Just remember – it’s not a win until you’ve locked in those profits. Buying Retrophin (RTRX) when PropThink suggested going long the stock on the day it up-listed to the NASDAQ has been good for 50% (in just over a month’s time!). On Wednesday, RTRX announced the purchase of Manchester Pharmaceuticals in a $62.5M deal ($29.5M of which is paid upfront). The market rewarded the stock handsomely. Retrophin is not your average biotech. CEO Martin Shkrelli, better known for his time running the short-centric hedge fund MSMB Capital, is taking a unique approach to drug development, preferring to repurpose and re-price well-understood assets for less-understood indications. The driver of this latest deal? Chenodal, a synthetic form of a natural bile acid called chenodeoxycholic acid (CDCA), that’s currently approved for gallstones. More importantly, Chenodal isthe standard of care for cerebrotendinous xanthomatosis (CTX), a rare genetic disorder that effects the metabolism of cholesterol, though CDCA is used off-label in the indication. Retrophin plans to seek an official FDA approval in CTX and increase the price on CDCA for the 500-1000 patients believed to reside in the U.S., meaning that Chenodal could go from a ho-hum gallstones product to a $100M+ orphan drug. Furthermore, CDCA is a FXR agonist (yup, thinkIntercept Pharma (ICPT)). Investors piled in. Retrophin’s departure from the norm on Wall Street is a breath of fresh air in our book, and for now we’re comfortable betting on management’s understanding of what investors like to see. One of the company’s proprietary orphan drugs, RE-024 for PKAN, just entered its first clinical trial; preliminary results from the open-label study could be available as early as this quarter. 
On Tuesday, Cempra (CEMP) released positive results from a 48-patient study testing the effect of its lead drug candidate, solithromycin, for its impact on a key marker of heart health. The macrolide antibiotic demonstrated no negative effect on the QT interval (QTc), a marker of potential cardiovascular issues, at single intravenous doses of 800mg in the study. 800mg is nearly twice the threshold at which solithromycin has shown a therapeutic effect. PropThink wrote about Cempra in detail at the end of last year, calling it a stock to own in 2014. (Read the report here). CEMP is still an attractive buy, having come down from its 52-week highs, and we explained why the QTc results were so important (the stock jumped 10%) in a column on Wednesday. Last year we followed XenoPort (XNPT) through some ups and downs (mostly downs), drawn to the company by the potential Tecfidera me-too, XP23829 (‘829), a novel therapy for the treatment of relapsing remitting multiple sclerosis (RRMS). Tecifdera is expected to do nearly $4B in peak sales, which is what makes ‘829, a monomethyl fumarate (MMF) prodrug, an interesting asset. XNPT underperformed the booming biotech sector in 2013, but we’ve been hearing more and more about investors coming back around on this name in the last few months. PropThinker readers – who are already up 25% since we suggested the name in December – will be familiar with our interest in Alcobra (ADHD). We just released our full report, elucidating why it’s an attractive bet in 2014. There’s a caveat, however, that suggests all may not be well for the longterm investor.Own the stock? You’ll want to get the story here. We also explained this week why we weren’t particularly impressed byProgenics’ (PGNX) recent oncology data – and what it should mean for investors. Finally, Happy Valentine’s Day!
In connection with RTRX, CEMP, ADHD, and XNPT, PropThink has taken a long position.
