|Small Cap BioPharmas With Near Term Catalysts|
|By Scott Matusow|
|Friday, 03 January 2014 11:22|
Amarin Corporation (AMRN)
Amarin focuses on the development and commercialization therapeutic products for the treatment for cardiovascular diseases
Amarin has recently asked the FDA to reinstate the ANCHOR Special Protocol Assessment (SPA) agreement for its Drug Vascepa, which is an already approved drug for an adjunct to diet for reducing triglyceride levels in patients suffering from severe hypertriglyceridemia -- the approval is otherwise known as "the MARINE indication."
The FDA was set to make a decision on whether or not to approve the supplemental new drug application for "the ANCHOR indication" on December 20th of last year, but has chosen first to consider whether to reinstate SPA designation or not. The ANCHOR indication is for the treatment of patients with high triglycerides (>200 mg/dL and <500 mg/dL) with Mixed dyslipidemia.
This is important for the company as a SPA designation basically entails that if a company executes a trial exactly as it promises it will, and the data is presented as asked for by the FDA, the drug would receive regulatory approval. In this case, receiving ANCHOR approval means the potential to make much more money with the drug.
The FDA is bound to honor a SPA agreement once the Phase III trial is completed, as long as the company has followed the agreed-upon protocol to the letter, and efficacy and safety is shown in the data, as agreed upon with the FDA.
Herein lies the problem with Amarin, and not with the FDA, as many Amarin investors believe. At stockmatusow, we have continually informed our followers that we were bearish on Amarin because of its poor management. Having the SPA agreement revoked shows us that Amarin did not follow the agreement as guided by the FDA, and/or simply did not know how to properly communicate with the organization; not some "conspiracy" enacted upon by the FDA to cheat Amarin on the behalf of "big pharma" to stop the drug from receiving the ANCHOR approval.
It's also hopeful news for Amarin investors that Joseph S. Zakrzewski has stepped down as company CEO, who has been the main reason for Amarin's failures in our strong opinion -- simply stated, we feel Zakrzewski was a poor CEO.
If Amarin's new CEO John F. Thero conveys the SPA case correctly to the FDA, it's a good chance the agreement will be reinstated, which would lead to eventual approval for the ANCHOR indication. If this turns out to be the case, Amarin should at least double in price from its current valuation.
We feel Amarin is undervalued here, and should be currently valued closer to a $500M market cap, simply on the fact that Zakrzewski is no longer the captain of what has been a sinking ship.
The FDA is expected to make a decision on the reinstatement no later than January 15th of this year.
Progenics engages in the research and development of biotechnology product candidates in the areas of oncology and therapeutics.
Progenics has two upcoming catalysts:
In a December 6 press release, Robert J. Israel, M.D., Executive Vice President, Medical Affairs, stated:
“PSMA ADC is the most advanced antibody drug conjugate in clinical development to treat prostate cancer. Based on the data seen with PSMA ADC in chemotherapy experienced patients, we have decided to explore whether this compound can also benefit men in the less clinically advanced chemotherapy naïve setting.”
Basically, the above states the company sees the potential for the drug to be used in greater measure without as much chemotherapy dependence, so in essence, the company is seeking the eventual expanded use of the drug.
Prostate cancer is the most common cancer in men in northern European countries and the USA, and the second leading cause of cancer-related death in men in most western countries. Needless to say, the topline data here, if positive, should be a very big price driver for the company.
As mentioned, the company also has a tentatively scheduled ADCOM in early March of this year for an sNDA of its drug, Relistor.
In July of 2012, the company received a complete response letter (CRL) from the FDA, rejecting the sNDA for approval. The CRL requested that the company, along with its partner Salix Pharma (SLXP) submit additional data before the sNDA can be approved. Both companies have taken quite some time and care to assure that the sNDA is approved, so we feel it's likely the sNDA will be approved this time around.
Progenics was trading over $11 a share before the CRL in 2012, and is very undervalued here in our opinion, trading around $5.50 a share. With a clean finance deal in place (warrant free), the very near-term ASCO topline data release, and the likeliness of the Relistor sNDA to be approved, Progenics should see a double-digit stock price this year as it saw in July of 2012.
Celldex Therapeutics (CLDX)
Celldex focuses on the development, manufacture, and commercialization of novel therapeutics for human health care primarily in the United States.
Celldex was one of biggest biotech winners of 2013 and we are expecting more to come in 2014. The company focuses on developing therapeutic antibodies, antibody drug conjugates, immune system modulators and vaccines. Investors are interested in Celldex because of the unmet need therapies the company is developing. Celldex is working on drug indications that include therapies for glioblastoma, breast cancer, Dense Deposit Disease (DDD), and lymphoma.
Although in early clinical trials, Celldex is developing CDX-1135 for Dense Deposit Disease. The company initiated a pilot study to determine if CDX-1135 could benefit patients with early-stage DDD. The hope is to find that the drug can restore kidney function or provide long-term disease control. The company is expecting to give an update on this program in February 2014. In a 3Q 2013 10-Q the company stated:
“Initial experience under an investigator sponsored IND indicated that CDX-1135 limits complement abnormalities in DDD. In 2011, we completed process development activities and in 2011 and 2012 we manufactured multiple runs of cGMP clinical drug product at our Fall River manufacturing facility in preparation for our pilot study. We initiated our pilot study of CDX-1135 to determine the appropriate dose and regimen for further clinical development based on safety, tolerability and biological activity. We anticipate presenting a program update in February 2014.”
This catalyst should provide the stock with additional momentum throughout the 1Q of 2014. The company recently did an offering on December 4, 2013 and raised about $163M. The offering has left the company with a strong cash position for 2014 and investors shouldn't have to worry about any dilution in the near future.
The offering was also priced at $24.50, so the stock is still currently sitting very close to that level. Considering that large institutions probably bought a lot of stock at that level, it is a good bet that the stock trends higher into the February catalyst.
Venaxis focuses on developing diagnostic tests for appendicitis. Appendicitis is a common condition that is caused by the inflammation of the appendix.
An interesting fact about the appendix is that we can live without it. Doctors routinely perform surgery on patients to remove the appendix and it has become fairly common today. However, the testing to see if a patient has appendicitis is quite expensive. Venaxis is currently developing APPY1, which is a test focused on diagnosing patients who are 2-20 years old and might have acute appendicitis.
The advantage of the APPY1 test is that it is cheaper than blood tests and CT imaging. The company is expecting to release data from a pivotal study from the APPY1 test by the end of 1Q 2014. In a November 7, 2013 press release Venaxis CEO Steve Lundy stated:
“Advancing the APPY1 Test toward potential FDA clearance continues to be our top priority. We look forward to reporting top-line data from the pivotal study toward the end of Q1 2014, and dependent on the study results, to submitting our final data package to the FDA shortly thereafter.”
Pending positive data, the company expects to launch the APPY1 test in 2014. Although this is not an unmet need or an extremely large market opportunity, we feel the catalyst will rally the stock in the first quarter.
The stock has a small trading float (shares available for trading) of only 21.4M shares, and as of December 13, 2013, 23.10% of it has been shorted. This can lead to a possible short squeeze, where shorts could face heavy pressure to buy to cover their shares due to the upcoming catalyst.
It is a good bet that many of the shorts will begin to cover before the end of the first quarter and pop the stock fairly quickly in our opinion. All things considered, we believe Venaxis can trade in the $3.50 range soon.
Disclosure: I am long PGNX,
Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky -- always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.