Biotech4cast Weekly Stock Digest March 11th

This week there were 2 rejections and 1 approval. The two rejections were expected, Astex Pharmaceuticals’ (ASTX) Dacogen for the treatment of Acute Myeloid Leukemia in the elderly and NeurogesX’s Qutenza 8% Patch for HIV-Associated peripheral neuropathy.

Discovery Labs’ SURFAXIN for the prevention of Respiratory Distress Syndrome in premature infants was approved on March 6th. The stock price rallied on the 7th increasing 50% from the closing price on March 5th. However this rally soon faded as journalists and investors voiced concerns about the revenue potential of SURFAXIN and Discovery Labs ability to execute a successful drug launch. For example the entire market for the drug is about $75 Million and there are already several competitors that serve this market with animal based products. Furthermore, investors are concerned that DSCO will need to raise money in order to launch the product commercially. To sum it up there was a lot of price action in the stock. However, it ended up where it started. The closing price on Monday March 5th was $3.58, and the closing price on Friday March 9th was $3.64. The stock ran up in anticipation of the decision date and now with all the concerns front and center the stock price is likely to move lower.

There are no major FDA events scheduled for this next week. Although we are likely to see briefing documents for the Oncology Drug Advisory Committee meeting which will be held on March 20th and 21st. Briefing documents come out two days prior to the meeting. ARIAD’s ridaforolimus will be discussed on the 20th and this puts the briefing documents release date Friday March 16th.