Last week, shares of Organogenesis Holdings Inc. (NASDAQ: ORGO) jumped over 600 percent to $82.35 at the close after the company announced positive Nasdaq listing determination. Obviously, when a catalyst like this provides a positive outcome for a firm, shares almost immediately appreciate, but in the case of Organogenesis, part of the reason for the huge surge in price is that the stock has a very low float and, of course, low floats tend to cause high demand on positive news.
ORGO shares had traded at a previous 52 week high of $13.45 where it averaged trading a mere 200 shares per day. Organogenesis is in the business of regenerative medicine and focused on the development, manufacture and commercialization of product solutions for the Advanced Wound Care, Surgical and Sports Medicine markets.
Another stock in the healthcare business which somewhat follows the model set-forth by Organogenesis of acquiring or incubating low-risk/high reward medical technologies is Q BioMed (OTCMKTS: QBIO). However, unlike most biotechnology firms which can burn cash for years as they pay for drug development costs and clinical trials, QBIO took a short-cut and is already facing a key FDA approval decision well ahead of schedule having acquired a non-opioid injectable drug indicated to relieve cancer bone pain in patients with painful skeletal metastases.
Interestingly, Like Organogenesis, they also have a very small float and are also facing an upcoming catalyst which they hope will provide a positive outcome for their immediate future.
One look at the QBIO chart tells us that traders who are not particularly risk-averse may be responsible for starting to gobble up shares and drive demand of QBIO’s 9M share float. Prices have been rising steadily since the beginning of the year and it would seem that FDA Catalyst traders are holding on in hopes that they too will be rewarded when and if the FDA approves the company to start manufacturing Strontium Chloride Sr89 Injection USP in accordance with cGMP at a manufacturing facility in Texas. According to a news release issued in late August, Q BioMed CEO Denis Corin told investors that his firm had submitted a comprehensive filing required by the FDA and that this was the final step in what has been a long process.
“Our U.S. based contract manufacturing facility is uniquely equipped for the complex manufacturing of this product,” said Corin. “And we will be ready to make the product available on approval. We will be the only commercial manufacturer of this drug in the U.S. and look forward to serving and growing the market for years to come.” Based on the timeline for these types of decisions, it appears that news from the FDA is imminent. “It could happen any day now,” said one insider at the firm with knowledge of the process.
If the FDA approves Q Biomed’s facility, that will be a transformative step for the emerging young company as it will allow them to manufacture, market and serve what analysts estimate to be a population of as many as 280,000 patients in the U.S. and approximately 2 million more around the world. Oncologic bone pain palliation is an area of increasing unmet need and QBIO is suddenly in position to better serve those populations. In late November, the company announced that they had acquired the brand name version of the cancer pain drug Metastron from GE Healthcare along with the associated intellectual property (IP), the drug brand, trademarks, and market authorization in 22 countries where Metastron is registered and approved for sale, in addition to all sales and distribution data.
QBioMed would now own a marketed, branded drug, and the revenue streams, besides creating a barrier for other entrants. News of the acquisition did not seem to go appreciated by Wall Street despite the fact that it basically removed an overhang from their own generic Sr-89 program which was likely facing delays and analysts who cover the firm believe that this is a very positive development which would bring back the focus to revenue growth through a marketed/branded drug, which QBioMed can market after successful transfer of data, IP technical transfer and after completing the regulatory requirements in different countries, the aim is to have those issues likely resolved in 1H19. Shares of QBIO rose 11% on Wednesday and appear poised to run higher if demand continues to wake up.
The entire biotechnology sector appears to be not only waking up, but in fact firming up for a solid run in 2019 as recent clinical and FDA related catalysts have pushed stocks like Axsome Therapeutics Inc (NASDAQ: AXSM), Constellation Pharmaceuticals (NASDAQ: CNST), and Novavax (NASDAQ: NVAX) higher in the last few sessions.
Axsome shares have been on an incredible run up this week after news that the firm’s investigational anti-depression treatment had met Phase 2 clinical trial expectations. The stock, which traded very thinly prior to the news, rallied by 161% as investors reacted to the company’s positive 2 results in what can only be described as a monster rally.
Even shares of Amarin Corporation (NASDAQ: AMRN) surged over 13% on Wednesday after the CEO made some positive comments at the company’s J.P. Morgan Healthcare conference presentation.
Investors know the entire sector is heating up for another reason. Last year, the FDA approved a record number of drugs. In fact, according to some reports, 2018 was a banner year with 59 new drugs approved, including 19 first-in-class agents, 34 novel drugs for rare diseases, and a record seven biosimilars. Those 59 drug approvals are the most in more than 10 years. In contrast, 46 new drugs were approved in 2017, and only 22 were approved in 2016. Between 2009 and 2017, the FDA averaged about 33 novel drug approvals per year.
This has speculators getting excited that the “Golden-Age” of biotech may be getting ready to make a comeback. The late 1990s has been thought of as a boom for the drug industry since in the four year period between 2006 and 2000, the FDA approved 183 new drugs. Will the new boom continue? It’s unlikely that 59 will become the annual standard for the FDA. However, it is hard to envision a return to the depressed decade of 2001 – 2010. So speculators who like placing bets on clinical and FDA related catalysts will take the early enthusiasm that the market is showing as a firm uptick and a strong change of market sentiment.
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