Darapladib failed two mid-stage studies in 2008, yet GlaxoSmithKline (GSK) moved the cardiovascular drug into Phase III trials nonetheless. While most investors consider the large Phase III program a long shot, a nano-cap diagnostic developer, diaDexus Inc. (DDXS), offers an interesting and advantageous way to be involved in the upcoming trial read outs, final arbitration as to whether darapladib becomes the next major cardiovascular asset.
On July 2, Achillion (ACHN) revealed that the FDA was putting a hold on one of its early clinical trials, sending the stock down by 25%. Mr. King called the move an overreaction given the small subset of the HCV market that the halt might ultimately affect. We bought stock on the dip, and ACHN has bounced back 12% so far .
Shares of Durect Corp. (DRRX) took off over the two weeks following our suggestion that the stock was attractive considering the full pipeline — up 25% as investors get in ahead of another Pfizer (PFE) earnings call and potential Remoxy update. In addition, we pointed out to PropThink Premium subscribers at the beginning of the week that Pain Therapeutics (PTIE) had yet to participate in the rally, but would likely make a move. PTIE ended the week up 10%. Pfizer’s earnings call is on the 30th of this month.
Potential patent infringement issues and limited clinical data had us hesitant about Synageva (GEVA) late last year. With these overhangs removed in the second quarter, we wrote two weeks ago that the orphan drug developer had gotten far more attractive. The stock closed Friday up 10% since our recommendation, although we’re involved for the long haul.
We’ve been involved in Questcor (QCOR) since immediately after the stock tanked last year with the misperceived Aetna update. However we reiterated yet again this week, the second time in a month, that the stock was undervalued given Acthar’s growth potential. The company is expanding into pulmonary sarcoidosis, yet another on-label indication with Acthar Gel. Buying when we did would have doubled your money.
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PropThink Subscribers knew we were shorting Mallinckrodt (MNK) Thursday morning as another generic Concerta was approved and pressured the stock. The Covidien (COV) spin-off listed on the NYSE at the beginning of July and had set up a textbook descending triangle by the end of the week.
Amarin (AMRN) raised cash this week at a hefty discount to market. While we were premature on our entrance point last month (albeit a small position), we continue to watch as the stock breaks down. AMRN gets more and more interesting the cheaper it gets, particularly with a significant pre-2010 gap that wants filled all the way to ~$3.50.
BioDelivery Sciences (BDSI) avoided shareholder dilution while firming up the balance sheet this week with the creation of a new $20M loan facility. BDSI has a number of developmental inflection points approaching and is now capitalized (prudently in our view) to reach these value-driving events. We like the stock for the long haul. Read why here.
Acorda Therapeutics (ACOR), says Mr. Deryugin, is going through a period of change as generic versions of Zanaflex have taken their toll on the stock. Now, it’s all about franchise expansions, and Mr. Deryugin believes the company is making real progress towards a record-setting 2015.
In connection with DDXS, ACHN, AMRN, PTIE, QCOR, AMRN and BDSI, PropThink has taken a long position.
