BST Position Update: August 6, 2013

| August 6, 2013

August 6, 2013

Position Update

. . . . ImmunoCellular Therapeutics (NYSE: IMUC) – Hold

Our latest recommendation is off to a very fast start.  After hitting a new intra-day high of $3.69 today, IMUC finished the day at $3.57 to give us a solid 28% gain on the position.

Not bad for just eight trading days in the portfolio.

What’s going on?

There hasn’t been any significant news since we published our trade alert.  So, the recent rise appears to be fueled by investors getting positioned ahead of upcoming trial results.

Remember, IMUC is evaluating ICT-107 as a potential treatment for glioblastoma multiforme (brain cancer).  And top-line results from the drug’s phase 2 trial are expected by the end of 2013.

Thanks to the recent rally, IMUC has moved above our maximum buy price.  As such, we’re moving the stock from buy to hold.  Hang on to your shares for greater gains.

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

RMTI recently reported great news!

SFP met the primary and key secondary endpoints in the first of two phase 3 trials. Remember, SFP is Rockwell’s late-stage iron delivery drug for chronic kidney disease patients receiving hemodialysis.

Specifically, SFP produced a statistically significant mean change in hemoglobin from baseline to end-of-treatment.  And, the drug showed maintenance of hemoglobin, maintenance of reticulocyte hemoglobin, and an increase in serum iron pre-to-post treatment without an increase in ferritin.

In the words of CEO Rob Chioini…

“… the data show that in place of IV iron, SFP is a safe and effective iron replacement therapy that consistently maintains hemoglobin levels without increasing iron stores.”

“These successful results… support our belief that SFP will set a new paradigm in iron therapy treatment for hemodialysis patients. We believe SFP is positioned to become the new standard of care in iron therapy.”

If true, that’s great news for Rockwell.

The US market for iron IV therapy is currently generating $600 million per year in revenue. And the global market is worth an estimated $1 billion annually.

A point not lost on investors.

They pushed RMTI up on the news to a high of $5.94 in just three days’ time.  It was a quick surge that gave us a 50% gain on the position.

While the shares have pulled back from those highs a bit, we think they’ll move higher again soon.

You see, Rockwell is expected to report top-line results from the second phase 3 trial of SFP in September.  After the first trial’s stunning success, investors will likely drive RMTI higher going into the next trial’s results.

As such, we recommend holding on to your shares of RMTI for greater potential gains. With that said, the stock has moved beyond our maximum buy price so we’re moving RMTI from Buy to Hold.

. . . . BioLineRx (NASDAQ: BLRX) – Hold

It looks like investors are starting to move into BLRX.  The shares have been slowly climbing higher since late June.  And we’re now sitting on gains of over 10%.

That’s what we like to see.

Investors are realizing that BLRX will provide a significant catalyst before the end of this year.  Remember, we’re expecting initial results from the phase 2 trial of BL-8040 during the fourth quarter.

BL-8040 is the company’s drug candidate for the treatment of acute myeloid leukemia (AML) and other types of blood cancers.

In pre-clinical testing, the drug inhibited the growth of tumors in a variety of different cancers.  And it successfully completed a phase 1/2 trial earlier this year in which it showed a direct anti-cancer effect by inducing cell death.

What’s more, the drug has huge revenue potential if it’s ultimately approved by the FDA.  The leukemia therapeutics market is expected to grow from $6.3 billion in 2010 to over $11 billion by 2020.

As a result…

We’re expecting BLRX to continue moving higher over the days and weeks ahead.  If the initial phase 2 trial results are positive, BLRX will be worth a heck of a lot more than its current market cap of $41 million.

Hopefully, you picked up shares of BLRX since our trade alert in May.  Now that the shares are trading above our maximum buy price we must move BLRX from Buy to Hold.

. . . . Halozyme Therapeutics (NASDAQ: HALO) – Hold

HALO was going gangbusters before some bad news derailed the rally.  In mid-July the stock hit a new high of $8.84 to give us a 62% gain on the position.

And the stock looked like it might break out for a parabolic-type surge into the stratosphere.

But it wasn’t meant to be… for the moment anyway.

On August 1st, ViroPharma (NASDAQ: VPHM) announced that it has cancelled its phase 2 trial of subcutaneous Cinryze with recombinant human hyaluronidase (rHuPH20). Apparently, the move is a precaution related to the emergence of anti-rHuPH20 antibodies in a number of patients.

You’ll recall that rHuPH20 is the key component of HALO’s subcutaneous drug delivery system.  So, it’s understandable that HALO investors reacted poorly to the ViroPharma news.

However, the news is not as bad as it seems.

HALO CEO Gregory Frost said…

“We have accumulated a robust data set regarding the clinical use of rHuPH20 across many different programs and indications, and feel confident about the safety profile of the rHuPH20 platform that has emerged from this clinical use and its continued application in our other products and programs around the world.”

