BST Position Update: February 15, 2013

| February 15, 2013

February 15, 2013

Position Update

. . . . MannKind (NASDAQ: MNKD) – Buy up to $2.85

MNKD is our latest addition to the portfolio.  And we’re very excited about it to say the least.  They’re developing a potential blockbuster drug called Afrezza for type 1 and type 2 diabetes.

Why are we so high on Afrezza?

It’s an ultra rapid-acting mealtime insulin therapy that could change the way diabetes is treated.

Unlike current treatments (insulin shots and oral medications), Afrezza is an inhalable therapy.  It’s delivered directly to the patient’s lungs via MannKind’s proprietary Dreamboat inhaler.

But here’s the key…

With its unique formulation and delivery method, Afrezza may treat diabetes more effectively and just as safely as existing diabetes treatments.  If so, MannKind stands to grab a big chunk of the $20 billion a year diabetes drug market.

What’s next for the drug?

Afrezza is currently undergoing two phase 3 clinical trials – one in patients with type 1 diabetes and another in patients with type 2 diabetes.  Top-line results from both studies are expected in July 2013.

We believe these results will be positive… and MNKD will soar!

Now, you should know that the FDA has twice denied approval for Afrezza since 2009. They’ve had concerns that Afrezza could harm patients’ lungs.

But we think the third time’s the charm. 

Results from a two-year pulmonary safety study have shown that Afrezza is as safe as current treatments.  And the drug has now been evaluated in 61 clinical trials involving over 5,600 patients.

The new safety data should alleviate the FDA’s concerns and pave the way to approval.

Nevertheless, MNKD remains 80% below its 2009 high of $12.30 per share.  Many investors are clearly skeptical of Afrezza’s chances.

But their doubt works to our favor.

We have a golden opportunity to pick up shares of MNKD at ridiculously cheap prices.  And when the herd rushes in on the phase 3 results, we’ll be laughing all the way to the bank.

Grab your shares of MNKD now.  The stock’s a good buy up to $2.85 per share.

. . . . Anacor Pharmaceuticals (NASDAQ: ANAC) – Buy up to $3.80

Anacor reported positive results from the first of its two phase 3 trials of tavabarole, but the shares dropped on the news.  What happened?  The data suggest the onychomycosis treatment may not be as effective as a similar treatment being developed by Valeant Pharmaceuticals (NYSE: VRX).

On the surface, the trial data were very good.

Tavabarole achieved the trial’s primary and secondary endpoints with a high degree of statistical significance.  In fact, it demonstrated a complete cure rate of 6.5% versus just 0.5% for the vehicle-treated arm.

Unfortunately, tavabarole did not come close to the 17.8% complete cure rate shown by Valeant’s efinaconazole in its phase 3 trial.

This is certainly disappointing news.

However, the story isn’t finished yet. 

Results from the second phase 3 trial of tavabarole are expected in March.  This data may show tavabarole is more effective than the first phase 3 trial results suggest.

If they do, it would likely provide a huge boost for the stock.

So, despite the drop in share price, we’re going to maintain our buy rating on ANAC. We think the shares are due for a relief rally any day now.  And they could trend higher going into next month’s important trial results.

Please note that this trade has become much more speculative after the first phase 3 trial results.  And we’ve adjusted our maximum buy price for ANAC to $3.80 per share.

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

TSRX is jumping on exciting news.  Results from the biotech’s November 2011 phase 3 trial of tedizolid phosphate have been published in The Journal of the American Medical Association (JAMA).

JAMA is a prestigious, weekly peer-reviewed medical journal published by the American Medical Association.  It’s been publishing original research, reviews, commentaries, and other content since 1883.

The best part is… the article’s bringing positive attention to tedizolid.

It recounts how tedizolid achieved the primary and all secondary endpoints of the trial. And it points out that tedizolid appears “efficacious using a short course of therapy and may have a better safety profile than linezolid.”

This could be just the catalyst we need for a rally going into the upcoming results from the second phase 3 trial.  Those results are expected by the end of the first quarter.

TSRX is currently rated a hold.  If you own the stock, hang on for greater gains.

. . . . Agenus (NASDAQ: AGEN) – Hold

AGEN didn’t rally on the positive trial results for QS-21 in late 2012, but we now have a second chance for big gains coming up.  The biotech has another major catalyst on the near-term horizon.

I’m talking about the phase 2 trial results for the company’s revolutionary Prophage Series G-100 vaccine for newly diagnosed brain cancer.  This amazing vaccine is made from heat shock protein-peptide complexes (HSPPCs) found in the patient’s very own tumor tissue.

When injected into the patient’s skin, these HSPPCs are expected to stimulate a powerful cellular immune response.  In short, the vaccine should prompt the patient’s immune system to target and kill the cancer cells from which the HSPPCs were derived.

What’s more, by targeting only the cancerous cells, Prophage should produce lower toxicities than chemotherapy.  Lower toxicities of course would make treatment safer and more tolerable for cancer patients.

Prophage is clearly a novel cancer treatment with serious blockbuster potential.

And it’s not the only one in the company’s pipeline.  Agenus is also developing Prophage vaccines for recurrent brain cancer, renal cell carcinoma, pediatric neurological tumors, and melanoma.

So, what are the odds for positive trial results?

We think they’re very good considering the complexity of the disease and the treatment.

Nearly 900 cancer patients have been treated with a Prophage Series vaccine since 1997. And the collective results from all prior trials show signs of efficacy, including the complete disappearance of a tumor, shrinkage in size, and no change in size (disease stabilization).

But the best part is… median overall survival rates have exceeded historical controls.

No question about it, Prophage could potentially revolutionize cancer treatment.

With so much at stake, these upcoming trial results could be a huge catalyst for AGEN.  As such, we recommend holding on to your shares for a major potential rally.

. . . . Oncolytics Biotech (NASDAQ: ONCY) – Hold

ONCY’s soaring again!

The shares jumped nearly 22% last Friday to a new high of $4.93.  That gave us a peak gain of 41% on the position.

The stock surged on more positive data for Reolysin.  The company said Reolysin shrunk the tumors of almost every patient in its small mid-stage lung cancer trial.

That makes two trials now, in two different kinds of cancer, with positive data on Reolysin.

All in just the past month and a half.

No wonder ONCY’s attracting so much attention!

With more data due from the phase 3 trial in head and neck cancer before the end of the quarter, we could see ONCY continue higher over the next few weeks.  Hang on to your shares for bigger profits.

Action To Take

  • Adjust the maximum buy price for Anacor Pharmaceuticals (NASDAQ: ANAC) to $3.80.


Category: BST Update

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