Quest For 10-Baggers in BioHealth in 2010 (JAZZ, TRGT, VNDA, DNDN, HGSI, CGEN, BNVI, QCOR, ACHN, PSDV, ATHX, SNSS, AVNR, BIOD, ALXA, CTIC)
If one thing was noticed in biotech stocks, or BioHealth stocks as we often say, it was that investors, traders, and speculators all piled into the chase for the next ten-bagger late in the year. When you have as many biotech and BioHealth stocks that ran over 1,000% in 2009 that is only to be expected…. hence the 10-bagger comments. We had many biotech and biohealth shares rally from their lows significantly this year, with companies such as Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Targacept, Inc. (NASDAQ: TRGT), Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA), Dendreon Corp. (NASDAQ: DNDN), and Human Genome Sciences, Inc. (NASDAQ: HGSI) all being in or having been in the 10-bagger club this year.
But late in 2009 we started seeing an onslaught of low-priced stocks with small cap or micro-cap values running rapidly higher on news. In some cases these faded, and in some not. We saw the traders run up shares of Compugen Ltd. (NASDAQ: CGEN), Bionovo, Inc. (NASDAQ: BNVI), Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR), Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN), pSivida Corp. (NASDAQ: PSDV), Athersys, Inc. (NASDAQ: ATHX), Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS), and AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) on news late in 2009. Also covered as potentials for this are Biodel Inc. (NASDAQ: BIOD), Alexza Pharmaceuticals, Inc. (NASDAQ: ALXA), and Cell Therapeutics, Inc. (NASDAQ: CTIC).
We have reviewed each of these and given a synopsis for each to see if these could be the 10-baggers for 2010.
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Is Sunesis The Next 10-Bagger? (SNSS, DNDN, JAZZ, TRGT, VNDA, HGSI)
Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) has become the next small cap and low-prices biotech craze this week. We have seen this occur this year in other stocks, and now it seems that investors and traders are ready to jump into many of these small-cap biotech stocks with the hope of catching the next 10-bagger (1,000% return on investment). When you look at the amazing performance of many stocks in the sector, you probably won’t be too shocked to see why traders and speculating investors pile in:
- Dendreon Corp. (NASDAQ: DNDN) is up 900% from its lows over the last year.
- Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) has jumped about 1,400% from lows.
- Targacept, Inc. (NASDAQ: TRGT) has jumped over 1,000% from lows.
- Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA) has popped over 2,000% from its lows.
- And the biggie…. Human Genome Sciences, Inc. (NASDAQ: HGSI) was under $0.50 in March, making those fortunate few who bought after the March price tank have a gain of 50-fold if had they still held on today.
Today’s action dwarfs what was seen on Tuesday after Sunesis announced positive data from its two Phase II clinical trials of its lead drug candidate called voreloxin. The company said that the results showed strong efficacy and safety profile when used as a single agent or in combination with chemotherapy in patients with difficult to treat acute myeloid leukemia.
This data was presented at the 51st American Society Hematology Annual Meeting in New Orleans, LA. Sunesis showed that the high rates of remission in both trials have translated into durable effects with meaningful preliminary overall survival results.
With an anticipated median survival of three and a half to six months on currently available therapies, primary refractory and first relapse AML patients are particularly in desperate need of more effective treatment options. The company said that it plans to discuss the data with the FDA in End-of-Phase 2 meeting scheduled for the first quarter of 2010.
This stock closed at $0.44 on Monday before the data was released. But then on December 8 it had trading volume of 10,042,800 and closed up at $0.53. Yesterday it closed up at $0.60 on 4.1 million shares. The 52-week trading range was $0.05 to $0.90, which shows how this was a dormant stock. But then this morning traders began piling into the stock. And piled and piled. At 2:00 PM EST the stock is up a whopping 120% at $1.32 on 23 million shares having traded, but the stock traded as high as $1.84 on the day.
If you smooth out the most recent trading action and if you smooth out the exact lows you have an average share price of probably $0.30 or $0.35. If we see one more day of this action, a 10-bagger is more than just theory.
Even after the run this week, this is a mere $45.4 million market cap stock. At the end of September, it held $3.87 million in cash. Always keep in mind that there is a nasty side to major price gains in small speculative biotech stocks that release positive study data. That is the “news selling” where companies raise cash in private placements. Don’t be too shocked if you see the company use the gains to raise cash.