And don’t forget… 

HALO has a couple of potential upside catalysts on tap before the end of the year.  The most important one being results from the phase 2 trial of PEGPH20 as a first-line treatment for metastatic pancreatic cancer.

As such, we think HALO will trend higher soon as investors refocus their attention on the upcoming catalysts.  In fact, even though the stock has dropped a bit, it’s still firmly within the upward sloping trend channel off the July 2012 lows.

Given our bullish outlook for HALO, we recommend hanging on to the shares for greater gains.

. . . . Vical (NASDAQ: VICL) – Hold

VICL made a strong upward climb in late July and early August.  The stock surged from a low of $3.30 to a high of $4.49.  That’s a 36% rise for those keeping count.

It appears investors were piling into the stock ahead of the Allovectin phase 3 trial results.  Those results were expected during the fast approaching third quarter.

However, plans have changed, and the stock is now pulling back.

Vical recently said the trial results will be released in August.  And with the data now coming sooner than expected, the rally in VICL has been cut short.

What’s more, a couple of negative articles about Allovectin have been published in recent days.  They claim the phase 3 trial will be a failure and that VICL is poised to drop.

As a result, a growing number of investors are betting against VICL.  Short interest in the stock has grown to 17%.  And the short ratio now stands just shy of 15.

However, we view this trade in a more positive light. 

Nobody knows for sure what the results will be.  The bears are merely speculating the results will be bad.  But they don’t have a perfect crystal ball.  And we’ve seen a good number of positive surprises over the years.

With that said, this upcoming catalyst is a particularly risky event.

Therefore, if you don’t feel comfortable hanging on to VICL through the results, we suggest you sell your shares now.  Many of you will lock in a nice gain.  And you can protect yourself against a potential hefty loss on bad results.

But for those who are comfortable with high risk speculation, we recommend holding VICL through the Allovectin trial results. 

This trade could turn into a monster winner.  If the trial is a success, VICL should skyrocket on the positive news and short-covering that is sure to follow.

With these important phase 3 trial results due any day now, we’re moving VICL from Buy to Hold.

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

ARRY’s climbing nicely after the pullback in June.  The stock is now up from a low of $4.42 in early June to around $6.80 per share.  That’s a 54% gain in just over a month and a half.

Not too shabby.

What’s more, ARRY recently hit a new high of $7.10 to give us a peak gain of 64%on the position.

The stock’s rising on a couple of good news items…

First off, Array announced positive results from an important phase 2 trial.  The purpose of the study was to establish proof-of-concept for ARRY-502 as a potential treatment for mild-to-moderate, persistent allergic asthma.

And the trial was an unqualified success.

The drug achieved the primary endpoint and key secondary endpoints with statistical significance.  It also was well tolerated with fewer adverse events compared to placebo.

ARRY jumped more than 10% on the news.

The other bit of good news was the announcement of a collaboration with biotech giant, Celgene (NASDAQ: CELG).  The two companies will work together on a preclinical program targeting a novel inflammation pathway.

Under the deal, Array will receive an upfront payment of $11 million and up to $376 million in milestone payments.  Array is also eligible to collect royalties on sales of any drugs developed and sold under this agreement.

So, what’s next?

ARRY has successfully achieved the catalyst we were targeting for this trade.  But the company has a couple of other catalysts on the horizon that could keep the rally going.

Given the stock’s positive momentum and potential upside catalysts, we recommend holding onto ARRY for bigger gains.

. . . . Nymox Pharmaceuticals (NASDAQ: NYMX) – Hold

NYMX has surged big time over the past few weeks.  The stock climbed in a steep uptrend from around $5.00 to just over $7.00 per share.

That’s a solid 40% gain in short order.

The rally started with good news for the first of two phase 3 trials of NX-1207 for benign prostatic hyperplasia (BPH).  A data monitoring committee said in early July that is has found no significant safety concerns with the drug.

And the stock gains continued as investor awareness of NYMX increased. 

The data monitoring committee report has clearly drawn attention to NYMX.  And many of these investors have discovered that results from the pivotal phase 3 trial are expected in November or December 2013.

Thanks to the recent rise, NYMX is now trading outside of our buy range.  As such, we’re moving NYMX from Buy to Hold.  Continue holding your shares for higher prices.

Action To Take

  • Move ImmunoCellular Therapeutics (NYSE: IMMU) from Buy to Hold.
  • Move Rockwell Medical (NASDAQ: RMTI) from Buy to Hold.
  • Move BioLineRX (NASDAQ: BLRX) from Buy to Hold.
  • Move Vical (NASDAQ: VICL) from Buy to Hold.
  • Move Nymox Pharmaceutical (NASDAQ: NYMX) from Buy to Hold.


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