Five Bio-pharmas That Look Ready For Upside Gains

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By Scott Matusow, Contributor   
Tuesday, 20 November 2012 06:54

icon_tradethesisBG Medicine (NASDAQ: BGMD) engages in the discovery, development, and commercialization of novel cardiovascular diagnostics to address unmet medical needs.

The company markets the BGM Galectin-3, a diagnostic test for measuring galectin-3 levels in blood plasma or serum for use in patients with heart failure through regional and national laboratory testing facilities and directly to hospitals and clinics in the United States, as well as through distributors in certain countries in Europe. It is also developing CardioSCORE, a cardiovascular diagnostic test designed to identify individuals at high risk for near term cardiovascular events, such as heart attack and stroke; and galectin-3 test for a second indication to identify individuals at risk for developing heart failure, such as patients who have suffered a heart attack, as well as patients suffering from hypertension or diabetes. It has strategic collaborations with Abbott Laboratories (ABT) to develop and commercialize galectin-3 assay kits and related control kits and calibrators.

Reasons to go long now : Company change in business model, oversold chart, large insider buy.

In the earnings press release dated November 13, 2012, BG Medicine, Inc. announced financial results for the fiscal quarter ended September 30, 2012 and provided a business update.

Included in this business update, the company announced a new commercial strategy to speed the adoption of its cardiovascular diagnostic tests - the BGM Galectin-3 test and the CardioSCORE ™ test.

In the release, the company announced a strategic reorganization in its research and development department moving toward a more commercially-oriented role in support of studies designed to further differentiate and support the BGM Galectin-3 and CardioSCORE tests in the marketplace. As a result of this strategic reorganization, eleven positions in early discovery research were eliminated on November 8, 2012. As a result of the strategic reorganization, the Company will record one-time severance costs of approximately $150,000, which will be recorded in the fourth quarter of 2012. Further, the Company estimates that it will generate savings of up to $1.2 million in 2013. After this strategic reorganization, the company will have 26 full time employees.

President and CEO of BG Medicine Eric Bouvier remarked;

We have taken a series of important steps over the past year to realign BG Medicine into a more commercially-focused company, capable of playing a larger role in facilitating the market adoption of our innovative cardiovascular diagnostic tests, The steps outlined today represent the culmination of our efforts to transform BG Medicine. Taken together, these actions place us in a much stronger position to control our own destiny and drive our own commercial success.

In July 2012, BD Medical announced the filing of a 510(k) Premarket Notification with the U.S. Food and Drug Administration (FDA) for regulatory clearance of the Abbott ARCHITECT galectin-3 assay, which is used with Abbott's fully automated architecht immunochemistry instrument platform. In August 2012, Abbott received a letter from the FDA regarding its 510(k) notification that requested additional information and Abbott is undertaking activities to respond to the FDA. In addition, BD Medical expects Abbott to begin marketing an automated version of the test in the EU under a CE Mark in late 2012 or early 2013. In May 2012, a 510(k) was submitted by the company to extend the labeling indication for the BGM Galectin-3 test to include individuals in the general adult population who are at risk for developing heart failure based on elevated levels of galectin-3. In July 2012, a letter from the FDA regarding the 510(k) notification requested additional information, including information regarding the clinical validation study and additional analytical study data. A response was submitted to the FDA in November 2012. If BD Medical obtains clearance in the United States for this additional indication, the company expects the potential market for the BGM Galectin-3 test to increase significantly.

On November 15t, company officer Bancel Stephane purchased 100,000 shares for approx. $126,000. Obviously, this is a bullish sign, when an insider buys a block this large with their own money. Tackling some of the cost issues the company has as BG is looking to do, is clearly a step forward.

With a current market cap of $23.58M,a strong partnership with Abott Labs, and speculative longer term value, BG Medicine seems ridiculously undervalued and oversold to me. I view this one as a "bounce" trade with my price target opinion being between $1.45- $1.55 a share.

Sarepta Therapeutics, Inc. (NASDAQ: SRPT) focuses on the discovery and development of RNA-based therapeutics for the treatment of serious and life-threatening rare and infectious diseases. Its lead clinical candidate is Eteplirsen, which is in Phase 2 clinical stage for the treatment of Duchenne muscular dystrophy. The company is also developing treatments that are in Phase I clinical trials for infectious diseases, including AVI-7537 for Ebola virus; AVI-7288 for Marburg virus; and AVI-7100 for influenza. Its pre-clinical products comprise Exon 45 PMO and Exon 50 PMO, which are used for the treatment of duchenne muscular dystrophy.

