MediciNova announced that the Investigational New Drug Application (IND) for MN-166 for treatment of glioblastoma has been accepted and is now open with the U.S. Food and Drug Administration. MediciNova was informed by the FDA that the proposed clinical investigation of MN-166 in combination with temozolomide for treatment of GBM may proceed. “We are very pleased that this important regulatory step is now completed, as we can now pursue clinical development of MN-166 in GBM, a devastating type of cancer with a high recurrence rate and very poor prognosis. As we previously reported, combination treatment of MN-166 (ibudilast) and TMZ improved survival compared to TMZ-only treatment in a GBM animal model study,” commented Yuichi Iwaki, MediciNova CEO.
Wednesday, May 9, 2018
5 Biopharma Stocks to Watch for Recovery or Continued Growth
The stock market has been volatile so far this year, and biotech stocks are right there in the middle of things. The iShares Nasdaq Biotechnology Index is down more than 4 percent and summer is a notoriously slow period for biotech. Still, there are a few stocks that have taken a beating but will probably recover, and others that appear to be on their way up with every indication of continuing.
#1. Acadia Pharmaceuticals. Headquartered in San Diego, Acadia focuses on therapeutics for central nervous system disorders. Its Nuplazid (pimavanserin) is the first and only drug approved by the U.S. Food and Drug Administration (FDA) to treat hallucinations and delusions associated with Parkinson’s disease psychosis. The drug’s hype probably forced the stock up higher than expected, but a bigger issue has been the opposite—stocks dropped 22 percent in one day after FDA commissioner Scott Gottlieb told Congress the agency would investigation the drug over 244 deaths reported between June 2016 and March 2017.
It’s unlikely the FDA will pull the drug, although any investigation is likely to have some fallout. Unfortunately, the drug is Acadia’s only product on the market, but it is still insisting that its 2018 sales guidance for the drug is $255 to $270 million. George Budwell, with The Motley Fool,wrote, “The core problem here, though, is that Acadia’s valuation is still way out of line with its peers—even after this year’s downward move.” Invest at your own risk.
#2. Celgene Corporation. In February, Celgene took a hit when the FDA issued a Refusal to File letter over its New Drug Application (NDA) for Ozanimod for multiple sclerosis. But recently, the company seemed to bounce back when it indicated it planned to resubmit in the first quarter of 2019, earlier than expected. The FDA did not require additional human trials. There would be some non-clinical bridging studies, but that would not delay another application for too long.
The company acquired Juno Therapeutics and Impact Biomedicines, and they have lead products that have potential, although are not without their own issues. Budwell writes, “Overall, the picture that’s emerging with Celgene is a company that’s losing its way to some degree. The ozanimod fiasco triggered a change in key leadership positions, and the biotech’s acquisitions of Juno and Impact appear, in hindsight, to be questionable moves at best. Valued at a mere 8.55 times forward earnings, though, Celgene stock is probably worth the risk at these levels.”
#3. Seres Therapeutics. Headquartered in Cambridge, Massachusetts, Seres is focused on developing therapies using live bacteria to treat diseases resulting from functional deficiencies in the microbiome. Analysts think its lead product candidate, SER-109, could revolutionize treatment of diseases such as inflammatory bowel disease. Mark Breidenbach, an analyst with Oppenheimer, wrote on March 8, “We rate Seres Outperform with an $18 12- to 18-month price target, based on our conviction that multiple programs in the company’s pipeline can achieve regulatory and commercial success.” In addition to inflammatory bowel disease, it is looking at ulcerative colitis (UC), and pushing into immuno-oncology with SER-401.
#4. Zynerba Pharmaceuticals. Located in Devon, Pennsylvania, Zynerba is devleoping therapies for severe rare and near-rare neuropsychiatric disorders such as Fragile X syndrome, refractory epilepsies, and Tourette Syndrome. The company recently initiated a Phase II trial of ZYN002 in patients with developmental and epileptic encephalopathies and expect to launch a pivotal trial for Fragile X syndrome.
