By Rockford Coscia, on August 28th, 2010
This post is a long one but I promise it’s worthwhile to the Arena crowd. In order to more accurately determine the potential outcome of the Lorqess advisory committee meeting on September 16, I wanted to review the comments to go along with the votes for the Qnexa panel.
The transcript in its entirety can be found here.
First, some background on each panel. The panel for Qnexa consisted of both the Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) and the Drug Safety and Risk Management Advisory Committee (DSRMAC). The Lorqess panel, so far, is listed as only the EMDAC. Each panel also has voting members in the temporary Center for Drug Evaluation and Research (CDER) category. The CDER temporary members appear to be members of other panels that are called in for the current panel.
The members that are most likely to be present in the Lorqess panel are the core EMDAC members. The other panel positions could be completely up in the air. However, the FDA may try to keep the panel similar to the Qnexa panel as both a fairness issue and that the Qnexa panelists would already be exposed to many of the same issues that will be presented for Lorqess. Regardless is that is true or not, examining the issues the previous panel had should give us insight into how a future panel will vote.
I will provide a more in depth preview of Lorqess’ potential issues in the future, but at the moment I am operating under the assumption that side effects are generally mild apart from the potential valvulopathy issue. The valvulopathy data, however, appears to be sufficiently powered to rule out an increase in valvulopathy as requested by the FDA. Efficacy surpasses the FDA guidelines for weight loss for Lorqess as well.
And with that, the voting members of the Qnexa panel, selected commentary, and my estimation of a future Lorqess vote: Continue reading Qnexa Panel Bodes Well for Lorqess
By Rockford Coscia, on August 25th, 2010
Today I wanted to talk about a measure of stock value that is often used in the equity research groups but is used only sparingly with amateur traders: enterprise value/revenues.
For those who haven’t heard of this measure of stock value let me provide a quick introduction.
Enterprise value is most intuitively thought of as the dollar amount at which a company can theoretically be purchased. You might think that number is just the market cap, and usually it is, but keep in mind that you would obtain the company’s cash and assume the company’s debt, so these figures are ‘factored in’ for the enterprise value. The long equation for the value is as follows:
Enterprise value =
- common equity at market value
- + debt at market value
- + minority interest at market value, if any
- – associate company at market value, if any
- + preferred equity at market value
- – cash and cash-equivalents.
By comparing the enterprise value to the revenues of a company, you get the dollar value needed to purchase those revenues. It’s very similar to a simple price/earnings ratio but works better for companies that aren’t yet profitable – like small biotechs. It’s also especially appropriate as smaller companies tend to be fairly common acquisition targets and a low EV/Rev ratio should yield especially good acquisition targets.
With that, I’d like to examine five companies that have especially low EV/Rev ratios, with some are even trading below their cash value! While these companies may be selling at a bargain price and may be good acquisition targets, there’s usually good reason their ratios are so low.
As a clarification of my methods, the EV/Rev ratios are determined using the trailing twelve month revenues and cash values (including cash equivalents and short term investments) are based on the last reported 10Q reports. Continue reading Five Cheap Small Cap Biotech Stocks
By admin, on August 21st, 2010
Please enjoy the new and improved BIP theme!
By Rockford Coscia, on August 20th, 2010
Brutal day in general, but especially for JAZZ. In the end, the illicit use and abuse issue was too big for Jazz to surmount.
There was a statement by Rappaport of the FDA stating that if the current REMS is inadequate you should vote ‘no’. I think that comment caused the high ‘no’ total and made things look a whole lot worse than they are. It looks like there’s still some hope for Jazz to iron out the REMS issue with the FDA but this will be a serious blow to the share price.
I do feel bad for the fibro patients who spoke that seemed to benefit so much from the therapy. Good luck to Jazz on getting the REMS issue resolved!
By Rockford Coscia, on August 19th, 2010
January 23, 2011 is approaching Cumberland Pharmaceuticals (CPIX) like a iceberg, threatening to sink revenues almost entirely for the small Tennessee biotech. On that date, the comapany’s primary revenue generator, Acetadote, will face generic competition. The company has been frantically trying to replace or extend the revenue of its star product; so far with little success.
One such way that Cumberland hopes to avert disaster is with a potential Acetadote FDA approval for non-acetaminophen acute liver failure. Acetadote is already approved for acetominophen-related acute liver failure and the company hopes to extend it to non-acetaminophen liver failure as well. Acetadote for this indication was granted priority review and the company expects a response by the scheduled September 10 PDUFA date. Along with approval for the new indication, Cumberland has asked for additional market exclusivity for its Acetadote product. While Cumberland stands a good chance to gain approval for the new indication, the potential market exclusivity agreement remains murky.
