OSI Still Worth A Look After FDA Rejection (OSIP, RHHBY)
OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) and Genentech, Inc., a wholly owned member of the Roche Group (RHHBY), had a disappointment from the FDA. The FDA’s Oncologic Drugs Advisory Committee voted 12 to 1 recommending against the approval of the daily pill Tarceva® as a first-line maintenance use in people with advanced or metastatic non-small cell lung cancer whose cancer has not grown or spread following first-line treatment with platinum-based chemotherapy.
While it is true that the FDA itself is not bound by the recommendations of its advisory committees, a vote this dominant against approval leaves a fairly certain outcome. The agency is expected to make a decision whether to approve Tarceva for this use by January 18, 2010.
It goes without saying that company expressed disappointment. The results were a 41% increase in the number of people showing improvement in the likelihood of living without the disease getting worse. People whose tumors over-expressed the epidermal growth factor receptor (EGFR) as assessed by Immunohistochemistry (IHC) who received Tarceva had a 45 percent improvement in PFS compared to placebo. Overall survival also improved by 23 percent with Tarceva compared to placebo.
The side effects noted as most common were rash at 49% and diarrhea at 20%.
What is interesting here is that this was given a very low pre-event binary trading alert status as this was an expanded use for Tarceva. OSI Pharma’s shares closed down over 7% at $32.89 and the shares are down another 1% at $32.51 in the after-hours session. We also saw 4.1 million shares trade hands versus an average volume of only about 800,000 shares before today. The 52-week trading range is $27.01 to $43.00.
It will be interesting to see how analysts treat this on Thursday in reaction. The 2009 estimates from Thomson Reuters are $1.25 EPS and $418.87 million in revenues. The estimates for 2010 before any changes based upon this are $1.67 EPS on $484.2 million in revenues.
If those estimates are still attainable in 2010, again if, then this trades at 3.9-times revenues and just under 20-times earnings. Some will say this is cheap, and others will say it is expensive. We want to see how much is taken off of the revenue expectations before giving this one a thumbs-up or thumbs-down.
JON C. OGG
PML Side Effect Concerns Moving Beyond MS to RA (RHHBY, BIIB)
PML, or progressive multifocal leukoencephalopathy, is moving beyong TYSABRI as a side effect in the world of drugs and pharmaceuticals. Yesterday the FDA posted a ‘Dear Doctor letter’ from Genentech, now part of Roche (OTC: RHHBY). Unfortunately, this involves Biogen Idec, Inc. (NASDAQ: BIIB) as well. The two companies notified healthcare professionals about a third case of PML, the first case of PML in a patient with rheumatoid arthritis treated with Rituxan who has not previously received treatment with a TNF antagonist.
The companies noted that information to date suggests that patients with RA who receive Rituxan have an increased risk of PML and that doctors should consider PML in any patient being treated with Rituxan who presents with new onset neurologic manifestations.
You can read the full letter and explanations here. Unfortunately, PML risks are likely to come more front and center in the coming weeks and months.
It is worth noting that this is not the first of the potentially fatal side effects of Rituxan. There have been prior warnings of brain disorders and other warnings including cardiac arrest, reactivation of Hepatitis B, kidney failure, and more. And PML is already a noted risk in Rituxan.
It JON C. OGG
Dendreon Merger Rumors Stay Alive (DNDN, SNY, AZN, RHHBY)
As far as whether a deal is really imminent for Dendreon Corp. (NASDAQ: DNDN) in this rumored buyout is coming is still a topic up for debate. We still have a Caveat Emptor flag here, but the trading in this name is just too hard to not notice now that the stock price and market cap is getting so high.
We saw a greater than 10% gain on Monday to where it closed at the highest closing of the year at $27.43. Of course it sold off, but throughout the day Dendreon shares have climbed and the stock is now up 9% at $29.23 on well above average volume.
We have seen over 30,000 options contracts trade hands for the September Calls alone against almost no Put volume. That is over 3 million shares on a fully leveraged basis. What is so interesting is that these options are all set to expire in just over 48 hours. If no deal is announced or leaked out early Friday, then those will all expire as worthless if out-of-the-money or at the intrinsic value if they are in-the-money. So again, this suggests that something is imminent if you only watch stock options.
Again, Sanofi-Aventis (NYSE: SNY) is the most widely thrown out name as a European buyer that can get companies on sale in the U.S. over a weak US Dollar. But Roche (RHHBY) for its Genentech unit and AstraZeneca plc (NYSE: AZN) have been pondered before.
PROVENGE is believed to be getting FDA approval, but this is still not a formally approved event. Roche already took that chance on Genentech ahead of a key independent study ahead of the panel releasing data that was shocking as Avastin turned out to not be good at using in patients with the aim of maintenance or future cancer prevention. The market cap here is now $3.3 billion, and the price is getting to be in the realm of gambling when considering the FDA-risk that is inherent in any pre-revenue stock in the biotech realm. And any merger has to come at a premium to get shareholder approval.