JON C. OGG
Jazz (JAZZ) Post Big Earnings
Jazz Pharmaceuticals(JAZZ) reported revenues for the second quarter were $37.3 million, compared to $15.5 million for the quarter ended June 30, 2008. Revenues for the second quarter included a $10.0 million milestone payment from UCB Pharma Limited that was received in July 2008 and recognized as revenue when the last patient completed the second JZP-6 Phase III clinical study in April 2009.
Research and development expenses for the second quarter were $11.2 million, compared to $21.9 million for the second quarter 2008 and $11.4 million for the first quarter 2009.
Jazz Pharmaceuticals’ net income for the second quarter 2009 was $2.2 million, compared to a net loss of $51.9 million for the second quarter of 2008. Jazz Pharmaceuticals’ unrestricted cash and cash equivalents balance as of June 30, 2009 was $15.8 million. In July 2009 Jazz Pharmaceuticals raised $7.0 million in a private placement and paid $14.6 million in accrued interest to the holders of its senior secured notes. Jazz Pharmaceuticals believes that it has cured all material defaults under the agreement governing the notes, and that it has sufficient cash to fund its operations and pay its obligations on an ongoing basis.
The stock is trading up 14% to $7.42, a long way from its 52-week low of $.52
Douglas A. McIntyre
Jazz Pharmaceuticals may have more to plow into its drug candidate (JAZZ)
Jazz Pharmaceuticals Inc. (Nasdaq: JAZZ) shares are up more than 26 percent to $4.62 on volume of more than 500,000 shares in the first hour of trading after the company said it has paid its senior secured noteholders interest payments that had been due them, following a private placement that eases its cash crunch.
The company announced it has closed a private placement of about 1.9 million common shares, and warrants to buy about 950,000 additional shares, generating proceeds of about $7 million. The per-unit purchase price for the stock and a warrant with an exercise price of $4 was about $3.69.
The company also said it has cured all material debt defaults.
Last month, Jazz Pharmaceuticals (Nasdaq: JAZZ) said it planned to halt development of three drug candidates in an effort to preserve much-needed cash. As of its most recent filing, the company had about $17 million in cash on hand, but at that time it had yet to make its fourth-quarter interest payments on about $19.5 million of its senior secured notes.
The company does plan to continue developing its Phase 2 experimental drug to treat fibromyalgia. The easing of its cash crunch may mean the company has more funding to plow into its drug candidate. — Mike Tarsala
Fibromyalgia stocks may be very active after Jazz Pharma trial (JAZZ)
Jazz Pharmaceuticals Inc. (Nasdaq: JAZZ) shares are up more than 30% on strong premarket volume and may be one of the most active biotech stocks today after the fibromyalgia treatment developer said preliminary data from a second Phase III trial of its pain drug Xyrem met its primary endpoint.
The company in a press release said 573 patients treated with Xyrem in a 14-week trial showed a 30% reduction in pain and fatigue and demonstrated improved daily function.
The positive test result for Xyrem may negatively affect shares of Cypress Bioscience Inc. (CYPB) today, which has a competing drug called Savella marketed with Forest Laboratories Inc. (NYSE: FRX) that was approved to treat fibromyalgia in January.
Beyond today however, the Street may come to realize that the data in the second Phase III trial for Xyrem is similar to that of the first trial, so there is not necessarily a new competitive threat.
Also, the Cypress Biosciences drug is generally seen a closer competitor to existing drugs on the market, while Xyrem is seen as a late-stage treatment for the disease.
The two most established treatments for fibromyalgia are Pfizer Inc.’s (NYSE: PFE) Lyrica and Eli Lilly & Co.’s (NYSE: LLY) Cymbalta. — Mike Tarsala.
Jazz Pharmaceuticals' cash crunch may benefit fibromyalgia rival (JAZZ)
Jazz Pharmaceuticals (Nasdaq: JAZZ) plans to halt development of three drug candidates in an effort to preserve much-needed cash.
As of its last filing, the company had about $17 million in cash on hand, but it has yet to make its fourth-quarter interest payments on about $19.5 million in senior secured notes.
The company does plan to continue developing its Phase 2 experimental drug to treat fibromyalgia.
But given its liquidity crunch, how much can JAZZ really plow into its promising fibromyalgia candidate?
Jazz’s woes may be a positive for small-cap biotech Cypress Bioscience, Inc. (Nasdaq: CYPB). The Cypress fibromyalgia drug Savella was approved by the FDA in January, and just became available to the market in late April.
It’s possible that Cypress may gain from its upstart rival’s financial pain.
– Mike Tarsala
