BST Position Update: March 11, 2013

| March 11, 2013

March 11, 2013

Position Update

. . . . Halozyme Therapeutics (NASDAQ: HALO) – Buy up to $6.00

HALO is our most recent addition to the portfolio.  And to say we’re excited about another opportunity to trade this biotech, would be an understatement.

The last time we traded it, our position more than doubled in value.  And so far, the biotech’s shares are off to a great start this time around.

We’re up 7% on the new position in just two trading days.

HALO’s clearly benefiting from recent strength in the biotech industry.  Using the SPDR S&P Biotech ETF (NYSE: XBI) as a proxy for the sector, biotech stocks have gained nearly 10% over the past two weeks.

HALO is also attracting investors with its slate of near-term catalysts.  Keep in mind that HALO is collaborating with the other drug makers mentioned below on developing subcutaneous injection formulations for their intra-venous delivered blockbuster drugs.

Here’s a quick summary of HALO’s upcoming catalysts…

    • Initial data from the phase 2 trial of PEGPH20 in pancreatic cancer are expected during the first half of 2013.


    • Baxter is expected to complete pre-clinical studies required by an FDA complete response letter for the subcutaneous injection formulation of its immunoglobulin product, HyQvia, by mid-2013.


    • The European Medicines Agency is expected to make a decision on Roche’s application for approval of a new subcutaneous injection formulation of its blockbuster breast cancer drug, Herceptin (called MabThera outside the US), around mid-2013.


  • And, ViroPharma is expected to complete their phase 2b trial of Cinryze, a subcutaneous injection formulation of its approved drug for hereditary angiodema, by the end of September 2013.

With so many potential upside catalysts ahead, HALO has a chance to really soar this year.

If you haven’t grabbed your HALO shares yet, you shouldn’t wait too long.  The stock is moving higher in a new uptrend.  And it’s closing in on our maximum buy price.

. . . . Vical (NASDAQ: VICL) – Hold

VICL surged on heavy volume last week.  The shares gained 31% to give us a solid 22% gain on the position.  And the stock closed at its high for the week, signaling it may be in store for more upside.

There was no specific news to explain the rally.

Most likely, VICL benefited from renewed investor interest in biotech stocks generally.  And investors may have targeted Vical due to its important upcoming phase 3 trial results.

Top-line results from the phase 3 trial of Allovectin in metastatic melanoma are expected by mid-2013.  If the results are good for the company’s novel, gene-based cancer vaccine, it could be a blockbuster product.

With VICL now trading above our maximum buy price, we’re moving it from Buy to Hold. Hang on to your shares for greater gains.

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

MNKD also soared last week.

The biotech slowly moved higher during the week and then gapped up on Friday.  The stock ended the week at $3.06 after setting a new 52-week high of $3.11.

That move gives us a nice 17% gain on the stock.

It looks like investors finally realized important phase 3 trial results are coming up for MNKD’s potential blockbuster drug, Afrezza.  Top-line results from the phase 3 trial of the diabetes drug are expected in July 2013.

Thanks to last week’s surge, MNKD is now trading well above our maximum buy price.  As a result, we’re moving it from Buy to Hold.  Let’s hang on to the shares to see if this rally has legs.

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

The rally we’ve been expecting for ANAC finally happened.  Since hitting a low of $3.00 on February 27th, the stock has gained 24%.

Not too shabby.

ANAC surged on the results from the second phase 3 trial of Tavabarole, its toe-nail fungus treatment.

The results showed the drug achieved a cure rate of 9.1% compared to just 1.5% for the placebo.  More importantly, the cure rate was much higher than the first phase 3 trial’s 6.5%.

Unfortunately, the data still trailed that of Valeant’s competing late-stage drug candidate, efinaconazole.

Let’s hang on to ANAC to see if it will continue moving higher.  The shares are consolidating the big move off the lows at the moment.  And there’s a good chance the stock will resume the uptrend after a quick breather.

Continue holding ANAC for more upside.

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

TSRX shot higher this week. In fact, the biotech set a new 52-week high of $6.47 to give us a 17% gain.

Investors are snapping up shares ahead of results from the second phase 3 trial of tedizolid phosphate.  Results from this trial of the company’s treatment for acute bacterial skin and skin structure infections are expected by the end of March.

Remember, if the results are good, tedizolid could ultimately grab a chunk of competing product, linezolid’s, $1 billion-plus annual revenues.  And Trius shares are hardly discounting this potential with a market cap of just $245 million.

No wonder investors are piling into TSRX.

Hang on to your shares for greater gains.  This stock could really soar on positive trial results.

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

NYMX recently reported some data from its phase 3 trial of NX-1207 for benign prostatic hyperplasia.

First, the drug has shown no evidence of eliciting an immune reaction in men treated with intra-prostatic injections of the drug.  This is good news.  Biotechnology-derived proteins can induce a cellular immune response that cause severe life-threatening conditions.

Obviously, the lack of any life-threatening immune responses in patients treated with NX-1207 is great news for the drug.

Second, the Safety Monitoring Committee issued a favorable report for NX-1207. The Committee said it has found no significant safety concerns related to NX-1207 to date.

Despite this good news, NYMX has declined recently.

We’re not sure why this has happened.  There is no negative news to explain the drop in share price.

The only thing we can attribute this downward move to is a lack of communication from the company regarding the phase 3 trial results.

Top-line data were initially expected by the end of 2012.  Now, the results aren’t expected until the fourth quarter of 2013.

The delay and the lack of an explanation from the company could explain why some investors have sold the stock recently.  While we’re not ready to exit the trade yet, we will be keeping a close eye on this situation.

For now, we’re going to maintain our Hold rating on NYMX.

Action To Take

  • Move Vical (NASDAQ: VICL) from Buy to Hold.
  • Move MannKind (NASDAQ: MNKD) from Buy to Hold.


Category: BST Update

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