BST Position Update: April 4, 2013

April 4, 2013

. . . . AcelRx Pharmaceuticals (NASDAQ: ACRX) – Buy up to $5.65

ACRX is the latest addition to the portfolio.  They’re developing the Sufentanil NanoTab® PCA system (also known as ARX-01) which allows patients to manage their post-operative pain following surgery.

At the moment, surgical patients manage their post-operative pain with intra-venous patient-controlled analgesia (IV PCA) systems.  However, a whopping 75% of patients report they don’t experience adequate pain relief after surgery.

ACRX believes ARX-01 solves the problems inherent to these systems.

ARX-01 is a non-invasive, handheld system that allows patients to self-dose with sublingual (under the tongue) Sufentanil NanoTabs to manage their pain.  The many advantages of ARX-01 over IV PCA systems are discussed extensively in the trade alert.

Here’s the key… ARX-01 could ultimately replace IV PCA systems and corner the post-operative pain market.

A market that’s expected to hit $6.5 billion in 2018!

The product has already demonstrated in one phase 3 trial that it’s non-inferior to IV PCA systems.  And data from a second phase 3 study showed patients experienced a significant reduction in pain versus placebo.

If results from the third and final phase 3 trial are also positive, ACRX could really soar. And those results are coming soon.  They’re expected during the current quarter.

The time is now to grab your shares of ACRX.  Go ahead and buy this exciting biotech up to $5.65 per share.

. . . . MannKind (NASDAQ: MNKD) – Hold

After a brief pull-back, MNKD is surging to new highs once again.  The stock hit $3.95 on Tuesday to give us an outstanding 51% gain.

That’s just what we like to see.

What’s going on?

The company’s getting a lot of play in the press about its revolutionary inhalable insulin product for diabetes.  And as a result, investors are scrambling to get into MNKD ahead of the upcoming phase 3 trial data expected in July.

While the stock has performed exceedingly well for us, we think it’s likely to head even higher from here.  Hang on to MNKD for more upside.

. . . . Array BioPharma (NASDAQ: ARRY) – Hold

ARRY’s on the move!

Fresh off a 14% jump in the final week of March, ARRY’s continuing to flex its muscles in April.  The biotech hit a new trading high today – its sixth in eight days – of $5.15 per share.

And the stock’s now up more than 17% since we recommended it.

Not bad for less than three months in the trade.

The shares took off on March 25th thanks to a Piper Jaffray upgrade.  The analyst raised his rating from neutral to overweight.  And he bumped his price target from $4 to $7.

Of course, we’re not surprised he cited potentially positive upcoming trial data and additional partnership opportunities.  We brought these catalysts to your attention back in January.

Speaking of trial data, the stock got a boost today from results of two ongoing studies of ARRY-520. 

ARRY-520 is being evaluated in three separate mid-stage trials as a potential treatment for multiple myeloma (MM).  And today’s data from two of those trials indicate the drug has great promise.

In one trial, ARRY-520 showed similar results to those of recently approved Kyprolis® and Pomalyst® as a single-agent therapy in a similar patient population.  And in the other trial, it was well-tolerated and showed initial signs of activity when given in combination with Velcade®.

While this is great news, we’re waiting for results from the phase 2 trial of ARRY-502 in patients with persistent asthma.  That data is expected before the end of the current quarter.

With ARRY now trading above our maximum buy price, we’re moving it from Buy to Hold.  If you own these exciting shares, you should hang on to them for greater gains.

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

ANAC keeps surging higher and higher.

A couple of weeks ago, we told you about Anacor’s stunning one-day gain of 26%.  The stock soared on positive phase 2 trial results for AN2728, the company’s novel treatment for atopic dermatitis and psoriasis.

But that proved to be just the first step in a larger move.

The very next day ANAC jumped another 26%.  It finished the day at $6.08 but not before it hit a new trading high of $7.00.

At that price, we were sitting on a remarkable 48% gain.

Now, the shares have pulled back a bit since hitting that high.  But we think it still has more upside ahead.

On March 22nd, Wedbush Morgan reiterated its outperform rating on the shares.  And the analyst raised their price target for ANAC from $10 to $20!

Let’s hang onto ANAC to see if this rally has legs.

. . . . Trius Therapeutics (NASDAQ: TSRX) – Hold

Trius is another position making new highs since our last update.  The stock hit $7.49 on March 25th to give us a peak gain of 36%. 

Not too shabby.

The stock jumped on positive top-line data from the second of two phase 3 trials of tedizolid phosphate. 

Tedizolid is a novel antibiotic being developed to treat serious gram-positive infections, including those caused by methicillin-resistant Staphylococcus aureus (MRSA).  The purpose of this phase 3 trial was to evaluate tedizolid as a treatment for acute bacterial skin and skin structure infections (ABSSSI).

And as we expected, the results were great!

The data showed that a six-day course of once-daily oral tedizolid is just as effective as a ten-day course of twice daily oral linezolid (the current leading antibiotic for MRSA infections).  And tedizolid produced fewer drug-related adverse events than linezolid.

So, what’s next?

Trius plans on filing for FDA approval of tedizolid in the second half of this year.  And they plan on starting a phase 3 trial of tedizolid in patients with severe pneumonia as well.

Now, TSRX has pulled back a bit since the trial results came out.  But we’re not concerned.  It’s simply selling on the news by short-term traders after the stock’s big run up into the results.

We think TSRX will trade significantly higher once the short-term traders have fully exited the stock.

Linezolid (marketed as Zyvox® by Pfizer) generated global sales of $1.3 billion in 2011. With its shorter course of therapy and better safety profile, tedizolid should be able to grab a big share of linezolid’s market down the road.

As such, we expect investors to start factoring that potential into Trius’ share price.

In fact, we think the median analyst price target of $12 is quite realistic.  At that level, Trius’ market cap would be $575 million.  That seems to be a reasonable valuation given tedizolid’s blockbuster sales potential.

Hang on tight to your shares of TSRX.  This stock has plenty of upside potential remaining.

Action To Take

• Move Array BioPharma (NASDAQ: ARRY) from Buy to Hold.

 

Category: BST Update