Great news for longtime PropThink readers on Monday morning – BioDelivery Sciences (BDSI) announced positive results from the second of two phase 3 studies testing BEMA-Buprenorphine in chronic pain sufferers. The announcement took the stock up 20%, and BDSI ended the week at $14.02, +190% since PropThink first suggested owning the equity. Those who’ve been following our research beginning last December knew that we were optimistic about the first late-stage trial of BEMA-Buprenorphine, which was completed this January, as well as this second value-driving event – both were key to the 2014 story. BioDelivery Sciences and partnerEndo International (ENDP) now head to the FDA for approval. Read more.
Pst, ENDP was a 100% winner for PropThink last year.
Last week when Agenus (AGEN) shares spiked to $4.00 we explained why the rally may be short-lived. AGEN released updated results from a study of the cancer vaccine Prophage in glioblastome multiforme, and the stock rocketed more than 15% when the markets opened. However, AGEN roundtripped back to $3.25 this week as the market digested the fact that the Prophage results were little more than a re-hash of old news. Understanding that twice before Agenus had press released similar results, and thatboth times (in May and September of 2013) the rally didn’t last, investors who got short the stock on the spike saw a 19% return in just a few days.
When the Prophage results hit, it didn’t take long to confirm what we suspected – that these data were largely factored into the stock in 2013, not another inflection point for the company. Sure enough, the market realized this within a few hours and the stock fell through the trading session and into this week.
In biotech, where it’s easy to write a compelling headline and a sexy press release, knowing where a company has been is crucial to quick decision-making. Buying AGEN on what appeared to be very good news would have been a losing trade. The flipside – shorting a twice-failed rally on these updates survival figures – made for a decent short-term play.
There’s more to the Agenus story than Prophage, but it’s not a story on which we’ve opined at length. However, you can see all of our fundamental research and trade ideas with a subscription to our Premium trade service. We deliver actionable ideas on small-cap healthcare stocks, right to your inbox. Try it, for 50% off, now.
Following a meeting with the FDA, Synergy Pharmaceuticals (SGYP) plans this year to begin two pivotal studies of its lead drug candidate in Irritable Bowel Syndrome with Constipation (IBS-C). The stock fell on Tuesday when Synergy made the announcement, in-part because the 2100-patient clinical program will be expensive (though size should come as no surprise to investors), and broad market weakness. The company is already running two large phase 3 studies of plecanatide in Chronic Idiopathic Constipation (CIC). Synergy ended the first quarter of 2014 with $70.6 million in cash & equivalents and has access to an additional $48.6 million through an equity financing agreement with Cantor Fitzgerald. Synergy is just fine into 2015, but investors are forward looking and anticipate a financing next year. We’ve been long-time SGYP bulls; the size (and implied expense) of these trials comes as so surprise, and we’re now looking to year-end for the company’s next value-driving event in the form of clinical data for another pipeline candidate.
Lexicon Pharmaceuticals (LXRX) announced this week that it will partner with JDRF (a diabetes research foundation) for a phase 2 study of LX4211 in Type 1 Diabetes(T1D). Lexicon has been seeking a partner to fund phase 3 studies of LX4211 in Type 2 Diabetes for some time, to no avail, and the partnership headline this week caused some initial excitement. Lexicon has said repeatedly that they will not move into phase 3 without a partner for T2D, critical because of the expected size and expense of this program. Lexicon is low on cash, which we explained in the column, and investors’ top priority is seeing some non-dilutive financing in the form of a partnership. So far, that has yet to materialize.
For more news commentary, read:
“Anacor and Valeant Go Head-to-Head With Newly Approved AntiFungals“
