BST Position Update: January 14, 2014

| January 14, 2014

January 14, 2014

Position Update

. . . . Conatus Pharmaceuticals (NASDAQ: CNAT) – Hold

Our most recent addition to the portfolio took off like a rocket last week.  CNAT soared to a new high of $15.67 to give us an outstanding 148% peak gain.  Not bad for just three weeks into the trade.

And even though it has pulled back a bit on profit taking, the stock’s up 88% as I write.

CNAT surged on good news for a competitor’s experimental drug for a form of chronic liver disease.

On Thursday, Intercept Pharmaceuticals (NASDAQ: ICPT) said its mid-stage trial of obeticholic acid (OCA) in non-alcoholic steatohepatitis (NASH) will be stopped early because it has already achieved the primary endpoint.  The results were a big surprise since nearly half of the trial participants haven’t finished the course of treatment.

Investors piled into ICPT on the news, driving the stock higher by a whopping 590% over the next two days.  And CNAT was swept up in the euphoria.

In other news, management provided an update on the company’s development strategy for 2014.  Here’s a list of upcoming catalysts for CNAT…

  • Acute-on-chronic liver failure (ACLF) phase 2b trial results expected in the first half of 2014.
  • Non-alcoholic steatohepatitis (NASH) phase 2 trial to begin in the first half of 2014.
  • Chronic liver failure (CLF) phase 2b trial to begin in the second half of 2014.
  • HCV-POLT phase 2b trial to begin in the second half of 2014.

With CNAT now trading well above our maximum buy price, we’re moving the stock from Buy to Hold.

There’s no question that CNAT has put up huge gains in a short period of time.  But we think it still has significant upside remaining.  Hang on to your shares for greater potential gains.

. . . . GTx (NASDAQ: GTXI) – Hold

GTXI has moved significantly higher over the past few weeks.  The stock climbed from a low of $1.42 in December to a high of $2.12 in early January.

That’s a 49% gain in just a few weeks’ time.

With the stock now trading just below our maximum buy price of $2.00, we’re going to move GTXI from Buy to Hold.  Remember, we think GTXI will continue to rise going into the phase 2 trial results of enobosarm in metastatic breast cancer.

These important trial results are expected in the second quarter of 2014.

. . . . Synergy Pharmaceuticals (NASDAQ: SGYP) – Hold

SYGP has made a huge comeback in the past two-plus months.  After hitting a low of $3.83 in November, the stock has climbed to a recent high of $5.82.

That’s a terrific 52% rise in relatively short order.

Investors are piling back into the stock ahead of the upcoming data from the phase 2b trial of plecanatide in IBS-C.  Synergy plans to release the results early in the second quarter of 2014.

Thanks to the recent rally, SGYP is now trading above our maximum buy price.  As such, we’re moving the stock from Buy to Hold.  Continue holding SGYP for higher prices.

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

HALO continues to move higher in a solid uptrend.  The stock hit a new high of $16.58 this week to give us a terrific peak gain of 204% on the position.

The stock surged after CEO Dr. Helen Torley provided an update on the company’s anticipated milestones for 2014.  Here’s a quick summary of what’s on tap for HALO this year…

Proprietary Products

  • Release results from the CONSISTENT 1 study of Hylenex® as a pretreatment in patients with diabetes using insulin pumps during the first quarter of 2014.
  • Release top-line results from the phase 2 study of HTI-501 in patients with cellulite during the first quarter of 2014.
  • Complete enrollment in the phase 2 study of PEGPH20 in pancreatic cancer during the second half of 2014.
  • Initiate a new study to evaluate PEGPH20 in an additional tumor setting during the fourth quarter of 2014.

Collaboration Products

  • Roche expects to receive an opinion on MabThera SC from the European Medicines Agency and potential marketing approval from the European Union during 2014.
  • Baxter expects to receive a response to its Biologic License Application for HyQvia from the FDA in mid-2014.

No question about it, 2014 is shaping up to be an exciting year for Halozyme.  If you’re not entirely convinced, here’s Dr. Torley’s view of the year ahead…

“Halozyme is poised for a pivotal year in 2014… With multiple collaboration products advancing to commercialization stage, our focus is now on advancing and unlocking the value of our three proprietary products, which are potentially game-changing for the company.”

(Emphasis added.)

We are definitely excited to see how things unfold for HALO in 2014.  With so many important catalysts on the calendar, the stock could really take off this year.

And we say that knowing full well that HALO has soared 193% since we recommended it last March.

Hang on tight to your shares of HALO.  This is one biotech stock that could shoot the moon over the next 12 months.

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

MACK’s spectacular rally off the November low continues to gain momentum.  After hitting a low of $2.05 in early November, MACK has climbed back above the $6.00 per share level.

That’s a better than 200% gain in just over two months time!

The stock’s benefitting from a combination of positive analyst comments and strong insider buying.  And with results from the phase 3 trial of MM-398 in pancreatic cancer expected in the second quarter, we think the stock will continue trending higher.

Hang on to your shares for bigger potential gains.

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

NYMX surged more than 10% on Monday.

The stock took off after management said it has stopped recruiting for its phase 2 study of NX-1207 in low-risk, localized prostate cancer.  What’s more, management confirmed that enrollment will be completed soon.

This is huge news as top-line results from the study are expected within 6 to 8 weeks after completion of enrollment.

With a clearer indication of when the highly anticipated trial results will be announced, investors piled back into NYMX.  And as a result, the stock took off.

We think this is just the beginning of larger rally.

If the trial results are positive, it would suggest NX-1207 is on track to become the new standard treatment for low-risk, localized prostate cancer.

The current standard of care involves surgical removal of the prostate and radiation therapy.  In contrast, treatment with NX-1207 involves a single injection into the area of the prostate where the cancer was detected.

The treatment can be performed by a urologist in an office setting and does not require anesthesia, sedation, or catheterization.  What’s more, it only takes a few minutes and involves minimal discomfort to the patient.

No question about it, NX-1207 has potential to revolutionize the way prostate cancer is treated.  And it would be a major step forward for the more than 240,000 men diagnosed with the disease annually.

Continue holding your shares of NYMX.  A major upswing could be just around the corner for this exciting biotech.

Action To Take

  • Move Conatus Pharmaceuticals (NASDAQ: CNAT) from Buy to Hold.
  • Move GTx (NASDAQ: GTXI) from Buy to Hold.
  • Move Synergy Pharmaceuticals (NASDAQ: SGYP) from Buy to Hold.


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