Acetadote, the only FDA approved IV treatment for acetaminophen poisoning
Acetaminophen poisoning is the most common cause of liver failure in the United States. Acetaminophen is one of the most ubiquitous drugs in the American household and overdoses of the drug number over 120,000 per year with as many as 48,000 receiving treatment. Acetaminophen overdose is also the most common form of acute liver failure, making up nearly 50% of the 2,000 cases per year in the U. S. When acetaminophen toxicity occurs, glutathione – a molecule necessary for proper metabolism of acetaminophen – is used up and the drug is converted to highly toxic N-acetyl-para-benzoquinone imine (NAPQI). NAPQI causes severe damage to the liver and, without treatment, will result in fulminant liver failure and death.
Acetadote is an intravenous formulation of N-acetylcysteine (NAC), a simple derivative of the naturally occurring amino acid cysteine. When given within eight hours of acetaminophen overdose, Acetadote is virtually 100% effective in preventing liver failure and death. The drug works by replenishing the body’s glutathione reserves as NAC is a precursor to glutathione. Acetadote is the only intravenous acetyl-cysteine treatment approved by the FDA for treatment of acetaminophen overdose. Mucomyst, a NAC treatment that is inhaled or orally administered, is also used as a treatment for acetaminophen overdose and is not produced by Cumberland Pharma. In 2009, total revenues for Acetadote accounted for $30 million of the company’s $43 million in total revenues. Continue reading Cumberland Pharma Needs Acetadote Approval to Avert Disaster
By Rockford Coscia, on August 18th, 2010
Here.
Looks like it’s on a tear upwards. If you got on the wave pre-market good job! I have to admit it’s a lot more volatility than I expected.
Additionally, it seems like the notes are being well received by what I hear on Twitter. May carry some momentum into the next 24 hours.
By Rockford Coscia, on August 17th, 2010
Tomorrow the information-starved market gets its crack at the FDA panel notes on Jazz’s new treatment for fibromyalgia, as yet known as JZP-6. There are lots of methods out there as far as playing biotech binary events goes, but I feel there’s very little associated with the note release to panel period. I wanted to share a method I occasionally use to make a little extra cash flow with the increased volatility surrounding the release of these notes. I feel like 5% is a realistic goal for this strategy, which isn’t bad for a day or two of work.
First, I’d like to summarize the general sentiments of the blogosphere regarding the content of the panel. The concern of the panel will likely not be over safety and efficacy – the drug appears to excel in these two areas – but rather with the potential illicit use of the drug’s main ingredient. The active ingredient in JZP-6 is sodium oxybate, a chemical that is basically gamma-hydroxybutyric acid, or GHB – a schedule 1 drug in the United States. While Jazz already markets the drug Xyrem for narcolepsy that is also basically GHB, the total market size for that drug is relatively puny. The market for fibromyalgia, however, is orders of magnitude larger than that of narcolepsy. With a whole lot more GHB floating around the potential for illicit use is much higher. There is already a REMS (Risk Evaluation and Mitigation Strategy) in place for Xyrem, and the consensus opinion seems to be that the panel will focus on whether that REMS will be adequate for the larger market. See my previous article for a more in depth analysis of my own viewpoint.
Now, generally when the panel notes are released, if the notes reflect exactly what the market expects the price tends to go up. This is because the uncertainty of whether something really scary is in those notes evaporates. If, however, something unexpected creeps in the market can mash on the panic button and the price can swing in the opposite direction. Expect people to be especially paranoid about exact wording of statements. One constant in the market is that investors tend to be risk-averse and – given the potentially huge price swing associated with the panel – investors holding JAZZ will be especially on edge. As I understand it, the panel notes usually cause a downward trend in the stock price. You should, however, be ready for a price swing in either direction. Continue reading Swing/Day Trading FDA Panel Notes
By Rockford Coscia, on August 13th, 2010
This morning Adam Feuerstein tweeted the follwing:
adamfeuerstein: Jefferies note argues $ARNA did not meet statistical test for proving lorcaserin heart valve safety. Hold rating, lowers PT from $6 to $5
Now I haven’t found the alleged note and from what I’ve heard there was no mention on flyonthewall or anywhere else. Let’s assume he got the data from some sort of reliable source and maybe he’s privy to information before the rest of us. While I’m not suggesting this may be the only reason for ARNA’s stock swing today, it is the only piece of news I see to accompany the 7ish% drop currently going on.
I wanted to share with you some of the data I found on the valvulopathy issue as I was writing my previous piece on the cardiac data for lorcaserin. Rather than launch into my own statistical analysis, I’ll give you the data and opinions I’ve compiled from around the web on the issue and you can make of it what you will.
