Most stocks broadly reflect a combination of their underlying company’s current value and future prospects. As that value and those prospects evolve over time, so does a stock’s price.
Biotech stocks aren’t “most stocks,” however.
In the world of biotech, a stock’s value is largely dependent on the success or failure of one particular drug. That’s why biotech stocks are notorious for soaring or plunging in just one day — because one announcement can instantaneously make or break a stock’s value.
Of course, if you’re in the right side of the news, a quick fortune can be made.
With that in mind, here are five biotech stocks with catalytic decisions or news scheduled for the near-term future.
The next-to-last step in bringing a drug all the way through the FDA’s maze is a review by an FDA advisory committee. This committee doesn’t make the final decision, but it does recommend an approval or a rejection, and the Food & Drug Administration generally heeds the advice.
Relistor, from Progenics (PGNX), for opioid-induced constipation, will be scrutinized by the appropriate advisory committee on March 10-11. A constipation treatment might not seem like much of a game-changer for Progenics. This market is surprisingly large, however. See, one of the relatively common side effects of pain-relieving opioids is — you guessed it — constipation.
Some believe Relistor could generate nearly $300 million in various milestones for Progenics.
There’s no firm date that Celldex Therapeutics (CLDX) is going to update the market on the progress it has made with its dense deposit disease treatment, CDX-1135, currently in Phase 2 testing. It’s just supposed to happen next month.
Whenever it happens, though, it should be big.
Dense deposit disease is a very rare kidney disease that ultimately causes kidney failure for most of its sufferers. That’s because there’s no existing treatment for it. If Celldex looks like it could be the first to bring such a treatment to the market, CLDX stock could soar on the news.
Indeed, CLDX could be one of the biggest movers among biotech stocks for the first quarter of 2014.
If you like long shots and can stomach some risk, then you might want to put Sarepta Therapeutics (SRPT) in your portfolio.
Sarepta Therapeutics is the company that developed eteplirsen — a drug under investigation for the treatment of Duchenne muscular dystrophy. It shows a lot promise, and there was even some speculation that the company would seek the FDA’s approval just with its Phase 2 trial results, and completely skip the usually required Phase 3 testing (shortening the development time by years).
Once the market was told by the FDA in November that the administration wasn’t interested in an early review of eteplirsen, however, SRPT stock tanked, falling from $36 to $13 in just one day.
Here’s the problem … the FDA never said it would refuse to consider an early approval of eteplirsen. One of several explanatory letters the FDA’s Catherine Chew wrote stated, “FDA has reached no conclusions about the possibility of using accelerated approval for any new drug for the treatment of Duchenne muscular dystrophy, and for eteplirsen in particular.”
Now, don’t get your hopes up, as this isn’t to say Sarepta is going to be allowed to skip Phase 3 trials. Indeed, the FDA rarely allows a biotech company to skip an entire phase of testing, and Sarepta Therapeutics doesn’t look like it’s going to be an exception to the norm either.
If the FDA is going to make a generous decision on the matter, though, its apt to happen within the next few weeks … at the most. At the very least, this will make SRPT stock one of the most-watched biotech stocks of Q1.
Chelsea Therapeutics (CHTP) just got Northera through the hurdle of the Advisory Panel, and the recommendation to the FDA has CHTP set to open Wednesday trading up 160%.
However, the FDA will make its final decision on the neurogenic hypotension treatment on Feb. 14, and despite the fact that Northera had been granted priority review, that’s certainly no guarantee the FDA feels like it has to give the drug the nod. Remember, the panel recommended the same drug be approved back in early 2012, and the Food and Drug Administration surprised a lot of CHTP stock owners by rejecting the drug, sending Northera back to the drawing board.
Perhaps the clarifying studies done in the meantime will appease the final authorities this time around. What’s at stake is at least $300 million in annual sales, according to some industry experts. An approval could make CHTP stock one of the most explosive biotech stocks of 2014.
It’s been a long time in the coming, but Mannkind (MNKD) is finally going to get a second chance to win the FDA’s approval for its inhaled insulin, Afrezza.
The story is too long to tell in all its glory. The short version is, Afrezza was considered to be all but approved back in 2011, as the efficacy numbers were solid. Even the FDA insider who had a history of front-running the agency’s approvals had his long position in MNKD stock in place. Then at the 11th hour, a hedge fund manager known for shorting biotech stocks in front of PDUFA dates made a relatively unusual (and considerably suspicious) decision to send a letter to several FDA chiefs explaining they had a duty to reject the drug. Sure enough, the drug was rejected. Plenty of people were shocked, but none so much as the people at Mannkind.
In any case, Mannkind humored the FDA and repeated the Phase 3 niceties, pretty much coming up with the same good results the second time around. We’ll find out if the FDA has the stomach to rear-end Mannkind again when Afrezza is up for approval on April 15.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.