Submitted by Scott Matusow
using our
Trefis Contributors
tool.
The following 5 biotech companies have strong catalysts and/or
strong chart signals that indicate a trade to the long side could
be in order. With the current choppy markets, opportunities for
long trades are few and far between. I will give specifics for each
company on why I believe they should provide a nice upside
gain.
BSD Medical (
BSDM
)
develops, manufactures, markets, and services systems to treat
cancer and diseases using heat therapy delivered via focused
radiofrequency and microwave energy. The company develops
technology and products for thermal ablation and hyperthermia
cancer therapy through various techniques, which include thermal
ablation that ablates soft tissues at high temperatures through
focused microwave energy.
The current options for cancer patients include the
following:
- Surgery
- Ablation
- External Radiation
- Systemic Chemotherapy
- Embolization (chemo/radio)
With the use of BSD's ablation technology, cancer patients have
the opportunity for a non-invasive alternative to open surgery.
Because it is non-invasive, complications such as infection,
swelling, and fluid accumulation can be avoided. BSD ablation tech
can cut down on, or eliminate 4 of the above current cancer
treatments.
BSD's MicroThermX Microwave Ablation System (MicroThermX) is a
compact, mobile, state-of-the-art, proprietary system that includes
a microwave generator, single-patient-use disposable antennas, and
a thermistor-based temperature monitoring system. The innovative
design of the MicroThermX is the first of its kind that allows
delivery of higher power levels using a single generator. The
MicroThermX utilizes innovative, patented, synchronous phased array
microwave delivery technology that was developed by the
company.
This microwave technology provides larger and more uniform size
of ablations during a single procedure. The MicroThermX introduces
into the product line an innovative disposable antenna (SynchroWave
antenna). Up to three SynchroWave antennas are used in each
ablation treatment, which will provide a significant ongoing
revenue stream after the sale of the system. This antenna gives BSD
the ability to treat smaller tumors in the liver, lung, kidney, and
other areas. The soft tissue ablation world market potential is
estimated to exceed $2.3 billion.
An upcoming catalyst for BSD is an earnings call scheduled for
this Monday, November 12th. The company
recently reported
significant growth of MicroThermX microwave ablation system sales
and equipment utilization. The report notes a 391% increase in
sales for the MicroThermX product line for September 2012, as
compared to September 2011. Because of this, I think it's likely
that the earnings will be a positive surprise to investors.
Let's take a look at the chart and see what it has to say:
(click to enlarge)
The chart above shows a nice pennant formation occurring with a
symmetrical wedged triangle. This stock has a good chance to break
above $2.50 in the very short term - if it gets good volume.
Sarepta Therapeutics, Inc. (
SRPT
)
focuses on the discovery and development of RNA-based therapeutics
for the treatment of serious and life-threatening rare and
infectious diseases. Its lead clinical candidate is Eteplirsen,
which is in Phase 2 clinical stage for the treatment of Duchenne
muscular dystrophy. The company is also developing treatments that
are in Phase I clinical trials for infectious diseases, including
AVI-7537 for Ebola virus; AVI-7288 for Marburg virus; and AVI-7100
for influenza. Its pre-clinical products comprise Exon 45 PMO and
Exon 50 PMO, which are used for the treatment of duchenne muscular
dystrophy.
On 10/3/12, Sarepta announced that it received positive phase
IIb clinical data for its Duchenne muscular dystrophy (
DMD
) drug eteplirsen. Sarepta said eteplirsen slowed the progress of
the disease and increased patients' levels of the protein
dystrophin in an extension of a midstage trial. Low levels of that
protein are the cause of Duchenne muscular dystrophy. The stock
exploded from a prior day's closing price of $14.99 to an intra-day
high the next trading session of $45.00.
The stock has since pulled back, trading in near $22 a share
currently.
DMD is one of the most common fatal genetic disorders to affect
children around the world. Approximately one in every 3,500 boys
worldwide is affected with DMD. Girls are rarely affected by the
disorder. DMD is a devastating and incurable muscle-wasting disease
associated with specific inborn errors in the gene that codes for
dystrophin, a protein that plays a key structural role in muscle
fiber function. Symptoms usually appear in children by age three.
Progressive muscle weakness of the legs and pelvis eventually
spreads to the arms, neck, and other areas. By age 10, braces may
be required for walking, and most patients require full-time use of
a wheelchair by age 12.
