BST Position Update: March 22, 2013

| March 22, 2013

March 22, 2013

Position Update

. . . . Anacor Pharmaceuticals (NASDAQ: ANAC) – Hold

It’s a good thing we decided to hang on to ANAC.  The stock surged 26% yesterdayon heavy volume.  And we now have a 3% gain on the position.

ANAC soared on positive data from a phase 2 trial of AN2728, the company’s novel treatment for mild-to-moderate atopic dermatitis.

A type of eczema, atopic dermatitis causes the skin to react abnormally to irritants, food, and environmental allergens.  The patient’s skin becomes very itchy, which leads to scratching, redness, flaky skin, and a chronic rash.

The condition usually first appears in childhood, but it can continue into adulthood.

Approximately 20% of all children in the US are affected by atopic dermatitis.  And Datamonitor reported in 2007 that the disorder affects about 40 million people in the world’s seven major pharmaceutical markets.

Unfortunately, there’s no cure for atopic dermatitis at the moment.

It’s typically treated with antibiotics, antihistamines, topical corticosteroids, and topical immunomodulators.  However, current treatments aren’t all that useful as they have limited efficacy, side effects, and/or safety concerns.

The most recently approved treatments are the topical mmunomodulators.  Protopic and Elidel were approved in 2000 and 2001 and had combined sales of over $500 million in 2004.

According to LeadDiscovery, sales of psoriasis drugs in the seven major drug markets reached $2.5 billion in 2008.

ANAC believes AN2728 will be just as effective as the current treatments but offer a better safety profile.

AN2728 is a topical, boron-based phosphodiesterase-4 (PDE-4) inhibitor.  It’s a small molecule drug that inhibits PDE-4 and reduced production of TNF-alpha, a precursor of the inflammation associated with psoriasis.

If approved, AN2728 will be the first topical non-steroidal treatment that inhibits TNF-alpha release.

In the phase 2 trial, patients treated with AN2728 ointment twice daily for 28 days achieved 71% improvement from baseline.  What’s more, an impressive 66% of lesions treated with AN2728 achieved total or partial clearance.

The drug was also generally safe and well-tolerated.  Most adverse events were mild and largely unrelated to the study.

Given the terrific phase 2 data, ANAC plans to advance AN2728 to phase 3 testing.  They expect to begin a phase 3 trial by the end of 2013.

With ANAC now trading above our maximum buy price, we’re moving the stock from Buy to Hold.  Hang on to your shares for bigger gains.

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

TSRX has continued moving higher since our last update.  The stock hit another new high, reaching $7.20 per share on March 20th.  That move gave us a 30% gain on the position.

The shares are now consolidating the recent gains ahead of the imminent phase 3 trial results for edizolid phosphate.  If the results are good, as we expect, Trius could soar on the news.

Continue holding TSRX for more upside.

. . . . Nymox Pharmaceutical (NASDAQ: NYMX) – Buy up to $6.35

NYMX is making a huge move higher this week. After putting in a bottom around $4.50 per share on Friday, the stock soared 26% on Monday to close at $5.84.

What happened?

The company issued a press release highlighting their presentation at the European Association of Urology’s annual meeting in Milan, Italy.  The presentation included the new safety and immunological data for benign prostatic hyperplasia (BPH) drug, NX-1207.

We summarized this important data in our last update.

Clearly, the presentation went over very well with those in attendance.  And it appears the press release caught the eye of many biotech investors on Monday.

Here’s a quote from the press release that likely resonated with investors previously unfamiliar with NYMX…

“In the BPH studies to date, a single dose of NX-1207 has been found to produce symptomatic improvements about double that reported for currently approved BPH drugs without causing the sexual or cardiovascular side effects associated with those drugs.  Follow up studies have shown evidence of long lasting benefit with a significant proportion of men who received a single dose reporting maintained improvement in BPH symptoms without other treatments for up to 7 1/2 years.”

It’s hard to imagine a more positive rendition of the drug’s performance in clinical testing. A point well taken with investors this week.

With the stock moving higher again, we’re moving NYMX from Hold to Buy.  We’re also adjusting our maximum buy price to $6.35 per share.  Go ahead and buy NYMX up to $6.35.

. . . . Vanda Pharmaceuticals (NASDAQ: VNDA) – Buy up to $4.40

Vanda’s moving higher after receiving positive reviews from several Wall Street analysts. In fact, the stock has gained 11% since hitting a low of $3.57 on March 14th.

Piper Jaffray analysts were the latest to climb aboard the VNDA bandwagon.  They started coverage of VNDA on March 5th with an “overweight” rating and an $8.00 price target.

That action followed an upgrade by Jefferies Group analysts on February 14th.  They raised their rating on VNDA from hold to buy and increased their price target from $3.50 to $6.00.

Prior to that upgrade, Lazard Capital Markets analysts had initiated coverage of VNDA on February 5th with a buy rating.  These bullish analysts also set an $11.00 price target for the shares.

But JMP Securities analysts are the ones who got the ball rolling.  They began coverage of VNDA on January 17th with an outperform rating and a $9.00 price target.

As you can see, Wall Street is quite bullish on VNDA.

That’s two buy ratings and two outperform ratings since the beginning of the year.  And the average price target for the stock is $8.50 per share.

That’s upside potential of 115% from the current share price.

With VNDA trending upward again, we’re moving the stock from Hold to Buy.  Go ahead and grab these shares up to a maximum price of $4.40.

. . . . Novavax (NASDAQ: NVAX) – Hold

NVAX is on fire!

The stock has gained 19% since March 6th.  And it’s moving steadily higher in a solid uptrend.

The current rally was sparked by a one-day surge of 9% on March 7th.  The stock jumped on news Novavax was honored at the Vaccine World Summit India 2013 conference for having the “Most Promising Vaccine for Emerging Diseases in India.”

The award recognized the biotech and its partners for the progress they’ve made on developing a new malaria vaccine.  According to the World Malaria Report 2011, over 70% of India’s population face the risk of malaria infection.

That’s about 890 million people!

Clearly, the sales potential for a safe and effective malaria vaccine in India is substantial. No wonder NVAX soared on this news.

Since that news came out, NVAX has released other positive information.

On Monday, the company presented exciting pre-clinical research from their respiratory syncytial virus (RSV) vaccine development program.  This amazing research showed the company’s vaccine “induced anti-RSV antibodies capable of neutralizing RSV in vitroand significantly reduced infectious RSV” in rats.

The research clearly has investors excited for the upcoming top-line results from a phase 2 study of this vaccine in 330 women of childbearing age.  Those results are expected in April 2013.

Things are looking good for NVAX.  If the upcoming trial results are good, the stock should soar.  Hang on to your shares for greater gains.

Action To Take

  • Move Anacor Pharmaceuticals (NASDAQ: ANAC) from Buy to Hold.
  • Move Nymox Pharmaceutical (NASDAQ: NYMX) from Hold to Buy and adjust maximum buy price to $6.35 per share.
  • Move Vanda Pharmaceuticals (NASDAQ: VNDA) from Hold to Buy.


Category: BST Update

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