Caveat Emptor!
JON C. OGG
One More Weapon in the Non-Hodgkins Lymphoma War (BIIB, RHHBY)
There was some key news out yesterday from Roche’s (RHHBY) Genentech and Biogen Idec (NASDAQ: BIIB) that is good news in the war against follicular lymphoma. It also snuck under the radar. The Phase III PRIMA study showed that patients who continued receiving Rituxan alone after responding to Rituxan and chemotherapy lived longer without their disease worsening than those who did not continue to receive Rituxan.
Since PRIMA met its endpoint during a pre-planned interim analysis, the study was stopped early on the recommendation of an independent data and safety monitoring board. Also noted was that the safety profile of Rituxan observed in the study was consistent with that previously reported.
Follicular lymphoma is a common and slow developing form of non-Hodgkin’s lymphoma that is currently uncurable and accounts for about one in four of all cases. As far as investors are concerned, this is effectively a blockbuster treatment potential alone. We wanted to look back to define just how large this drug is already. Genentech listed its 2008 Rituxan U.S. sales as follows: Q1 $605M; Q2 $651M; Q3 $655M; Q4 $677M; All 2008 as $2.587 billion. Biogen listed its portion of Rituxan sales was roughly $1.1 billion for 2008.
Genentech, Roche and Biogen now plan to discuss which next steps to take with the FDA and E.U. authorities for a new indication for Rituxan.
This is an interesting study because this falls in line with the ‘maintenance program’ treatment that so many cancer patients need after they have completed their round of chemotherapy or other treatments for cancer. Many drugs out there can only be taken in so many doses within a certain time frame.
Rituxan is co-marketed in the United States by Genentech, which was recently bought out by Roche, and co-marketed by Biogen.
JON C. OGG
SEPTEMBER 17, 2009
Five Fast-Growing Biotechs To Watch Right Now (ALNY, FOLD, HALO, AOB, STEM)
Alnylam (Nasdaq: ALNY) leads a short list of some of the fastest-growing biotech stocks where analyst estimate revisions continue to rise.
BioHealth Investor began by analyzing 171 stocks in the biotech sector based on revenue growth over the trailing four quarters, identifying 30 stocks in the sector with better than 50 percent revenue growth over the past 12 months.
We then screened those 30 stocks to look for those very few names that have seen both strong growth in at least the past two years and positive analyst estimate revisions in recent months, in an effort to find stocks with strong trends that still have potentially improving operations going forward.
The work resulted in growth biotech stocks to watch: Alnylam Pharmaceuticals Inc. (Nasdaq: ALNY), Amicus Therapeutics Inc. (Nasdaq: FOLD), Halozyme Therapeutics Inc. (Nasdaq: HALO), American Oriental Bioengineering Inc. (NYSE: AOB), and Stemcells Inc. (Nasdaq: STEM).
1) Alnylam:
With a new class of potential biotech medicines, aggressive goals for development and partnerships, cash on the books and a large addressable market, Alnylam tops our short list of biotechs with strong growth and increasing analyst estimates.
Swine Flu Speculation Stocks (GILD, BCRX, NVAX, GNBT, VICL, AVII, CRXL, RHHBY, GSK)
Monday is looking like a SWINE FLU speculative flu stock stock bonanza. The two approved drug treatments, not vaccines, which are being released are Tamiflu made by Roche (OTC: RHHBY) and Relenza made by GlaxoSmithkline (NYSE: GSK). Gilead Sciences, Inc. (GILD) gets royalties from Roche for Tamiflu, and its shares are indicated north of $48.00 after a $45.80 close on Friday.
There is a second-tier level of stocks here: BioCryst Pharmaceuticals Inc. (BCRX) was up big Friday as it is a maker of drugs that block key enzymes in viral diseases like the flu, shares are indicated over $3.00 after a $2.21 close on Friday. Novavax, Inc. (NVAX) is another clinical stage company using its virus-like particle platform technology for flu treatments; stock is indicated north of $2.50 after closing up some 75% at $1.42 Friday.
And here is the third-tier of these stocks: Generex Biotechnology Corp. (GNBT) is being passed around as a penny stock flu player with shares indicated around $0.40 after closing up 25% at almost $0.34 Friday. Vical Inc. (VICL) closed up 3% Friday at $2.53 and shares are indicated up around $3.00. AVI Biopharma, Inc. (AVII) rose over 20% to $0.89 Friday and shares are indicated up marginally as a result. Crucell NV (CRXL) has a faster way of making flu vaccines. This closed up 1% on Friday and is hardly moving.
As a reminder, these huge gap ups generally have a one day to multi-day move with each move usually being less than the first. As with issues such as SARS and bird flu, the world did not end and it was only the SARS scare which actually caused real damage. You can probably bet that you will be hearing “squeal like a pig!” jokes.
