A Recap of PropThink’s Top Trades this Week

Our open conference call with Tekmira Pharmaceuticals’ (TKMR) CEO Dr. Mark Murray on Thursday afternoon was a success on a number of fronts – participation, quality of information, and investor interest – and we thank our readers for taking the time to join the event. For those who weren’t able to make the call, we posted a recording to PropThink.com (here) and should have a transcript to accompany in the next few days.

The PropThink team has been bullish on TKMR since April of this year, and subscribers who have held the stock have seen their position appreciate by more than 90%. We reiterated our stance this week to PropThink’s Premium members, suggesting a long position in TKMR. The stock is up over 30% since Thursday morning on excitement over a potential orphan indication for a new Tekmira drug candidate. Tekmira will host its own conference call and R&D webinar this coming Tuesday; it sounds like Tekmira will offer full details on the new asset during this event. Given increasing interest in the name, we don’t believe it’s too late to take a position in TKMR, particularly ahead of the Tuesday webinar.

Shares of Vivus Pharmaceuticals (VVUS) saw a strong uptick this week with an upgrade from Cowen and reiteration from Leerink. More important was the less-publicized fact that two Vivus patent applications covering Qsymia seem to be in a condition for allowance according to the USPTO. Mr. Robert Diggs, who approaches Vivus with the skeptical eye of a former patent agent, has opined at length on Vivus and Qsymia, and captured this latest development in an update on the VivusPatent blog. While this progress is still early, patent allowance and issuance is important to Vivus’ ability to protect Qsymia from generic challengers – a point of debate among investors. While PropThink has no view on the long-term Vivus story, we suggested to PropThink Premium subscribers that they buy VVUS or calls on Wednesday morning as the news trickled out. VVUS traded as high as $11.60 this week, and we exited the trade with a 20% profit.


Also in the weight-loss realm, recall that at the end of August we wrote that we were interested in Orexigen (OREX) as the interim analysis of the LIGHT study approached; Orexigen expects the results in early December. OREX remained under pressure following Mr. King’s brief column, and this Monday the stock broke below its 200-day moving average, a key trend-line. We closed our long position at a loss alongside the break. On Thursday, Orexigen announced that a Marketing Authorization Application for Contrave, its weight-loss drug, had been submitted in Europe, and reiterated that the company expects the LIGHT results by early December. The stock had a volatile day despite this positive development, and Orexigen closed the week at $6.21, just below the 200-day MA. Although we expect increased attention in the next two months, we’ll remain on the sidelines until support holds up with consistence.

Our Alcobra (ADHD) trade, save for sparse mentions in earlier recaps, has been exclusive to PropThink Premium members. Alcobra, which IPO’d at $8.25/share in June, is an Israeli company focusing on the sizable ADHD market with lead candidate Metadoxine ER, a compound touted as a quality alternative to existing stimulants. Our editorial team first sent out our thesis on Alcobra to Premium Subscribers on July 16; the stock has appreciated more than 140% since, attributable to the company’s increasing visibility as a late-stage drug developer. Here’s what we said with our last wrap-up.

“While the completed Phase II trial looked good, we have some questions about the IP estate, and of course, trials run outside the U.S. always raise eyebrows. We’re still conducting diligence, but are cautiously optimistic about Alcobra as the company gains visibility in 2H13.”

We based our position on the lack of market awareness about Alcobra and the sexy, large-market story. We’re not interested in holding long-term until we see a defined path towards protecting Metadoxine ER, which we’ve detailed to PropThink’s Premium members.

In connection with TKMR and ADHD, PropThink has taken a long position.