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QLT Inc. (QLTI) on November 20 announced a strategic review and plans for moving forward the orphan drug QLT09100. Early that day in an alrt to PropThink Premium subscribers, PropThink briefly profiled the Canadian company, noting the stock’s abnormal volume on a news-less day and indicating our long position based on the technicals. Our buy was well-timed, but our follow-on article suggesting a long position on the strategic news has also proven fortuitous – QLTI is up 15% as investors have appreciated this management team’s dedication to shareholders. Given that the strategic review has yet to produce an event, and that the company will have some meaningful catalysts early next year, we remain long QLTI.
While AcelRx (ACRX) has pulled back in the last week, our purchase and note to PropThink Premium subscribers on October 31 was well-timed. ACRX is up 30% following continued buying by biotech-focused hedge fund, Perceptive Advisors, during the first week of November. Mr. Deryugin offered his investment thesis on AcelRx, available to PropThink Premium subscribers, on the 19th.
In early November Mr. King outlined why he believed Zogenix (ZGNX) was due for a move higher. A newly approved opioid asset, an existing and growing migraine franchise, and $300 million in net operating loss carry-forwards suggested that one way or another, Zogenix wouldn’t stay cheap for long. ZGNX is up almost 25% since our recommendation.
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Questcor Pharmaceuticals (QCOR) has come back into the spotlight. Citron Research has been making an expose of the company’s questionable sales practices, highlighting a number of ongoing government investigations and bringing a few new components to the bear case to light in the process. QCOR was a major win for PropThink this year. Following a tremendous drop in share price last summer, PropThink suggested going long the stock. In the year since, our original purchase nearly tripled in value, but as the regulatory investigations continued to heat up, we suggested selling the stock on October 30. We believe the risks to this story are just too great to ignore.
In a note to PropThink Premium subscribers on Tuesday, Mr. Deryugin highlighted why we own Biodelivery Sciences (BDSI) and are optimistic about 2014. BioDelivery has crafted a solid pain franchise with a defined commercial opportunity for Bunavail, BEMA-Buprenorphine, and clonidine. The company recently filed a shelf registration, signaling a possible financing in the near-term, but we’d rather own the stock now, with powder dry for addition. Mr. Deryugin outlined a few scenarios in the column, including some thoughts on why BDSI may not need to sell equity at all.
Mr. Napodano outlined the Durect (DRRX) bull case (here) in early November following the company’s third quarter earnings. Although he’s split on the FDA’s approval decision on Posidur early next year, the stock still appears undervalued on a risk-adjusted basis due primarily to the market opportunity for Remoxy, Pfizer’s (PFE) abuse-deterrent oxycodone product. If Posidur meets a complete response letter on its February 12 PDUFA date, Mr. Napodano believes that the company can quickly move forward with a new phase 3 study in 2014 and re-file the following year. Either way, the stock has made a nice move since this summer: up almost 100% from lows around $0.80.
Beth Senko, a newcomer to the PropThink team, took another look this week at Teva Pharmaceuticals (TEVA) and the legacy that former CEO Jeremy Levin leaves behind. Levin stepped down at the end of October after a year-and-a-half on the job. The challenge now will be whether Levin’s well-articulated “string of pearls” program will get the resources needed to succeed from a company facing the loss of a significant product and potential difficulty attracting a new CEO.
In connection with BDSI, QLTI, ACRX, and ZGNX, PropThink has taken a long position.