First, an excerpt from the BLOOM and BLOSSOM trial press releases. First BLOOM (3,182 patients):
Using an ITT-LOCF analysis, the assessment of echocardiograms performed at baseline and after patients completed 6, 12, 18 and 24 months of dosing indicated no apparent drug-related effect on the development of FDA-defined valvulopathy (moderate or greater mitral insufficiency and/or mild or greater aortic insufficiency).
Lorcaserin met the primary safety endpoint of no significant difference in rates of valvulopathy at 12 months. Rates of valvulopathy at 6, 12, 18 and 24 months for lorcaserin versus placebo were 2.1% vs. 1.9%, 2.7% vs. 2.3%, 2.9% vs. 3.1% and 2.6% vs. 2.7%. At 18 and 24 months, rates of valvulopathy for lorcaserin patients crossing over to placebo were 3.6% and 1.9%, respectively.
The FDA has requested that Arena rule out a 1.5-fold or greater risk of valvulopathy with 80% power. Assuming similar results in BLOSSOM (Behavioral modification and Lorcaserin Second Study for Obesity Management), the integrated data set from the two trials will be more than sufficiently large to meet this requirement. Continue reading Lorcaserin: A Summary of Valvulopathy Data
By Rockford Coscia, on August 11th, 2010
On September 14, Savient’s (SVNT) Krystexxa (pegloticase) faces what could be the end of a tumultuous journey to approval. Krystexxa has had an especially bumpy go of it, with soaring high of a 14-1 panel approval and crushing low of an FDA complete response letter. Investors may be sick from the rollercoaster ride and are certainly looking for relief from the FDA. I want to provide a brief summary of what Krystexxa is, what it has gone through, and what I expect as we get closer to this important catalyst date.
What is Krystexxa?
Krystexxa is a biologic therapy for the treatment of chronic gout in patients refractory to traditional therapies. Gout is a painful joint and tissue affliction that results from what is effectively crystallization of uric acid within the body. Krystexxa is administered via injection once every two weeks and continuously processes this uric acid into a form that is more easily passed from the body.
Krystexxa is actually just uricase, an enzyme that is found in virtually all mammals besides humans and some apes. As it turns out, we carry with us the genes for such an enzyme, but somewhere in our genetic history the expression was turned off. In these other mammals, allantoin is the purine metabolism product of choice, whereas in humans we stop short of the final step of producing allantoin and simply excrete uric acid. Unfortunately, excess uric acid can ‘crash out’ of solution (namely our blood) and collect in tissues and joints, resulting in the above mentioned painful condition. The uricase enzyme in Krystexxa allows us to processes uric acid – which has relatively low solubility in water – into allantoin – which has relatively high solubility. The allantoin is then excreted from the body, much as it would be in any other mammal, significantly improving the gout situation in the patient. Continue reading A (Re)Introduction to Krystexxa
By Rockford Coscia, on August 8th, 2010
This year a trio of obesity drugs have stormed onto the stage and soon face their respective FDA decisions The trio consists of Vivus’ Qnexa, which was already voted down by an FDA panel, Arena’s lorcaserin, and Orexigen’s Contrave. Following Qnexa’s jilting by FDA panel, many investors piled into Arena as lorcaserin’s side effect profile appeared the most benign of the three. Lorcaserin faces its own FDA panel on September 16. While I’m guessing that multiple issues will be discussed – including potential off-label use with phentermine – one of the issues likely to be addressed is the potential of valvulopathy in long-term use of lorcaserin. There is very good reason to believe, however, that these concerns will be little more than a distraction on the way to lorcaserin’s approval.
What is Lorcaserin?
Lorcaserin is a 5HT2C receptor agonist. 5HT, aka 5-hydroxytrptamine and serotonin, is responsible for regulating a number of biochemical pathways in the body. While we know of the existence of as many as 13 5HT receptors throughout the body, the 5HT2C receptor is located in the brain and is thought to control things like mood, addiction, and appetite. Lorcaserin appears to be reasonably selective for the 5HT2C receptor in particular. Think of the receptor as a lock, and lorcaserin its key. When the key fits into the lock, a biochemical cascade usually ensues resulting in the drug’s desired effects. Agonism of this particular receptor leads people to feel more satiated - preventing the patient from over eating – and may play a role in the prevention of impulsive eating. This strategy is not necessarily unique as the drug combination Fen-Phen utilized a similar 5HT receptor agonism to assist in weight loss.
Continue reading Lorcaserin: Valvulopathy? What Valvulopathy?
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