Arlinda Lee, an analyst with Canaccord Genuity, wrote recently, “The announcement sets ZYN002 on track for topline Fragile X data next year and potential FDA approval in 2020, consistent with our published model. We reiterate our BUY rating.”
The average analyst price target is $19.21.
#5. Strongbridge Biopharma. Based in Trevose, Pennsylvania, Strongbridge is working to develop therapies for rare diseases, such as Primary Periodic Paralysis (PPP), Adult Growth Hormone Deficiency (AGHD), Cushing’s syndrome, and acromegaly. In April, the company announced that the first four patients had been dosed in its second Phase III trial of Recorlev (levoketoconazole) for the treatment of endogenous Cushing’s syndrome. The company already has two commercial products, Keveyis for PPP and Macrilen for AGHD. Andrew Fein, an analyst with HC Wainwright, wrote, “We continue to believe that the strong revenue guidance of Keveyis ($16 to $19 million) for full year 2018 versus $7 million record in 2017 (nine months since launch), signals management’s high confidence level around Keveyis’ market growth.”
4 Big Pharma Biotech Accelerators: Investing in Innovation
A biotech accelerator is not exactly the same thing as a biotech incubator, although they’re often used interchangeably. Theoretically, an “incubator” provides research facilities, services and consulting. An “accelerator,” does more or less the same thing, but is supposed to “accelerate” startups from concept to company, often through a boot camp-like program.
RebelBio wrote last year, “Bio-incubators collect the rent and make sure the gas (nitrogen, CO2) is turned on. If they are good, they will provide some core lab facilities. Obviously, if you need lab space and it’s going at the right price, then it’s a valuable facility. They don’t incubate. In fact, some are more like refrigerators: they’ll preserve your company for a while but, if you spend too long there, you’ll remain in stasis or even decline.”
For the sake of this article, both will just be called accelerators with a definition of: a private or public entity designed to support the growth and development of startup biotech companies with facilities, equipment and consultative services. It should be emphasized that in some areas, such as Europe, there is a clear distinction between incubators and accelerators.
Some accelerators come out of government and academic institutions, while others have specific big pharma backing. Many use a combination of all of the above, while some are private in nature linked to venture capital firms. Let’s look at some of the accelerators linked to big pharma.
- JLABS. JABS is part of Johnson & Johnson Innovation, and is called a “global network of open innovation ecosystems, enabling and empowering innovators to create and accelerate the delivery of life-saving, life-enhancing health and wellness solutions to patients around the world.”
On February 8, 2018, Belgium-based JLINX incubator, a collaboration between Janssen Pharmaceutica NV and Bioqube Ventures launched in March 2016, became part of the J&J Innovation network, transitioning into a JLABS. That became the first JLABS in Europe and the 10th in the world. It will accommodate up to 30 life science startups and is located at the heart of the Beerse Janssen R&D Campus.
- Bayer’s Grants4Apps. Germany-based Bayer founded Grants4Apps in 2013, originally to provide grants to innovative healthcare apps. Now the program has expanded to assist life science and health care startups grow. It operates in over 13 countries, and also has programs such as G4A Accelerator. (In Europe, there is a more nuanced distinction between accelerators and incubators than in the U.S.).
To date, it has supported more than fifty startups and invested 900,000 euros. It provides workspace, mentorship, meetups and networking, access to Bayer experts, financial awards, promotion, partnerships, and a Dealmaker and Generator program for mature companies.
It launched its G4A program in the U.S. in 2017.
- AstraZeneca Incubator. AstraZeneca Incubator offers free access to its modern drug discovery labs and other onsite facilities, in addition to access to scientific and business development mentoring. It is particularly interested in companies working on therapeutics in oncology, cardiovascular, metabolic, respiratory, inflammation or autoimmune diseases, or neuroscience. The sites are at their facilities at 35 Gatehouse Drive in Waltham, Massachusetts. It offers about 12,000 to 35,000 rental square feet of available laboratory and office facilities.
Earlier this year, AstraZeneca supported the launch of a new bio-incubator and life science accelerator, Accelerate@Babraham in Cambridge, UK, along with One Nucleus and RxCelerate.
