This week was dominated by a number of binary events (which we outlined on Monday), two of which played out against us; Dr. Chaudhry expected that the FDA’s oncologic advisory panel would vote in favor of AVEO and DCTH. Here’s where AVEO went awry, and next week she’ll recap the DCTH panel outcome. (P.S. the AVEO story isn’t over yet)
On Tuesday the FDA rejected Titan Pharma’s (TTNP) probuphine, hitting the stock hard. There’s some optionality with this name, and Jason Napodano laid out his theories on Wednesday.
Raptor Pharma’s Procysbi received approval from the FDA. The question now is how payers will receive its $250,000 annual price tag when a less convenient form of the drug is available for $10,000 annually. While the run-up was a great call for Mr. King (up 40% before the PDUFA), we opined to our subscribers that this might be a short following the FDA’s approval. The stock, sure enough, was down 16% at the end of the week.
Following the binary event thread, DRRX had a good week due to Pfizer mentioning Remoxy (briefly) on its 1Q conference call. The evidence suggests development continues, and we’re buyers.
Another narcotic, Zogenix’s Zohydro ER, won’t receive FDA approval says Mr. King, and he expects that the stock will tumble by 40% when it happens.
Mr. Deryugin believes that Alexion’s manufacturing scare has been mostly resolved, and that its first quarter results suggest that ALXN is still building shareholder value.
While it may have been the inverse of investors’ hopes — an acquisition as opposed to a sale — Auxilium’s CEO Adrian Adams did some strategic deal making this past month. It’s what we considered a key part of the investment thesis in AUXL, and it looks like the company is moving in a positive direction.
Vical’s leading clinical trial has gone on for two years longer than expected. That’s caused most to flee the stock, but Dr. Kotak believes that the market is undervaluing the equity, and that there’s major upside if, as he expects, the Allovectin trial reads out positively.
TSRX faced some pressure on Wednesday following chatter that a large fund was winding down its position as the firm prepared for closure. Nevertheless, this weakness is an opportunity to be acquiring shares for the long-haul.
SGYP is up 10% since we called it a “Sale that shouldn’t be missed” last week, up 19% at peak. There’s great long-term potential here based on a comparison to the closest competition, IRWD.
Mr. Napodano is keeping a close eye on Zalicus and thanks there could be a significant rally as critical data points approach in the second half of the year. In fact, he’s watching it like a hawk.
