We ended the week with some commentary based largely on the strength observed in recent biotech stocks immediately following financings. It’s the momentum behind recent secondary offerings – see Inovio Pharmaceuticals (INO) and Nektar Therapeutics (NKTR) , which returned 27% and 20%, respectively, following offerings – that underlies our interest in Synageva (GEVA); on Thursday morning, the company priced a 2 million secondary offering. Synageva is a long-time Wall Street darling and has some key catalysts in the second half, though we admit the valuation is stretched – GEVA is up 63% YTD to a $3.2B valuation.
Unfortunately, we were stopped out of the trade as the sector went south at the end of the week. Our entrance was clearly premature, but we continue to keep tabs on this orphan drug developer.
On the same note, we’ve seen support step into Neptune BioResources (NEPT) since the company’s disappointing financing last week – NEPT traded as high as $3.46 before the company priced a secondary at $2.50(!), quite an ugly discount. We remain optimistic about NEPT in 2014 – you can sign up for PropThink Premium and read why here.
Early in the week we revisited Durect Corp. (DRRX), which took a beating with the receipt of a Complete Response Letter from the FDA in February. The FDA rejected POSIDUR (SABER-Bupivacaine) as a treatment for post-operative pain relief based on a paucity of data comparing POSIDUR to an active control like bupivacaine HCl. The basis of the CRL was a bit of a surprise, but we believe that the issues are addressable. More important for investors, DRRX should have more information related to Remoxy, an extended release formulation of oxycodone, from partner Pfizer (PFE) around mid-year. Remoxy royalties represent a significant opportunity for DRRX, and good news on two small studies being run by the larger company this summer will be big for the smaller stock. Ultimately at a $170 million valuation, the market’s not giving DRRX much credit for its pipeline. In our article (linked above) we outlined where we think the stock can go.
It seems that investors may not have long to wait for some much-anticipated news out of Sarepta Therapeutics (SRPT). A meeting with the FDA tentatively scheduled for February was pushed back to March, though as of last week the meeting had not yet been scheduled. The FDA has continued to request additional information since meetings last November, which many take as an indication that a shot at accelerated approval is not entirely lost. With a new meeting likely in the next 30 days, investors could be privy to an update within the month. Consider this: is FDA really obligated to advise SRPT on filing for accelerated approval? What if they leave it open-ended? On Monday, we discussed SRPT’s FY2013 results in more detail.