- Illumina Accelerator. Illumina, the leader in developing gene sequencers, has Illumina Accelerator, which offers mentorship, financial support, and access to sequencing systems, reagents and lab space. It has a six-month funding cycle, and offers access to its $40 million Illumina Accelerator Boost Capital via partners at Viking Global Investors, a subscription to BaseSpace Correlation Engine and BaseSpace Cohort Analyzer and other genomic sequencing tools, coaching and a fully equipped lab and office space in the San Francisco Bay Area.
Companies part of the Illumina Accelerator include Biome Makers, Boost Biomers, Checkerspot, Chimera Bioengineering, Haystack Sciences and Resilient Biotics.
Mylan May Be Gem in Rough Generic Sector
Generic drug companies like Mylan have been out of favor with investors for several years. It might finally be time to bet on a turnaround.
Mylan, which reported first-quarter sales of $2.7 billion and adjusted earnings of $0.96 a share on Wednesday morning, looks especially interesting. Those figures, down 1% and up 3% from a year earlier, respectively, were hardly spectacular.
But its shares were 4% higher Wednesday because those numbers start to look a little better when one considers the backdrop. Mylan shares are down by about 15% so far this year and 50% from their 2015 peak. EpiPen revenues have been in decline ever since the 2016 pricing scandal. Mylan’s headquarters were raided later that year by the Federal Bureau of Investigation as part of an investigation throughout the industry into generic drug price collusion.
Wednesday’s results didn’t resolve every problem the company and industry face. First-quarter earnings calls from rivals like Teva Pharmaceutical Industries and Novartis haven’t given any indication that U.S. pricing pressure is easing.
That prolonged slump in generic drug prices continues to weigh on Mylan’s income statement: North American sales were down 19% from a year ago, though Mylan blamed falling EpiPen sales and other one-time factors. Moves to diversify Mylan’s geographic reach, like the 2016 acquisition of Swedish drug company Meda, are paying off. First-quarter European sales grew by 16%.
And, while nobody knows when the U.S. pricing environment will improve, stock markets are forward looking; the stock is likely to rally before results improve, not after.
An investment in Mylan has a nice margin of safety in absolute and relative terms. Its debt adjusted market value is less than eight times forward earnings before interest, taxes, depreciation and amortization. By contrast, Teva fetches more than 10 times and Mylan traded north of 14 times back in 2015.
Major product launches for generic versions of blockbuster brands might be in Mylan’s near-term future. The Food and Drug Administration is set to rule next month on Mylan’s applications to sell a generic version of the asthma blockbuster Advair and a biosimilar version of cancer drug Neulasta.
Mylan has a chance to have the first version of each hit the market, which carries advantages like favorable pricing and a six-month window of exclusivity. Those drugs combined for more than $8 billion in world-wide revenues last year.
After a long wait for good news, capturing even a small part of those sales would brighten Mylan’s outlook in a hurry.
Evelo IPO opens flat
Wednesday’s IPO for Evelo Biosciences, Inc. (NASDAQ: EVLO) opened for trading at $16 after pricing 5,312,500 shares of common stock at a public offering price of $16.00 per share, before underwriting discounts and commissions.
In addition, Evelo has granted the underwriters a 30-day option to purchase up to an additional 796,875 shares of common stock at the initial public offering price, less the underwriting discounts and commissions, to cover over-allotments, if any.
Morgan Stanley, Cowen and BMO Capital Markets are acting as book-running managers for the offering. JMP Securities is acting as lead manager for the offering.
Evelo Biosciences is dedicated to improving the lives of patients globally through the development of a new modality of medicines – monoclonal microbials. Evelo’s monoclonal microbial product candidates are orally delivered and are intended to modulate systemic immunology and biology through direct interactions with human cells in the gut. Evelo believes they have the potential to be broadly applicable across many diseases – including autoimmune, immunoinflammatory, metabolic, neurological, neuroinflammatory diseases and cancer. Monoclonal microbials have the potential to fundamentally change traditional models of drug discovery and development. By finding and selecting naturally occurring monoclonal microbials with defined therapeutic effects, Evelo is focused on improving the speed, cost and success of drug discovery and development. Evelo’s platform targets pharmacological intervention at all stages of disease with naturally occurring monoclonal microbials, which Evelo believes will be safe and effective. Evelo Biosciences was conceived and created within VentureLabs®, Flagship Pioneering’s institutional innovation foundry and launched by Flagship in 2015.