On August 27, 2012, the company announced that its drug eteplirsen, developed for the treatment of Duchenne muscular dystrophy, received positive early clinical trial results.

Jerry Mendell, M.D., Director of the Centers for Gene Therapy and Muscular Dystrophy at Nationwide Children's Hospital and principal investigator of the Phase IIb study, remarked:

“The magnitude of this clinical benefit is an unprecedented treatment effect in DMD. This result represents a major advance in the pursuit of a disease modifying treatment for this severe, progressive and life-threatening disease. Dr. Mendell added, The 6-minute walk test results with eteplirsen, combined with its safety profile to date, make eteplirsen the most promising advance to treat the underlying cause of muscular dystrophy I've seen in my more than 30 years in the field.”

Due to the above factors, the drug could be see expedited FDA approval potential and be available to patients for compassionate use in the second half of 2013. Sarepta will report its final results of the trial in October -- which gives the company a potential strong upcoming catalyst to trade on.

On 10/3/12, Sarepta announced that it received positive phase IIb clinical data for its Duchenne muscular dystrophy (DMD) drug eteplirsen. Sarepta said eteplirsen slowed the progress of the disease and increased patients' levels of the protein dystrophin in an extension of a midstage trial. Low levels of that protein are the cause of Duchenne muscular dystrophy. The stock exploded from a prior day's closing price of $14.99 to an intra-day high the next trading session of $45.00.

The stock has since pulled back, trading in near $22 a share currently.

DMD is one of the most common fatal genetic disorders to affect children around the world. Approximately one in every 3,500 boys worldwide is affected with DMD. Girls are rarely affected by the disorder. DMD is a devastating and incurable muscle-wasting disease associated with specific inborn errors in the gene that codes for dystrophin, a protein that plays a key structural role in muscle fiber function. Symptoms usually appear in children by age three. Progressive muscle weakness of the legs and pelvis eventually spreads to the arms, neck, and other areas. By age 10, braces may be required for walking, and most patients require full-time use of a wheelchair by age 12.

Eventually, this progresses to complete paralysis and increasing difficulty in breathing due to respiratory muscle dysfunction requiring ventilatory support, and cardiac muscle dysfunction leading to heart failure. The condition is terminal, and death usually occurs before the age of 30. The outpatient cost of care for a non-ambulatory DMD patient is very high. There is currently no cure for DMD, but for the first time ever there are promising therapies in, or moving into, development.

Sarepta is definitely one Biopharma to watch, as any significant treatment for Duchenne muscular dystrophy that ends up being FDA approved would be a huge breakthrough for the patients suffering from this terrible disease, and create big money potential for the company.

Amicus Therapeutics, Inc. (NASDAQ: FOLD) focuses on the discovery, development, and commercialization of orally-administered, small molecule drugs for the treatment of lysosomal storage disorders and diseases of neurodegeneration. Its drugs are known as pharmacological chaperones, which selectively bind to the target protein, enhance the stability of the protein, help it fold into the three-dimensional shape, as well as allow proper trafficking of the protein, thereby increasing protein activity, enhance cellular function, and reduce cell stress. The company focuses on the development of pharmacological chaperone monotherapy programs and pharmacological chaperones in combination with enzyme replacement therapy (ERT). Its pharmacological chaperone monotherapy programs for genetic diseases include migalastat HCl, which is in Phase III clinical trial for the treatment of Fabry disease.

Amicus is utilizing a new technology in the development of treatments for genetic diseases. Pharmacological chaperone technology involves the use of small molecules that selectively bind to and stabilize proteins in cells, leading to improved protein folding and trafficking, and increased activity.

In its Fabry program, the company is investigating the use of AT1001 to bind to destabilized α-galactosidase A enzyme (α-GAL) and thereby restore its intended biological function.

Characteristics of Fabre Disease:

  • Full body or localized pain to the extremities is common in patients with Fabry disease. This is believed to be related to damage of peripheral nerve fibers that transmit pain.
  • Kidney complications are a common and serious effect of the disease; renal insufficiency and renal failure may worsen throughout life. End stage renal failure in males can typically occur in the third decade of life, and is a common cause of death due to the disease.
  • Cardiac complications occur when glycolipids build up in different heart cells. This creates heart related effects which worsen with age and may lead to increased risk of heart disease. Hypertension (high blood pressure) and cardiomyopathy are also commonly observed.

