Summary
A recent study claims that smoking marijuana could lead to prediabetes.
Celgene is fairly valued at current levels.
Baker Bros raise stake in Aquinox Pharmaceuticals.
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Dr De’s Opening Thoughts: Diabetes and Marijuana
Does pot smoking lead to diabetes? Well, the consensus opinion has long been that it doesn’t. In fact, marijuana helps glycemic control. However, a study recently published in Diabetologia, the journal of the European Association for the Study of Diabetes, claims otherwise. This study done on data collected for over 30 years among 5000+plus subjects shows that 65% of subjects consuming marijuana have a tendency towards prediabetes.
While prediabetes is not diabetes, there is, of course, a strong correlation between prediabetes and diabetes. Even if a prediabetic does not develop diabetes, there can be considerable damage to their cardiovascular and other systems from long-term prediabetic conditions. That is certainly not good for proponents of marijuana as the elixir of life.
Focus Ticker: Celgene
Celgene (NASDAQ:CELG) has had a mixed year so far. The stock hit an all-time high of $140.72 earlier this year after the company announced the acquisition of Receptos. However, since then CELG has given up some of its gains for the year amid a correction in the biotech sector.
Despite the correction, CELG is still up more than 7% for the year, easily outperforming the S&P 500. But when compared to the iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB), Celgene has underperformed this year. The IBB is still up more than 16% for the year. The underperformance is surprising, considering that CELG has been making all the right moves.
In Q2, Celgene saw a 22% increase in its product sales. The company’s total revenue of $2.28 billion for the second quarter also beat the consensus forecast. Second quarter earnings of $1.23 per share also came in ahead of expectations. Importantly, Celgene maintained its full-year net product sales guidance and raised its non-GAAP earnings guidance.
Then there is the Receptos acquisition. The initial reaction to the acquisition was positive, as I noted above, as the stock hit an all-time high. The pullback in recent weeks has more to do with the correction in the biotech sector than anything specific with Celgene. Despite this, I would remain on the sidelines with Celgene at current levels.
While the stock has seen a pullback, it is still trading 10.40x 2015 sales estimate, which is in line with the industry average. I think Celgene is fairly valued at current levels and especially when compared to other large cap biotech such as Gilead Sciences (NASDAQ:GILD) and Biogen (NASDAQ:BIIB). In my opinion, a 10%-15% pullback in Celgene would be a good opportunity to buy. CELG is a solid long-term story, especially after the Receptos acquisition; however, I would wait for a pullback before taking a position.
Sector News
Mylan Launches Perrigo Bid – Mylan (NASDAQ:MYL) has launched its tender offer to acquire Perrigo (NYSE:PRGO). Mylan has offered $75 in cash and 2.3 MYL shares for each Perrigo share. Perrigo has urged shareholders to take no action, pending a board review. In a statement, PRGO said that its board will assess MYL’s offer and advise shareholders within 10 days.
Baker Bros Raise Stake in Aquinox – Aquinox Pharmaceuticals (NASDAQ:AQXP) shares edged higher on Monday following reports that investors Julian and Felix Baker raised their stake in the company to 39.6%. AQXP shares rose to an intra-day high of $22.38 on Monday before paring most of its gains to settle 1.85% higher.
FDA Designates Catabasis Pharma’s CAT-1004 Rare Pediatric Disease for DMD – The U.S. FDA has designated Catabasis Pharma’s (NASDAQ:CATB) CAT-1004 a Rare Pediatric Disease for the treatment of DMD. If CAT-1004 is approved then Catabasis will be eligible to receive a Rare Pediatric Disease Priority Review Voucher. The company can use this voucher or sell it.
Janssen Biotech Submits sNDA for IMBRUVICA(R) – Janssen Biotech (NYSE:JNJ) announced the submission of supplemental New Drug Application (sNDA) for IMBRUVICA to the U.S. FDA. The sNDA is for front-line use in patients with chronic lymphocytic leukemia (CLL).
Amarantus Granted Orphan Drug Designation for MANF – Amarantus Bioscience (OTCQX:AMBS) announced that the U.S. FDA granted the company’s investigational drug mesencephalic-astrocyte-derived neurotrophic factor ((OTC:MANF)) Orphan Drug Designation for the treatment of retinal artery occlusion (RAO). MANF was discovered using AMBS’s proprietary PhenoGuard Protein Discovery Engine.
Anthera’s Japanese Partner Terminates Agreement – Anthera Pharmaceuticals (NASDAQ:ANTH) announced the receipt of a termination notice from its Japanese partner, Zenyaku. Zenyaku has terminated the December 2014 Collaboration and License Agreement related to blisibimod, effective January 7, 2016.