JON C. OGG
Swine Flu Treatment Stockpiles Released by CDC/DHS (RHHBY, GSK)
With the swine flu epidemic from Mexico spreading to the U.S. (and maybe beyond), a new media advisory is confirming that the drugs Tamiflu by Roche (OTC: RHHBY) and Relenza by GlaxoSmithkline (NYSE: GSK) are being released to combat the swine flu. No exact numbers were mentioned of how many of each of the doses in the total stockpile of 50 million doses, but Homeland Security Secretary Janet Napolitano said in a White House briefing that the government is releasing 25% of the 50 million total stockpiled doses to treat the outbreak.
The cases in each state were listed at 12:45 EST as follows: California has 7 cases, Kansas has 2 cases, New York City has 8 cases, Ohio has 1 reported case, and Texas has 2 reported cases. These numbers are from earlier and obviously if this is any epidemic or is much more widespread then those numbers will grow. This is on the heels of some 1,300 suspected cases in Mexico and even New Zealand has said it is “likely” that 10 students who were recently in Mexico have swine flu.
JON C. OGG
Solid Developments for Rheumatoid Arthritis (ABT, ARRY, LLY, INCY, JNJ, SGP, RHHBY)
If you have followed the news on arthritis and rheumatoid arthritis (“RA”) for very long, this was a good week for the possible treatments of the disease. The annual congress of the European League Against Rheumatism in Paris, France took place and this was the venue for many study announcements. This is only a snippet of the data and a snippet of the companies presenting, but some of the companies were Abbott Laboratories, Array, Eli Lilly, Incyte, J&J, Schering-Plough, and Roche. This is a very debilitating condition that affects millions in the US and globally as our populations are all aging.
Abbott Laboratories (NYSE: ABT) announced that its long-term data from a study of 1,469 patients showed its drug Humira, in combination with a common treatment used to treat a type of arthritis pain, led to remission of the disease for up to seven years. After six months of therapy, patients’ symptoms improved, with additional improvements seen after two or more years.
Array BioPharma Inc. (NASDAQ: ARRY) reported on some additional positive results of its Phase I clinical trial of ARRY-162, its novel small molecule MEK inhibitor; and it reported positive results from a Phase I trial of ARRY-797, its modulator of inflammatory mediators in blood. The four-week study of ARRY-162 in patients with stable RA receiving continued doses, showed that ARRY-162 was well tolerated and with no patients that discontinued the study due to an adverse event. Its activity was predictable with no drug/drug interactions with ARRY-162 and methotrexate. ARRY-162 suppressed production of IL-1, IL-6 and TNF, suggesting that this treatment has the potential to reduce inflammation mediated by these cytokines in patients with RA.
Eli Lilly & Co. (NYSE: LLY) presented new data that suggests patients with osteoarthritis pain of the knee treated with 60 mg and 120 mg Cymbalta once daily experienced significant pain reduction. Patients taking duloxetine reported significant pain improvement compared to placebo within the first week of treatment that lasted throughout the 13-week trial. The results from a study of 231 patients were presented at the annual congress of the European League Against Rheumatism in Paris, France.
Incyte Corporation (NASDAQ: INCY) showed clinical results from a 28-day Phase IIa trial of INCB18424, its janus-associated kinase inhibitor, in patients with RA. Results from the first of four treatment groups demonstrated that the 15 mg twice-daily dose of INCB18424 was well tolerated and provided ACR20/50/70/90 response rates of 75%/50%/25%/17%, respectively, with responses seen as early as 1 week. These results suggest that INCB18424 has the potential to be more effective than currently available RA therapies.
J&J’s (NYSE: JNJ) Centocor and Schering-Plough Corporation (NYSE: SGP) showed data in their Phase III human anti-TNF-alpha monoclonal antibody study for an anti-TNF-alpha biologic therapy. Findings from two new Phase III studies showed that patients receiving every four-week injections of golimumab 50 mg and 100 mg and weekly methotrexate experienced significant improvements in the signs and symptoms of RA as well as in physical function and disease activity, with some patients achieving remission as measured by Disease Activity Score.
Roche Holding AG (OTC: RHHBY) said that it expects to increase sales of MabThera in 2008 compared to 2007 in the rheumatoid arthritis indication at the European League Against Rheumatism congress in Paris. Roche also noted that about 30% percent of rheumatoid arthritis patients who failed prior attempts to respond adequately to anti-TNF therapy saw some remission from the disease with Actemra. Rituximab results provide continued inhibition of structural damage after 2 years in patients with rheumatoid arthritis who had an inadequate response to tumor necrosis factor inhibition
And the best news is potentially for boozers. Scandinavian researchers conducted two studies, involving 2,750 people who drink alcohol regularly showing that it may reduce the risk of developing rheumatoid arthritis by up to 50%. This assessed environmental and genetic risk factors for rheumatoid arthritis; and 1,650 participants had the disease, and were questioned about their smoking and drinking habits. By the way, blowing out your liver isn’t a good substitute.
Jon Ogg
June 13, 2008
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