BST Position Update: December 17, 2013

December 17, 2013

. . . . Anacor Pharmaceuticals (NASDAQ: ANAC) – Sell

ANAC has been an outstanding performer for the portfolio.  After dropping to a low of $3.00 in February, the stock has increased more than five-fold in the past ten months.

As a result, we’re now sitting on gains of 245%!

With the stock having failed twice now to move above $17.44, we think it’s time to take our tidy profit off the table.  An FDA decision on Tavabarole won’t happen until July 2014 so there isn’t much in the way of upside catalysts on the horizon.

Go ahead and sell ANAC as soon as possible to lock in your hefty gains.

. . . . ImmunoCellular Therapeutics (NASDAQ: IMUC) – Sell

IMUC reported mixed results from its phase 2 study of ICT-107 in patients with newly diagnosed brain cancer.  The data showed a statistically significant increase in progression free survival for patients taking ICT-107.  But the study failed to show a statistically significant increase in overall survival.

Unfortunately, overall survival was the primary endpoint.

As a result of the study’s failure to achieve the primary endpoint, IMUC has dropped sharply.  We were giving the stock time to recover a bit, but it doesn’t look like that’s going to happen.

Therefore, we recommend you sell IMUC as soon as possible to conserve capital for better opportunities in the biotech space.

. . . . Novavax (NASDAQ: NVAX) – Sell

NVAX is the oldest position in the portfolio.  Because we believed in the company, we decided to ride out a difficult time in 2011 and early 2012.

And now our patience has finally paid off.

Since hitting a low of $1.12 in April 2012, the stock has climbed to a high of $4.65 today. That’s right… NVAX has more than quadrupled in value over the past 19-plus months.

Best of all… our position has moved from a loss to a profit of 104%!

Let’s go ahead and lock in our hefty gains.  NVAX is expected to announce top-line results from its trial of H7N9, a pandemic flu vaccine, before the end of this year.  No sense risking our profit on these upcoming results.

. . . . Rockwell Medical (NASDAQ: RMTI) – Hold

RMTI plunged today on a negative report from Brean Capital.

The firm initiated coverage on the stock with a sell rating and a $4.00 price target.  The Brean analyst claims the FDA is not likely to approve Triferic due to poor study design and questionable effectiveness.

We disagree.

We believe Triferic will be approved by the FDA.  And we believe it will become the new standard of care iron therapy for patients with chronic kidney disease on hemodialysis.

As such, we recommend you continue holding RMTI.

. . . . Merrimack Pharmaceuticals (NASDAQ: MACK) – Hold

MACK’s been on a tear in recent weeks!

Since hitting a low of $2.05 in early November, the stock has climbed back to the $4.75 level.  That’s a whopping gain of 131% in just a little over five weeks’ time.

It looks like investors have finally realized that the phase 2 study of MM-121 in ovarian cancer was not the complete failure some in the media made it out to be.

As we pointed out in a prior update, the trial data have helped MACK identify a substantial subpopulation of patients who benefitted from MM-121.  And the company can now design a phase 3 trial of MM-121 that includes only patients from this subgroup.  That should significantly increase the trial’s chances for success.

What’s more, MACK just reported positive news from a phase 1 study of MM-302 in patients with advanced HER2-positive breast cancer.

Patients treated with MM-302 had an estimated progression free survival of 5.6 months and a clinical benefit response rate of 37%.  What’s more, these patients showed no signs of clinical decline in cardiac function.

MM-302 is designed to be more effective than doxorubicin (a widely used chemotherapy) without the cardiac toxicity.  It attempts to achieve this goal by delivering doxorubicin to tumor cells overexpressing HER2, while minimizing uptake into normal cells.

Merrimack is now planning a phase 2 study of MM-302 in patients with HER-2 positive breast cancer.

With MACK now trading above our maximum buy price, we’re moving it from Buy to Hold. Hang on to your shares for greater gains.

Action To Take

• Sell Anacor Pharmaceuticals (NASDAQ: ANAC)
• Sell ImmunoCellular Therapeutics (NASDAQ: IMUC)
• Sell Novavax (NASDAQ: NVAX)
• Move Merrimack Pharmaceuticals (NASDAQ: MACK) from Buy to Hold

 

Category: BST Update