Parexel Announces Stock Buyback Program – Parexel International (NASDAQ:PRXL) announced that its Board of Directors has approved a stock repurchase program authorizing the repurchase of up to $200 million of its common stock. The buyback will be funded through cash on hand, cash generated from operations, existing credit facilities or other financing.
Drug Approvals
Supernus (NASDAQ:SUPN) had a manufacturing addition for Oxtellar XR, an antiepileptic drug (AED) indicated for adjunctive therapy in the treatment of partial seizures in adults and children 6-17 years old. Oxtellar had sales of $25 million last year.
Mylan had an approval for generic Fluvastatin, used together with a proper diet to lower high cholesterol and triglycerides (fats) in the blood. First developed by Novartis (NYSE:NVS), annual sales peaked at $734 million in 2003.
Novartis had a manufacturing addition for Tobi podhaler, an antibacterial aminoglycoside indicated for the management of cystic fibrosis patients with Pseudomonas aeruginosa. “TOBI Podhaler is currently approved in the European Union, Canada, Switzerland and other countries. TOBI’s (TOBI nebulizer solution and TOBI Podhaler) sales in 2012 were up 7% year over year (up 9% year over year in constant currency) to $317million.”
Pacira Pharma (NASDAQ:PCRX) had a manufacturing addition for Exparel, a liposome injection of bupivacaine, an amide local anesthetic, indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia. EXPAREL net product revenues were $56.0 million in the first quarter of 2015, compared to $34.4 million in the first quarter of 2014.
Novartis had an MAA for Farydak (panobinostat), used in combination with two other medicines, bortezomib and dexamethasone, to treat multiple myeloma. The FDA approved panobinostat earlier in February.
Trials and results
No trials and results to report.
Deals
Kite Pharma Expands Collaboration with Netherlands Cancer Institute – Kite Pharma (NASDAQ:KITE) announced that it has expanded its collaboration with the Netherlands Cancer Institute (NKI). Under the agreement, Kite will receive from NKI, the exclusive option to license T cell receptor gene sequences for the development and commercialization of cancer immunotherapy candidates targeting solid tumors.
Chimerix and BARDA Announce Contract Extension – Chimerix (NASDAQ:CMRX) announced an extension of its contract with the Biomedical Advanced Research and Development Authority (BARDA) for the development of the broad spectrum antiviral, brincidofovir as a medical countermeasure to treat smallpox. The contract extension provides an additional $13 million to CMRX for a period of 15 months.
Dr. Reddy’s Signs Commercialization Deal with Hatchtech – Dr. Reddy’s Laboratories (NYSE:RDY) announced the signing of a commercialization agreement with Australia-based Hatchtech. Hatchtech is developing an innovative prescription head lice product called Xeglyze Lotion. RDY has been granted exclusive rights for Xeglyze Lotion for the territories of the U.S., Canada, India, Russia and the CIS, Australia, New Zealand and Venezuela. In exchange, Dr. Reddy’s will make an upfront payment of $10 million, up to $50 million based on pre-commercialization milestones and an undisclosed amount based on post commercialization milestones.
Sanofi to Collaborate with PeptiDream – French drug maker Sanofi (NYSE:SNY) and Tokyo-based PeptiDream have entered into a collaboration agreement under which PeptiDream will use its proprietary Peptide Discovery Platform System (PDPS) technology to generate macrocyclic/constrained peptides against multiple targets of interest selected by Sanofi. SNY will have the right to develop and commercialize all therapeutic peptides resulting from the collaboration.
NantWorks Signs License Agreement with Amgen – NantPharma, a subsidiary of NantWorks, has signed an exclusive global license deal with Amgen (NASDAQ:AMGN) for its cancer therapy candidate, AMG 337. As per the agreement, NantPharma has acquired the rights to develop and commercialize AMG 337 worldwide, excluding Japan, Russia and certain other Central Asian countries.
Secondary Offerings
BioTime to Sell Shares in Registered Direct Offering – BioTime (NYSEMKT:BTX) announced that it has agreed to sell 2,607,401 shares of its common stock to selected investors, including Broadwood Partners LP, in a registered direct offering. The shares have been offered at a price of $3.29 per share. The gross proceeds from the offering total $8.58 million.
Acadia Health Upsizes Debt Offering – Acadia Healthcare (NASDAQ:ACHC) upsized its private offering of 5.625% Senior Notes to $275 million. The company had initially announced a private debt offering of $250 million. The 5.625% Senior Notes will be due in 2023. The company will use the net proceeds from the offering to fund the retirement of its existing 12.875% Senior Notes due 2018, the repayment of indebtedness under its senior secured revolving line of credit and general corporate purposes.
