These Stories Topped the List at PropThink This Week

The FDA accepted Durect’s (DRRX) New Drug Application for Posidur on Thursday, causing shares to gap up and continue higher through the day. Analysts expect Posidur’s closest competition, Pacira Pharmaceuticals’ (PCRX) Exparel, to generate $62M this year (its first full year on the market), $136M next year, and $246M in 2015. With expectations that Posidur will offer greater opioid-sparing and cost reductions over Exparel, Jason Napodano made the case on Friday that DRRX remains significantly undervalued at a market capitalization of just $100M. Most investors are focused on Remoxy and Pfizer (PFE), but Posidur is a compelling part of Durect’s portfolio in the long-run.

Stemline (STML) has been on a tear in the last month following an oversubscribed secondary offering and ASCO at the end of May. We took positions around $15.50 and have booked over 65% as investors continue to pile into the low-float stock. Here’s why we suspected it would be a mover.

Johnson and Johnson (JNJ) acquired Aragon Pharmaceuticals in a $1B deal early this week in order to add ARN-509 to its own pipeline. Medivation (MDVN) sold off on the news, as many believe 509 is the biggest threat to Xtandi. It’s not as bad as it sounds, says Mr. Deryugin, and explained why he considers any weakness a buying opportunity. Just last week, Deryugin also laid out why he’s long Pharmacyclics (PCYC) on its recent weakness.

Keryx (KERX) got some love from the sell-side this week, and it seems more investors are getting comfortable with the strength of Zerenex’s IP. Mr. King has been pounding the table on this name for some time — here’s what he said earlier this month.

An initiation from Citigroup on Monday and another initiation on Friday morning from Credit Suisse — both of which Mr. King predicted a month ago — pushed shares of Synergy Pharma (SGYP) higher this week. Price targets from the two research arms suggest SGYP should double from here. In addition, rumors floated within the social media realm that SGYP had been added to the Russell 2000 small-cap fund in its yearly reconstitution. PropThink Subscribers knew to pick up shares last Friday around $4.60, immediately after Chairman Gabriel Cerrone stepped in as a buyer in the mid-$4.00 range. SGYP remains a long-term favorite.

The Tecfidera launch has been a huge success, nevertheless some analysts have been raising concerns about its sustainability. In our view, Biogen Idec’s (BIIB) sell-off over the last month makes for a quality long-term entrance point.

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As PropThink pointed out Friday, we expected shares of Seattle Genetics (SGEN) to continue lower into this week, with a break below the $32.o0 line suggestive of a greater sell-off. SGEN ended Friday trading at just over $30, a 10% return on our note to PropThink Subscribers that we were getting short last Tuesday.

News on Friday that Amarin’s (AMRN) Phase 1 Vascepa/statin combination trial was a success caused a brief rally, but the stock sold off as weekly prescription data weren’t as robust as investors had hoped. PropThink Subscribers knew that we had initiated a small position in Amarin (AMRN) on Thursday with the expectation of a retail-driven run into the October 16th advisory panel meeting. Support at $6.25 held up by the close on Friday, but a break below will likely send AMRN to the $6.00 level.

Mr. Deryugin considers the hullabaloo over IPI-145‘s safety overblown. Read on to see why patient deaths and changing dosing regimens aren’t as onerous as they sound. Understanding that it may take patience, we’re buyers in Infinity Pharmaceuticals (INFI) at these levels.

In connection with STML, MDVN, PCYC, KERX, SGYP, BIIB, AMRN, INFI, PropThink has taken a long position. In connection with SGEN, PropThink has taken a short position.