BST Position Update: June 25, 2014

| June 25, 2014

June 25, 2014

Position Update

. . . . GTx (NASDAQ: GTXI) – Sell

GTXI has been a huge disappointment.  We were hoping the shares would pop on the results of the phase 2 trial of enobosarm 9mg in patients with metastatic breast cancer.

But after a small bump, the stock has come right back down.

With no catalysts on the near-term horizon, GTXI is not likely to make a significant move higher anytime soon.  As such, we think it’s time to cut our losses.

Go ahead and sell GTXI as soon as possible.  Conserve your capital for better opportunities in the biotech space.

. . . . Regado Biosciences (NASDAQ: RGDO) – Buy up to $7.60

Our most recent recommendation is off to a good start.  The stock hit a high of $7.32 this week for a quick 6% gain.  That’s just what we like to see.

RGDO received a boost after the company reported positive data from a phase 1 trial of the REG2 anticoagulation system.  The data show “the dose and concentration-dependent attenuation of thrombin generation and subsequent restoration of thrombin following reversal associated with REG2.”

REG2 is similar to the company’s lead product candidate, the Revolixys Kit, which we described in our trade alert.

Each products is a two-component system consisting of pegnivacogin, an anticoagulant aptamer, and its complementary active control agent, anivamersen.  The main difference between the two is that REG2 is being developed to provide a controllable level of anticoagulation for up to two weeks for sub-acute uses.

In contrast, the Revolixys Kit is being developed for use in patients suffering from acute coronary syndrome, including those requiring revascularization procedures such as percutaneous coronary intervention (PCI).

The other positive take away from the REG2 trial results is their impact on the phase 3 trial of the Revolixys Kit.  The concentration-dependent inhibition of thrombin generation observed in the study further supports the pegnivacogin dose selected for the phase 3 trial.

If you haven’t yet grabbed your shares of RGDO, you may not want to wait much longer.  The shares are closing in our maximum buy price.

. . . . Xencor (NASDAQ: XNCR) – Hold

XNCR has been on a roll ever since we recommended it.  The stock quickly traded up to a high of $11.67 on June 13th to give us a 36% gain.  And while the biotech has drifted slightly lower since then, we’re sitting on a 29% increase as I write.

That’s a nice rise in a short period of time.

There hasn’t been any substantive news on Xencor since we published our trade alert. It looks like we’re just benefiting from good timing for the trade.  As you probably know, we established our position just as the current uptrend was getting started.

Although the shares have leveled off over the past 10 days, we remain confident that XNCR will provide bigger gains going forward. 

Remember, the company is expected to provide results from the phase 2a trial of XmAb5871 in rheumatoid arthritis patients during the second half of 2014.  And the rheumatoid arthritis drug market is expected to grow from $12.3 billion in 2012 to $15.8 billion by 2022.

We fully expect investors to move into the stock ahead of the upcoming trial results.  And this buying should drive Xencor’s stock price up for a retest of the March high around $14 per share.

With XNCR now trading above our maximum buy price, we’re changing our rating from Buy to Hold.  If you own the stock, hang on to it for greater gains.

. . . . Exelixis (NASDAQ: EXEL) – Buy up to $3.75

Trading in EXEL has been rather quiet since we recommended the stock at the end of April.  However, it has been slowly making its way higher over the past few weeks.

And on Monday, the shares came within a nickel of our maximum buy price.

It’s hard to say if EXEL has begun a new uptrend or if it’s continuing the sideways pattern that began in late March.  But it’s nice to see the position moving in the right direction.

Make sure you take advantage of the current situation and grab your shares while they’re trading at a huge discount.

Don’t forget that EXEL was trading above $6.00 per share just a few months ago.  And it won’t be long before traders move in to get positioned ahead of important upcoming trial results.

Top-line data from the phase 3 trial of COMETRIQ in patients with castration-resistant prostate cancer are expected by the end of this year.  COMETRIQ is targeting the multi-billion dollar prostate cancer drug market, which is expected to grow to $8.6 billion by 2022.

. . . . Catalyst Pharmaceutical Partners (NASDAQ: CPRX) – Hold

CPRX has been moving higher in a tight uptrend since mid-May.  Our position is now up 10% from our initial buy price.  And at a recent high of $2.69, we were sitting on a solid 21% increase.

Not too shabby…

There hasn’t been much news about the company or its leading drug candidate over the past few months.  But the rising stock price certainly suggests investors are getting positioned ahead of the approaching trial results.

Top-line data from the US phase 3 trial of Firdapse in patients with Lambert-Easton Myasthenic Syndrome (LEMS) are expected in the third quarter of 2014.

Given the wealth of efficacy and safety data from prior studies of Firdapse, we’re confident Catalyst’s phase 3 trial results will be positive.  And we believe a large number of investors out there feel the same way we do.

As such, we’re expecting CPRX to move significantly higher over the months ahead.

Hopefully, you picked up your shares of this exciting biotech in the months following our April trade alert.  With CPRX now trading above our maximum buy price, we’re changing our rating from Buy to Hold.

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

CNAT’s on fire!

The biotech has risen 50% off the early June low of $5.48 and is now back above the $8 per share level.  Most of that gain is due to an impressive one-day gain of 57% on June 11th.

And while the shares have pulled back a bit since then, we’re sitting on a respectable 31% gain as I write.

The recent rally is due to the shares having become grossly oversold during the downturn through March, April, and May.  After dropping down into the $5.00 to $6.00 per share range, CNAT was too great a bargain for investors to pass up.

Keep in mind, the market potential for the company’s liver disease drug candidate, emricasan, is just too big to ignore.  At least one market research firm projects the market for liver disease drugs to grow from $6.5 billion in 2011 to nearly $11 billion in 2018.

What’s more, investors are jumping back into the stock with an eye toward important upcoming trial results.  Conatus is expected to provide top-line data from its phase 2b trial of emricasan in patients with non-alcoholic steatohepatitis during the second half of 2014.

Not only should the stock move higher ahead of the results, but it will likely soar on good news.

The recent rally has pushed the stock above our maximum buy price of $7.00.  As such, we’re moving CNAT from Buy to Hold.  If you own the shares, hang on for more upside.

. . . . Venaxis (NASDAQ: APPY) – Hold

APPY is another one of our biotechs that has made a nice upward move in recent weeks.  In fact, we now have a nice 18% gain for the position.

The shares are moving higher as part of the larger rally in the biotech sector.  And APPY clearly drew the attention of bargain hunters when it fell below the $2.00 per share level in mid-May.

With the stock now trading above our maximum buy price, we’re moving it from Buy to Hold.  Look for these shares to move higher as the company moves forward on its plan to seek FDA approval for the APPY1 Test.

Action To Take

  • Sell GTx (NASDAQ: GTXI) as soon as possible.
  • Move Xencor (NASDAQ: XNCR) from Buy to Hold.
  • Move Catalyst Pharmaceutical Partners (NASDAQ: CPRX) from Buy to Hold.
  • Move Conatus (NASDAQ: CNAT) from Buy to Hold.
  • Move Venaxis (NASDAQ: APPY) from Buy to Hold.


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