Morgan Stanley Turns Bearish On Ironwood, Lowers Linzess Sales Estimate
Commercial stage biopharma company Ironwood Pharmaceuticals, Inc. IRWD 4.52%‘s Linzess, which it markets along with Allergan plc AGN 1.72% in the U.S., is a major revenue earner for the company. In the first quarter, Ironwood received roughly 89 percent of its total revenues from its share of Linzess sales in the U.S.
Linzess is indicated to treat adults with irritable bowel syndrome with constipation or or chronic idiopathic constipation.
The Analyst
Morgan Stanley analyst David Lebowitz downgraded shares of Ironwood from Equal-weight to Underweight and lowered the price target from $15 to $13.
The Thesis
Linzess, although a steady grower for Ironwood, poses risk in the form of challenges to its long-term target, Lebowitz said in a Wednesday morning note. (See the analyst’s track record here.)
The company targets U.S. Linzess net sales of $1 billion in 2020, which would require a 12-percent growth rate. In Q1, Linzess sales were up only 8 percent, the analyst said.
Morgan Stanley lowered its 2020 U.S. Linzess net sales estimate from $1.1 billion to $985 million.
Despite patent settlements reached by Ironwood, Lebowitz expects generic competition, once the composition of matter patent expires in the U.S. in 2026.
Ironwood shares have ran up ahead of fundamentals in reaction to activist Sarissa Capital’s plan to nominate its CIO to the board, Lebowitz said.
“Furthermore, though the company has multiple mid-to-late stage pipeline products, we are not yet comfortable enough with them to incorporate into our valuation.”
Lipocine Hit As FDA Rejects Testosterone Replacement Therapy 2nd Time
Shares of Utah-based Lipocine, Inc. are down more than 41 percent in premarket trading after the company announced it received a second Complete Response Letter from the U.S. Food and Drug Administration (FDA) for its testosterone replacement therapy product.
The FDA had previously rejected Lipocine’s Tlando in 2016 and the company resubmitted its New Drug Application last year following concerns over dosing algorithms. The latest CRL issued by the FDA was no surprise following the overwhelming rejection of an advisory committee earlier this year. In January the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee voted 13 to 6 against the benefit/risk profile for Tlando.
This morning Salt Lake City-based Lipocine said the latest CRO identified four deficiencies in the company’s New Drug Application for Tlando. Those deficiencies include determining the extent, if any, that ex vivo conversion of testosterone undecanoate to testosterone in serum blood collection tubes to confirm the reliability of T data. The company has been asked to obtain definitive evidence through an ambulatory blood pressure monitoring study whether or not Tlando causes a clinically meaningful increase in blood pressure in hypogonadal men. Another deficiency the company has been asked to address the reliability of Cmax data. Once that is done Lipocine has been tasked with providing justification for non-applicability of the agreed-upon and prespecified Cmax secondary endpoints for Tlando. The fourth identified deficiency is determining the appropriate stopping criteria that can “reproducibly and accurately identify those patients who should discontinue use of Tlando.”
The CRL also identified additional comments that are not considered approvability issues, the company said. What those additional comments are were not disclosed.
Mahesh Patel, president and chief executive officer of Lipocine, said the company is disappointed by the Complete Response Letter. He said the deficiencies identified in the CRL were within the company’s expectations following a Jan. 10 meeting with the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee.
“We are assessing the content of the CRL, including the information that may be needed to resolve the deficiencies. We remain committed to work with the FDA to bring Tlando to patients,” Patel said in a statement.
Now the company will have to request a meeting with the FDA to further evaluate the deficiencies raised and work on a plan that will allow the company to have a second shot on goal.
Tlando is an oral testosterone candidate developed for testosterone replacement therapy in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism.
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