A potentially big catalyst coming up for Amicus is the release of the phase III results related to its medication for Fabry disease. This is a disorder caused by the deficiency of an enzyme called α-galactosidase A (α-GAL). Reduced or absent levels of this enzyme's activity leads to the accumulation of a complex lipid in the affected tissues, including the central nervous system, heart, kidneys, and skin. This accumulation is believed to cause the various symptoms of Fabry disease including pain, kidney failure, and increased risk of heart attack and stroke.

There has been historic difficulty in finding successful treatments for rare genetic diseases. If Amicus can show successful phase III data here, it could very well be like a "kodak" moment in medicine's war against genetic diseases -- Amicus is definitely a company with the potential to be a large upside mover soon.

Santarus (NASDAQ: SNTS) engages in acquiring, developing, and commercializing proprietary products that address the needs of patients treated by physician specialists. The company sells metformin hydrochloride extended release tablets under the Glumetza name and bromocriptine mesylate tablets under the CYCLOSET name, which are indicated to treat type 2 diabetes 

The company announced on September 4th that the U.S. Court of Appeals for the Federal Circuit reversed in part a lower court decision of invalidity involving certain asserted patent claims covering ZEGERID Capsules and ZEGERID Powder for Oral Suspension. The Federal Circuit found that certain claims of asserted U.S. Patent numbers 6,780,882 and 7,399,772, which Par Pharmaceutical, Inc. had been found to infringe, were not invalid due to obviousness. The Federal Circuit also upheld the District Court's finding that there was no inequitable conduct. The case will be remanded back to the U.S. District Court for the District of Delaware for further proceedings consistent with the appellate decision.

These patents were the subject of lawsuits brought by Santarus in 2007 against Par for patent infringement associated with Par's submission of Abbreviated New Drug Applications (ANDAs) to the U.S. Food and Drug Administration (FDA). The patents at issue expire in July 2016. In July 2010, following the District Court decision that five patents covering ZEGERID were invalid due to obviousness, Prasco, LLC, under a distribution and supply agreement with Santarus, and Par launched generic versions of ZEGERID Capsules.

Santarus also has a Prescription Drug User Fee Act (PDUFA) target action date of January 16, 2013 for the review of its New Drug Application for UCERIS (budesonide) 9 mg tablets.

UCERIS is designed for the induction of remission of mild to moderate active ulcerative colitis.

Traders might want to consider Santarus for a good catalyst trade as we get close to the PDUFA target date in January of next year.

Celldex Therapeutics (NASDAQ: CLDX)  focuses on the development and commercialization of novel therapeutics for human health care primarily in the United States. Its lead drug candidate, Rindopepimut (CDX-110), is an immunotherapeutic vaccine in a Phase III clinical trial to target the tumor-specific molecule, epidermal growth factor receptor variant III. It also is in a Phase II clinical trial for the indication of recurrent glioblastoma.

Glioblastomas are tumors that arise from astrocytes-the star-shaped cells that make up the glue-like or supportive tissue of the brain. These tumors are usually highly malignant (cancerous) because the cells reproduce quickly and they are supported by a large network of blood vessels. Glioblastomas are generally found in the cerebral hemispheres of the brain, but can be found anywhere in the brain or spinal cord.

Glioblastomas usually contain a mix of cell types. It is not unusual for these tumors to contain cystic mineral, calcium deposits, blood vessels, or a mixed grade of cells.

Rindopepimut is an immunotherapy that targets the tumor specific oncogene called EGFRvIII, a functional and permanently activated mutation of the epidermal growth factor receptor (EGFR), a protein that has been well validated as a target for cancer therapy. Unlike EGFR, EGFRvIII has not been detected at a significant level in normal tissues, but has been identified in multiple cancer types. It is believed that targeting of this tumor-specific molecule is not likely to impact healthy tissues.

In October, rindopepimut was granted orphan drug designation from the European Medicines Agency. The FDA already gave Celldex orphan drug designation and fast track designation for the vaccine candidate.

Malignant brain tumors are extremely deadly -- any new treatment that can treat this condition effectively would certainly be needed fast. Celldex is a company investors should keep a strong eye on for strong long term gains.

Disclosure: I am long BGMD





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