as part of our
To begin this week, I list four bio-pharma companies I feel have
significant catalyst trade upside potential. What exactly is a
catalyst trade you might be asking?
a catalyst is defined as news or information that changes a pricing
trend in a security.
"Catalysts can drive an investment up or down. A favorable event
can push a stock to new heights, but if events turn sour, the exit
for these shares can be very narrow and very crowded.
Let's take the example of a classic investment catalyst: adverse
press publicity. A fundamentally strong company can get unfairly
beaten up by the press and by analysts, driving down its stock
price to unjustified lows. In this case, the catalyst would signal
a great opportunity for investors to buy, not sell.
can change the perception of a security. They can be almost
anything: earnings releases, favorable or unfavorable economic
reports, management changes, new products, product recalls,
successful (or unsuccessful) marketing campaigns, lawsuits,
Quite often, catalysts are the news or events that finally call
attention to fundamentals or other intrinsic factors that have
existed for some time in a security. When investors can identify
what events or information will be catalysts for a particular
security, they essentially are able to predict which way the
security will go if and when the information becomes public
In biopharma, catalyst events include, but are not limited to
such events as; anticipated drug approvals, Phase clinical data
releases, New Drug Application (NDA) filings, and anticipated
Let's take a look at the companies I feel have significant
catalysts coming up that also have nice chart set-ups, which
indicate higher stock prices can be expected in the short term.
Pozen plans on filing an NDA in April for PA32540, which
according to Pozen's website:
PA32540 is a coordinated-delivery tablet combining
immediate-release omeprazole (40 mg), a proton pump inhibitor
(PPI), layered around pH-sensitive enteric-coated aspirin (325 mg).
This novel, patented product candidate is administered orally once
a day and will be indicated for use for the secondary prevention of
cardiovascular disease in patients at risk for aspirin-associated
gastric ulcers. Pozen has completed two pivotal Phase III trials,
and a long-term, open-label safety trial for secondary
cardiovascular disease prevention was completed in 2011. Top-line
results were announced in March 2012 and presented at both ACG and
AHA in October and November 2012, respectively.
According to well respected analyst Jason Napodano, the company
has also clearly indicated that it wants a partnership deal in
place before it files the NDA in April - further adding catalyst
trade value here.
Jason also remarks that he sees this particular PA drug as a
$400M opportunity for the company. I agree with Jason, and also
feel the potential for other products in the company's pipeline add
additional speculation value.
The chart seems to indicate to me that traders are beginning to
get into position to take advantage of the potential catalyst trade
The chart shows me that the stock might be poised to make
another run near its 52 week high of $8.12. This is a strong chart
in my opinion and set up nicely to reverse its down trend following
its first run to its 52 week high. The first point of resistance
should be around $6.50, the second resistance point $7.30, then
finally, the third resistance point near its 52 week high of $8.00.
The near term NDA filing plus any announcement of a partnership
deal beforehand for this particular PA drug should see the stock
Interim results are expected this quarter for the company's much
maligned drug, Perifosine, being studied for the treatment of
multiple myeloma. An independent committee will analyze the results
and give a recommendation whether or not the company should
continue development of the drug or not.
On April 2nd, 2012,
announced that Perifosine failed its Phase III trial for the
treatment of colon cancer. Keryx licensed Perifosine from Aeterna,
and after the failure, returned the drug back to Aeterna. Since
then, both companies have gone in polar opposite directions as
Keryx recently announced positive data for its Phase III drug
Zerenex, designed to treat chronic kidney disease. Keryx recently
hit a 52 week high of $9.98 on January 31st. On a side note,
investors might want to take a hard look at Keryx moving forward.
Keryx could end up being a great success story in the making for
some time to come.
For Aeterna however, after the Perifosine failure its shares
plummeted to a 52 week low of $1.75 (adjusted from a 1:6 reverse
split, actual 52 week low was $0.29). The company had to engage in
a reverse split and financing just to stay afloat.
Is there hope this time around for Perifosine? Can Aeterna be a
turn-around story like its former partner Keryx? Only time will
tell but catalyst traders seem to think so according to my read of
the charts. Let's take a look:
After being beaten down for some time, the stock is looking to
turn the corner and rebound. There has been forming an up channel
leading into the data results. I expect this trend to continue as
it begins to trade near its older range prior to the second gap
down shown in the chart above.