Mirati Therapeutics Announces Secondary Offering – Mirati Therapeutics (NASDAQ:MRTX) announced that it intends to offer and sell approximately $80 million of shares of its common stock in an underwritten public offering. The company also expects to grant underwriters to the offering, a 30-day option to purchase up to an additional 15% of the shares of common stock offered in the public offering.
IPOs
Dimension Therapeutics Files for IPO – Dimension Therapeutics has filed for a $115 million IPO. The Cambridge, Massachusetts-based company is engaged in the development of novel, liver-directed gene therapies for rare genetic disorders. Dimension plans to list its shares on the NASDAQ under the ticker symbol DMTX.
Earnings
Tenax Therapeutics (NASDAQ:TENX) reported a loss of $0.11 per share for the first quarter, beating consensus forecast by 3 cents. The company ended the quarter with $43.9 million in cash on its balance sheet.
Insider Transactions
Tracon Insider Sells – JAFCO Super V3 Investment Limited, a 10% owner in Tracon Pharmaceuticals (NASDAQ:TCON), sold 60,038 shares in three separate transactions. JAFCO sold 22,000 shares at $11.86, 19,438 shares at $11.96, and 18,600 shares at $11.48.
FibroGen Insider Sells – K Peony Yu, VP, Clinical Development at FibroGen (NASDAQ:FGEN) sold 1,093 shares at $27.84. The total value of the transaction was $30,430.
Impax Laboratories Insiders Sell – Michael Nestor, President Impax Pharmaceuticals, a division of Impax Laboratories (NASDAQ:IPXL), sold 5,000 shares at $43.56. Mark A. Schlossberg, SVP and General Counsel at Impax Laboratories, sold 7,457 shares at $43.30.
Synergy Pharmaceuticals Insider Sells – Alan Joslyn, director at Synergy Pharmaceuticals (NASDAQ:SGYP) sold 13,754 shares at $7.22. The total value of the transaction was $99,347.
Pozen Insider Sells – John E. Barnhardt, VP, Finance & Administration at Pozen (NASDAQ:POZN) sold 18,322 shares at $8.78. The total value of the transaction was $160,867.
Flexion Therapeutics Insider Buys – Ann C. Merrifield, director at Flexion Therapeutics (NASDAQ:FLXN) bought 1,000 shares at $23. The total value of the transaction was $23,000.
Bio-Rad Insiders Sell – Christine A. Tsingos, EVP and CFO at Bio-Rad Laboratories (NYSE:BIO) sold 289 shares in two separate transactions. Tsingos sold 152 shares at $137.50 and 137 shares at $139.11. Norman D. Schwartz, Chairman, President and CEO at the company, sold 3,809 shares in two separate transactions. Schwartz sold 1,058 shares at $137.36, and 2,751 shares at $138.50. James R. Stark, VP, Corporate Controller at the company, sold 76 shares at $137.50. Shawn Marie Soderberg, EVP, General Counsel, Sec at the company sold 152 shares at $137.50. Giovanni Magni, EVP, Chief Strategy Officer at Bio-Rad, sold 152 shares at $137.50. Ronald W. Hutton, Vice President and Treasurer, sold 58 shares at $137.50. John Hertia, Executive Vice President at Bio-Rad, sold 228 shares at $137.50. Shannon Hall, Executive Vice President at the company, sold 92 shares at $137.50. Michael Crowley, EVP, GBL Commercial Operations, sold 152 shares at $137.50.
Pacira Pharmaceuticals Insider Buys – James S. Scibetta, SVP, Chief Financial Officer at Pacira Pharmaceuticals bought 5,000 shares at $61.37. The total value of the transaction was $306,850.
Big Movers
NYSE – Axovant Sciences (NYSE:AXON) was among the major biotech gainers on the NYSE. The stock closed 13.01% higher. Baxalta (NYSE:BXLT) shares closed 4.30% higher.
NASDAQ – Collegium Pharmaceutical (NASDAQ:COLL) was one of the biggest gainers on the NASDAQ. The stock closed 39.48% higher. Trevena (NASDAQ:TRVN) shares ended the day 15.51% higher. Bellicum Pharmaceuticals (NASDAQ:BLCM) shares ended the day 10.44% higher. Raptor Pharmaceutical (NASDAQ:RPTP) shares were among the major losers. The stock closed 37.49% lower. Omeros (NASDAQ:OMER) shares ended the day 6.52% lower. Bellerophon Therapeutics (NASDAQ:BLPH) closed 6.31% lower.
NYSEMKT – Bio-Time was one of the major biotech movers on the NYSEMKT. The stock closed 7.60% higher.
OTC – Amarantus Bioscience was one of the major movers on the OTC market. The stock closed 5.85% higher. Cellceutix (OTCPK:CTIX) shares ended the day 2.22% lower.
Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…)I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.