Eventually, this progresses to complete paralysis and increasing
difficulty in breathing due to respiratory muscle dysfunction
requiring ventilatory support, and cardiac muscle dysfunction
leading to heart failure. The condition is terminal, and death
usually occurs before the age of 30. The outpatient cost of care
for a non-ambulatory DMD patient is very high. There is currently
no cure for DMD, but for the first time ever there are promising
therapies in, or moving into, development. Any positive news on the
advancement of this drug and Sarepta stock is back to the races -
so to speak.
(click to enlarge)
The chart above shows us that Sarepta has retraced back to its
original uptrend line, after the huge gap up from a few weeks ago.
In my opinion, we are at a pivot point for the stock, and all
indications seem to point to the uptrend continuing from around its
current price.
Amicus Therapeutics, Inc. (
FOLD
)
focuses on the discovery, development, and commercialization of
orally-administered, small molecule drugs for the treatment of
lysosomal storage disorders and diseases of neurodegeneration. Its
drugs are known as pharmacological chaperones, which selectively
bind to the target protein, enhance the stability of the protein,
help it fold into the three-dimensional shape, as well as allow
proper trafficking of the protein. This increases protein activity,
enhances cellular function, and reduces cell stress.
In its Fabry program, the company is investigating the use of
AT1001 to bind to destabilized α-galactosidase A enzyme (α-GAL) and
thereby restore its intended biological function.
Fabry disease is a rare X-linked (inherited) lysosomal storage
disease, which can cause a wide range of systemic symptoms. It is a
form of sphingolipidosis, as it involves dysfunctional metabolism
of sphingolipids.
There has been historic difficulty in finding successful
treatments for rare genetic diseases such as Fabry's. If Amicus can
show successful phase III data here, it could very well be like a
"kodak" moment in medicine's war against genetic diseases.
On September 6th, Amicus issued a press release to update the
screening profiles related to this study. Labeled study 011, this
is one of two ongoing Phase 3 studies of migalastat HCl monotherapy
being conducted by Amicus and
GlaxoSmithKline (
GSK
)
. The updated screening profiles included the following:
- A total of 180 Fabry patients (60 males and 120 females) were
screened for Study 011. Prior to screening, sites used genotype
information when available to enrich Fabry patients with amenable
mutations who were more likely to be interested in participating
in the study.
- Approximately 86% (154/180) of patients screened had missense
mutations (compared to a current estimate in the Fabry population
of approximately 60%).
- Approximately 88% (136/154) of those patients, or 76% of
patients screened, had alpha-galactosidase A mutations amenable
to migalastat HCl monotherapy, and were potentially eligible for
enrollment.
- Approximately 50% (67/136) of those patients, or 37% of all
patients screened, enrolled in Study 011 upon meeting all entry
criteria, including: 1) naïve to ERT or had not received ERT for
at least 6 months prior to study entry; 2) genetic mutations
amenable to chaperone monotherapy and; 3) for study purposes,
urine globotriaosylceramide (GL-3) levels at least four-times the
upper limit of normal at baseline.
The primary endpoint in Study 011 is a change in interstitial
capillary GL-3 as measured in kidney biopsy at 6 months versus
baseline. The six month primary treatment period in Study 011 was
completed in the second quarter of 2012 and the six-month follow-up
period is expected to complete in the
December 2012
. Amicus and GSK will also un-blind and analyze data from the
primary six month treatment at this time. Currently, both companies
remain blinded to all results.
Also of significance, on Nov. 8, 2012, the company announced
additional preliminary results from an open-label Phase 2 drug-drug
interaction study (Study 013) to evaluate a single oral dose of
migalastat HCl (150 mg or 450 mg) co-administered with enzyme
replacement therapy (ERT) in males with Fabry disease. In a poster
at the American Society of Human Genetics (
ASHG
) Annual Meeting, Dr. David G. Warnock, University of
Alabama-Birmingham, presented results from all 12 patients in the
migalastat HCl 150 mg dose group.
Amicus, also in collaboration with
GlaxoSmithKline
, is developing the investigational pharmacological chaperone
migalastat HCl as a monotherapy and in combination with ERT for the
treatment of Fabry disease. When co-administered with ERT
,
migalastat HCl binds to and stabilizes infused enzyme in the
circulation.
In my opinion, Amicus is grossly undervalued at its current
price of $4.77 with a market cap of $235.45M. With an average cost
of
$200,000 US per patient in treating a disease like Fabry's, the
potential for Amicus to rake in big revenues is very high. Also,
because GSK already owns 20% of Amicus stock, I think there is a
good chance it will buy out the rest of the company's stock on
successful phase III data from the 011 study.
