Our Top Stories In Healthcare This Week

Medivation (MDVN) announced on Tuesday morning that the Phase III PREVAIL study, testing Xtandi (enzalutamide) in chemotherapy-naive patients with advanced prostate cancer, was stopped early after meeting both co-primary endpoints. Investors initially took a step back as overall survival figures weren’t as compelling as Johnson & Johnson’s (JNJ) competing drug, Zytiga. PropThink suggested that the market missed the point, and by the end of the week MDVN had climbed from a low of $48.15 to $60.24. Investors who jumped in when our column went public saw an 18% gain by Friday’s close.

We expect Zalicus (ZLCS) to report results from two Phase IIa trials of the pain drug Z160, in post-herpetic neuralgia (PHN) and lumbosacral radiculopathy (LSR), around mid-November. While we’re hesitant to speculate on the outcome of the trials, and would not be involved through the event without a hedge, the run-up in ZLCS has already proven profitable for traders who got involved alongside Mr. Napodano’s Thursday article. Jason outlined his expectations for the stock if Z160 hits in both, one, or none of the current trials, and explained what each scenario means for the small company. Make no mistake, success in the two mid-stage studies would be huge for this small company – and highly profitable for investors. The stock ended the week up 23% from our alert to PropThink Premium members.

On Friday, the FDA approved Zogenix’s (ZGNX) pure hydrocodone product, Zohydro ER, for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment, and for which alternative treatment options are inadequate. After repeat signals from the FDA in 2013 (including a negative advisory panel vote on Zohydro) that opioids lacking abuse-deterrent qualities would be frowned upon at the agency, we speculated in May that the FDA would ultimately reject Zohydro ER. We were dead wrong, and ZGNX is up about 70% from the release of our bearish article.

Pfizer (PFE) is moving a head with the development of Remoxy, a novel, abuse-resistant and extended-release oral oxycodone for the management of moderate-to-severe pain. As guided previously, Pfizer doesn’t expect to resubmit the Remoxy New Drug Application to the FDA until mid-2015. The “Yes” decision was big news for Pain Therapeutics (PTIE) and Durect Corp. (DRRX) as both small companies receive robust economics on Remoxy sales. The announcement came on Tuesday, and while both stocks gapped up initially, this turned into a sell-the-news event. You can follow our previous coverage of DRRX and PTIE at PropThink.com.

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Mr. Deryugin, in a brief update on Wednesday, reiterated why he remains bullish on Enanta Pharmaceuticals (ENTA) despite weakness in the stock over the last few weeks. You can read that story here, and his full, bull thesis here.

Illumina (ILMN) is up almost 100% since PropThink started covering the name late last year. In an update on Friday, we discussed the company’s latest earnings release; outlined why the bear thesis didn’t hold up; and highlighted the company’s ongoing expansion efforts. You can catch up on the ILMN story here, but Mr. Deryugin thinks this is a core part of any long-term healthcare portfolio.

Shares of BioLife Solutions (BLFS) are up over 214% since our April report, despite a late day plunge on Friday afternoon, which still left the stock up 25% this week. There has been little in the way of concrete news from BioLife, but the company will report third quarter results in mid-November. In an August update, we suggested that the stock could hold surprise upside in the second half of this year.

In connection with MDVN, DRRX, ILMN, ENTA, ZLCS, PTIE, and BLFS, PropThink has taken a long position.