A green light for Aeterna to move forward with Perifosine would
be major good news for the company, but a recommendation from the
independent committee to end the drug's trial would be a
devastating blow that the company would have a hard time recovering
from. The chart above does seem to indicate that traders are buying
Aeterna, so I do expect the stock to see some nice short term
upside gains before the catalyst event here. However, please use
caution with this trade since negative news would mean a stock
price collapse as mentioned above.
Results from the company's Palifosfamide phase III study for the
treatment of sarcoma are expected at the end of the current
According to the company's website:
"Palifosfamide belongs to a group of chemotherapy drugs called
alkylating agents, which halt tumor growth by binding to cancer
cell DNA and interfering with its function. Alkylating agents have
demonstrated activity in a wide range of solid tumors and
hematologic cancer. Palifosfamide was rationally designed to confer
similar efficacy compared to in-class agents, with significantly
Palifosfamide has shown promise as a treatment for cancers with
increased levels of aldehyde dehydrogenase (ALDH), an enzyme though
to confer cancer stem cell-like activity and therefore resistance
to treatment, particularly treatment with alkylating agents. High
levels of ALDH have also been associated with worse prognoses and
poor clinical outcomes in cancer patients."
If the data release is positive for Palifosfamide, the stock
would rally massively. Any treatment that is shown to successfully
treat sarcomas is a huge deal.
What are the chances here of a positive Phase III result? Well,
according to Adam Feuerstein, roughly 17% using his
"Feuerstein-Ratain Rule." According to Adam:
"First, a reminder about the Feuerstein-Ratain (F-R) Rule:
University of Chicago oncologist and professor Dr. Mark Ratain and
I examined 59 phase III clinical trials of cancer drugs going back
10 years. We found companies with micro-cap market valuations (i.e.
market caps less than $300 million) had no chance - 0% - of
producing positive phase III results."
Adam goes on to make a logical point about his rule:
"The logic behind the F-R Rule borrows a bit from Occam's Razor.
Good cancer drugs are scarce and valuable commodities, and
potential Big Pharma partners and institutional investors are
forever scouting for opportunities to buy, license or invest in
companies with drugs that have a high probability of success. Said
another way, there are very few, if any, cancer drugs that come out
of nowhere to be big sellers."
The above is solid logic, but as we get closer to Obama Care
being enacted in full, along with the 2011 directive issued by the
Obama Administration to the FDA, I feel we will see more smaller
pharmas begin to break Adam's and Dr. Ratain's rule trend. However,
this doesn't mean one should ignore the Feuerstein-Ratain Rule;
just consider it in its proper perspective.
Let's take a look at the chart to gage how traders are feeling
about Ziop's stock:
After a significant fall, the stock has finally found support at
the $3.80 level, which looks to be a launching point to propel the
stock back to the $4.75 resistance area. The rounding pattern seen
above that it is forming in the chart above certainly seems to
Considering the chart above, it appears it is setup for Ziop's
stock to run a bit into the end of this quarter, when the data
release is expected.
is expecting a Prescription Drug User Fee Act (PDUFA) date of
February 24th for its hepatitis B vaccine Heplisav. Basically, this
means the FDA will decide on or before this date whether or not to
approve the drug.
Hepatitis B is an infectious inflammatory illness of the liver
caused by the hepatitis B virus (HBV). The disease has caused
epidemics in parts of Asia and Africa, and it is endemic in China.
About a third of the world population has been infected at one
point in their lives, including 350 million who are chronic
Needless to say, the market is large for a drug like Heplisav.
Many biotech analysts and writers believe the drug will be
approved. The real question is whether or not the FDA will place
certain restrictions on the drug, such as patient age and dosing
restrictions. Also worth considering is last November's advisory
on the drug, which was 5-8 against. This prompted Jeffries to lower
its price target from $6 to $5, with the analyst firm still rating
the stock a buy.
Let's take a look at the chart to get an indication on where
Dynavax's price might be heading towards:
After the company received the 5-8 safety vote against Heplisav,
the stock took a beating, but now appears to be making a nice come
back. If the stock moves past the final resistance trendline it
should test $3.45 with no issues. If the price can break the $3.45
range on volume, it should be clear sailing back upwards to fill
the huge gap.
Disclaimer: This article is intended for informational and
entertainment use only, and should not be construed as professional
investment advice. They are my opinions only. Trading stocks is
risky - always be sure to know and understand your risk tolerance.
You can incur substantial financial losses in any trade or
investment. Always do your own due diligence before buying and
selling any stock, and/or consult with a licensed financial