(click to enlarge)
The chart above shows us that Amicus has been oversold, and
received a nice bounce yesterday, trading as high as $4.78 before
closing at $4.75. The chart seems to indicate a reversal is
currently underway, and with the company already being undervalued,
it's a good bet in my opinion that we will see $5 very soon.
Threshold Pharmaceuticals Inc. (
THLD
)
focuses on the discovery and development of drugs for the
microenvironment of solid tumors and the bone marrows of
hematologic malignancies as novel treatments for patients living
with cancer. Its clinical development products include TH-302, a
novel drug candidate, which is in Phase I, Phase II, and Phase III
clinical trials for the severe hypoxic regions present in various
solid tumors and hematologic malignancies.
TH-302 is an anticancer agent in clinical development at
Threshold. Preclinically, it is preferentially activated under
hypoxic conditions and has demonstrated potent anticancer activity
in many preclinical cancer models. TH-302 is converted selectively
to the drug's active form, dibromo isophoramide mustard, a potent
DNA alkylator, within hypoxic tumor cells. TH-302 targets levels of
hypoxia that are common in tumors but are rare in normal tissues -
this is how selective targeting of the tumor occurs.
After conversion to the active form of the drug, the more
resistant hypoxic cells are exposed to high concentrations of
released cytotoxic agents, which can also be diffused into the
surrounding oxygenated regions of the tumor, exerting what is
referred to as a bystander effect. In this way, TH-302 can kill
more of the tumor than can otherwise be accounted for by the
hypoxic fraction alone. Because of its selective activation in the
hypoxic regions of solid tumors, it is believed that TH-302 will be
less likely to produce the systemic toxicity caused by most
cytotoxic chemotherapies.
At the end of 2012, Threshold and its partner Merck KGaA plan to
initiate a phase III trial that will compare TH-302 in combination
with gemcitabine against gemcitabine alone in patients with
metastatic or locally advanced unresectable pancreatic cancer.
Others as in this linked article, have mentioned that they did
not think TH-302 was all that impressive. Personally, at a price of
$4.05 and a market cap of $227.82M, I think it's worth the gamble
that Mihai's point of view is correct.
Let's take a look at the chart to see if Threshold offers a good
long trade here.
(click to enlarge)
As we can see from the chart above, the stock has that classic
PPO/ADX pinch and, in my opinion can easily make its way back to
about $5.88 per share which would be a rather significant move from
here. A few more things to note, the stock is showing signs of
bottoming around the 4 dollar range with a MACD cross, and
yesterday crossed above the 5 day moving average (
MA
). Watch for a follow through and consider a stop just below the
most recent bottoming level - around $3.90
Ironwood Pharmaceuticals, Inc. (
IRWD
)
discovers, develops, and commercializes human medicines. Its lead
product candidate, linaclotide, is a guanylate cyclase type-C
agonist that received FDA approval in August of this year for the
treatment of patients with irritable bowel syndrome with
constipation (IBS-C) and chronic constipation (CC). The company
also has a pipeline focused on the research and development of
early development candidates and discovery research in various
therapeutic areas, including gastrointestinal diseases, central
nervous system disorders, respiratory diseases, and cardiovascular
diseases.
Insider activity is always something I like to look at, as it
tends to be bullish when key insiders buy a good amount of shares
in their company. On November 5, the CEO of Ironwood, Peter Hecht,
purchased 50,000 shares and currently holds 3,722,554 shares of the
company. He has led Ironwood since its inception in 1998.
The day after this purchase, the company reported its third quarter
2012 financial results on November 6, which looks strong in several
areas such as:
- Revenue - $96.4 million
- Net income - $47.6 million
- Cash - $193.4 million
Let's take a look at the chart:
(click to enlarge)
The chart above shows me a nice
wedge formation
taking place. Notice the higher lows and lower highs, and the
amount of trading taking place above the green retrace line. The
stock closed yesterday's session at $11.68, and the chart seems to
indicate a move to $12.50, barring a large downturn in the overall
market.
I have offered 5 companies in this write-up I feel have both
strong fundamental and technical factors that could indicate these
stocks are good upside trades. This is a tough stock market right
now, but I feel the bottom is close to being priced in. We have the
holiday season approaching fast, and usually we can expect to see a
nice bounce in all the indices as we draw closer to year end.
Additional disclosure:
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
adviser.