Actionable news
All posts from Actionable news

Top 2 Trade Alert Ideas October 7: Spark's Pullback, Synta Catalyst, M&A Activity

The biotech sector has seen significant M&A activity this year. Speaking to CNBC in August, Gregory Sarian, managing director and partner at Hightower Advisors, said that although the total number of deals announced in the twelve months to August has been the same as the previous twelve months, the total value is twice the level seen in previous twelve months.

The September sell-off in the biotech sector should boost M&A activity further, in my opinion. Following the sell-off, several potential takeover targets such as Clovis Oncology (NASDAQ:CLVS) and Arrowhead Research (NASDAQ:ARWR) are trading at attractive levels. I believe that companies with strong cash position will look to capitalize on this.

Spark Therapeutics shares soared above $60 on Monday after the company announced positive Phase III results for its lead product candidate, SPK-RPE65, for the treatment of RPE65-mediated inherited retinal dystrophies.

SPK-RPE65, an Orphan-designated drug, is targeting a lucrative market. The addressable market in the U.S. and five major European markets alone is worth $350 million. This is based on an estimated treatment cost of $100,000, which is reasonable for an Orphan Drug, and a total of 3,500 patients in the U.S. and five major European markets. Assuming that ONCE is able to capture even half of this market at peak, which is possible given the unmet need, it could generate sales of $175 million. At around $47.50, ONCE currently trades at 6.5x sales, which is below the industry average of 10x sales, according to data from Stern.

In my opinion, at around $50, ONCE looks attractive, especially considering that SPK-RPE65 is now close to commercialization. Add to this the fact that the company has more than $8 per share in cash on its balance sheet.

Synta Pharmaceuticals shares saw a huge sell-off in 2013 as investors were disappointed over results from the clinical trial of ganetespib, an Hsp90 inhibitor being evaluated as a treatment for advanced non-small cell lung cancer. Ganetespib is also being evaluated as a treatment in number of other cancers.

Investors had high hopes from ganetespib and this is why the stock traded above $10 in January 2013. However, disappointment over Phase II data sparked a sell-off. The stock was also hit by the company's decision to expand its Phase III clinical trial from 500 to 700 patients, which meant that interim and final results would be delayed. However, the sell-off, as I had noted in an earlier article, is an overreaction. In fact, based on the final analysis of GALAXY-1 trial of ganetespib, investors are possibly making a mistake by remaining on the sidelines with SNTA. Importantly, the company has an upcoming catalyst before the end of this year, which could potentially boost the stock price.

Dr Kanak Kanti De's Real Time Biotech Trade Alert Service Archive - October 7, 2015


Posted: Wed, 07 Oct 2015 10:59:20 -0400
Ticker: BCLI
Investment Type: Speculative
News: BrainStorm Cell Therapeutics Inc. (NASDAQ:BCLI) - Final patient has been treated in its multicenter Phase 2 clinical trial investigating the company's proprietary NurOwn™ stem cell technology. The trial is a double blind, placebo-controlled, clinical trial which targeted enrollment of 48 patients with Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gehrig's disease.

Posted: Wed, 07 Oct 2015 10:58:27 -0400
Ticker: OPK
Investment Type: Speculative
News: OPKO Health, Inc. (NYSE:OPK) presented clinical data from its completed 12-month hGH-CTP Phase 2 pediatric growth hormone deficiency clinical study in two oral presentations at the 54th Annual Meeting of the European Society for Paediatric Endocrinology on October 3, 2015, in Barcelona, Spain. The presentations included pharmacokinetic, pharmacodynamic, safety and efficacy data of OPKO's hGH-CTP in comparison to a daily Genotropin® arm. Safety/efficacy comparable to daily hGH was shown.

Posted: Wed, 07 Oct 2015 10:51:39 -0400
Ticker: SNTA
In Portfolio: Yes
Action: Buy

Conviction Buy: Yes
Price: 1.84
Target: 10
Stop: 0.75
Profit Taker: 5
Risk Profile: High
Investment Type: Speculative
Thesis: A beaten-down stock with upcoming catalysts. Synta Pharmaceuticals has fallen sharply from its 2013 highs. The next few months could make or break SNTA as the company prepares to report interim analysis from Phase III GALAXY-2 trial of ganetespib in second-line NSCLC. The data is expected before the end of this year and there is a high possibility of success. Ended Q2 with more than $98 million in cash, which is around $0.70 per share.
Catalyst: First interim analysis from Phase III GALAXY-2 trial in NSCLC by year end.
News: Synta recently named Dr. Alan C. Rigby as its Chief Scientific Officer.

Posted: Wed, 07 Oct 2015 10:50:36 -0400
Ticker: LBIO
Investment Type: Speculative
News: Lion Biotechnologies (NASDAQ:LBIO) obtained an exclusive, worldwide license from the National Institutes of Health (NIH) to...