Biotech4cast Weekly Stock Digest March 25th

This upcoming week will be busy with three PDUFA dates and an advisory committee meeting, but first a look back.

ARIAD (ARIA): On March 21, ODAC voted against approval of ARIAD’s ridaforolimus for the treatment of soft tissue/bone sarcomas. The outcome of this advisory committee meeting was expected and there were many calls to buy ARIAD’s stock on weakness. All eyes are looking past ridaforolimus and focusing on ARIAD’s other drug ponatinib. The results to date for ponatinib have been more promising and the market potential is much greater.

Talon Therapeutics (TLON.OB): This tiny biotechnology company received a pleasant surprise when an advisory committee voted 7 to 4 with 2 abstentions to recommend Marqibo for approval for the treatment of adult Philadelphia chromosome-negative acute lymphoblastic leukemia. The FDA is not required to follow this recommendation when it meets on May 13th, 2012 to decide Marqibo’s fate.

Now a look toward what is upcoming this week.

MAP Pharmaceuticals (MAPP): Monday March 26th, 2012 is when the FDA is expected to announce their decision regarding LEVADEX for acute treatment of migraine in adults. LEVADEX is a novel formulation of DHE which has been on the market for decades. LEVADEX is administer via an inhaler. The FDA has rejected medications administered via inhalers in the recent past, just ask Alexza Pharmaceuticals or MannKind. We believe that the FDA will approve LEVADEX because the efficacy data is good enough and the safety concerns regarding lung function should be decreased because LEVADEX is for acute treatment of migraines. This means that it will not be taken daily in contrast to insulin for diabetes. Also, the data show that the side effect profile including (lung related issues) is good. MAP Pharmaceuticals market capitalization stands at almost $500M with the stock at about $16 per share. Lazard Capital raised its price target to $22 on March 22nd and thinks there is a high probability of approval. If approved the shares may bounce up to over $20 a share. The company has a strong balance sheet with approximately $100M in cash so dilution should not be a concern. However, failure meeting revenue projections may bring the share price down post approval.

Affymax (AFFY): Tuesday March 27 is the PDUFA date for Affymax’s peginesatide for the treatment of anemia associated with chronic kidney disease on dialysis. If approved, peginesatide will be the first once-monthly erythropoiesis stimulating agent available for the treatment of anemia associated with chronic kidney disease patients on dialysis in the United States. In December 2011, an FDA advisory committee voted 15 to 1, with 1 abstention, that peginesatide demonstrated a favorable benefit/risk profile. A recent research note from a Citigroup analyst was very positive about the prospects about this drug. Investors have bid up the stock price in anticipation of approval beginning with the December 2011 AdComm vote. The stock sits at its 52 week high over $13 a share.

Chelsea Therapeutics (CHTP): Wednesday March 28, 2012 is the PDUFA date for NORTHERA for the treatment of symptomatic Neurogenic orthostatic hypotension. In February an advisory panel voted to recommend approval for NORTHERA in a 7-4 vote. The company has enough cash to last until the first quarter of 2013. They have a $100M shelf registration and if NORTHERA is approved the company will  dilute existing shareholders to raise money to market the drug.

Endocrinologic and Metabolic Drugs Advisory Committee Meeting -Treatment of Obesity (VVUS, ARNA, OREX): On March 28 and 29, 2012, the committee will discuss the role of cardiovascular assessment in the preapproval and postapproval settings for drugs and biologics developed for the treatment of obesity. This advisory panel will discuss cardiovascular assessment for the treatment of obesity in general, not specifically related to any one company. However, VIVUS (VVUS), Arena Pharmaceuticals (ARNA)and Orexigen Therapeutics (OREX) all are in play because the cardiovascular risks are top of mind when it comes to their potential obesity treatments. Biotech4cast member bioprophet has commented that this AdComm will be a negative for obesity treatment related stocks. We tend to agree with him. This will be two days of the FDA discussing the importance of cardiovascular assessment. What this means to biotech companies and their investors is that it is highly likely that a pre or post approval study will have to be conducted looking at cardiac function. Orexigen already has to run such a study prior to approval. If VIVUS is required to do the same this will delay the approval of Qnexa.