Summary
Seattle Genetics could see 25%-30% upside over the next one year.
Pfizer is apparently in advanced talks to acquire Allergan.
KaloBios soared more than 800% after-hours on Wednesday.
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Focus Ticker: Seattle Genetics
On Wednesday, Goldman Sachs gave a Sell rating on Seattle Genetics (NASDAQ:SGEN). Goldman Sachs believes that Adcetris label expansion is already priced into the stock, which is up nearly 40% so far this year. Goldman Sachs has a price target of $33 on SGEN, which represents a significant downside from current levels.
Goldman Sachs’ report was overly bearish. Indeed, the market seemed to disagree as SGEN shares finished marginally lower on Wednesday. Adcetris is already approved in three indications. In the third quarter, Adcetris sales totaled $59.1 million and accounted for bulk of SGEN’s total revenue of $84.1 million. For the first nine months of 2015, Adcetris sales have totaled $163 million and are on track to reach around $225 million for the full year.
I expect Adcetris sales to a significant increase next year though. The company received regulatory approval for classical Hodgkin lymphoma patients at high risk of relapse or progression as post-autologous transplant consolidation in the third quarter. The full impact of this third indication will only be seen in 2016. Remember, Adcetris is also being evaluated as part of a frontline combination chemotherapy regimen in patients with previously untreated advanced classical Hodgkin lymphoma. The company has already completed patient enrollment in the Phase III ECHELON-1 clinical trial. An approval in this indication could significantly boost Adcetris sales and I believe that this is not yet priced into the stock.
Although SGEN shares have posted strong gains this year even as the biotech sector has struggled, the stock is now around 10% below its 52-week high of $52.33. I believe SGEN is still trading at attractive levels and see at least 25%-30% upside over the next one year.
Sector News
Pfizer Close to Acquiring Allergan- Reuters, citing sources familiar with the situation, has reported that Pfizer (NYSE:PFE) is in talks to acquire Allergan (NYSE:AGN) for $370-$380 per share. At $150 billion, this would be one of the biggest deals in the healthcare sector. Both AGN and Pfizer had confirmed last month that they had entered into friendly takeover talks. Latest reports suggest that a deal is likely to be announced soon. The reports come even as the Treasury Department is set to announce new tax rules that will discourage tax inversion deals. In the wake of several tax inversion deals last year, the Treasury Department had introduced new tax rules that discouraged such deals. Last year, AbbVie (NYSE:ABBV) had dropped its takeover bid for Shire Plc (NASDAQ:SHPG) after the new rules were introduced. It will be interesting to see if PFE and Allergan do the same or continue with their takeover talks.
KaloBios Soars in After Hours Trading- KaloBios Pharmaceuticals (NASDAQ:KBIO) soared more than 800% in after-hours trading after confirming communications with majority shareholder group. A few days ago, KBIO had said that it was winding down operations after exploring its strategic alternatives. On Wednesday though, the company announced that it has been informed that an investor group comprised of Turing Pharmaceuticals’ Martin Shkreli and associates have bought more than 50% of the outstanding shares of KBIO. The company also confirmed that it is in discussions with Shkreli regarding possible direction for it to continue in operation. (I asked Martin Shkreli for an interview today – let’s see what he says. If readers are interested, pitch it to him on twitter.)
StemCells Presents Six-Month Interim Results from Pathway Study- StemCells (NASDAQ:STEM) presented six-month interim results from the first cohort in the Pathway Study, a Phase II proof-of-concept study evaluating the company’s HuCNS-SC platform in cervical spinal cord injury. The company reported that dose of 40M cells was well tolerated and will be the dose for the second cohort. The company also said that safety profile is acceptable. In addition, five of the six patients that were part of the first cohort demonstrated improved upper extremity muscle strength and four patients demonstrated improved function in dexterity. The final results from the cohort are expected to be released in the second quarter of 2016.
Amgen’s Repatha Not Recommended by Britain’s NICE- Britain’s National Institute for Health and Care Excellence (‘NICE) has issued a draft guidance not recommending Amgen’s (NASDAQ:AMGN) Repatha for the treatment of high cholesterol and mixed dyslipidemia. NICE serves as an advisor to the National Health Service (‘NHS) to improve health and social care in the UK. Amgen’s Repatha and Regeneron/Sanofi’s Praluent were approved earlier this year but both drugs have faced criticism over pricing. In the U.S., Express Scripts (NASDAQ:ESRX) agreed to cover both the drugs after negotiating discounts.
Veracyte Rallies on CMS Pricing Decision for Afirma- Veracyte (NASDAQ:VCYT) shares rallied more than 15% on Wednesday after the company issued a statement in response to the Centers for Medicare and Medicaid Services’ (‘CMS) decision to use a “gapfill” approach to price the Afirma Gene Expression Classifier (‘GEC). Bonnie Anderson, Veracyte’s President and CEO said that CMS’s decision is a victory for precision medicine and the many patients who are benefiting from it.
European Commission Approves KALYDECO’s Label Expansion- Vertex Pharmaceuticals (NASDAQ:VRTX) announced that the European Commission has approved expansion of the indication for KALYDECO(NYSE:R) to include children ages 2 to 5 with cystic fibrosis (‘CF) who have nine gating mutations in the CFTR gene and to include people with CF ages 18 and older who have an R117H mutation. KALYDECO was previously approved in the European Union (‘EU) for use in people with CF ages 6 and older who have one of nine gating mutations.
Pfizer and Merck KGaA’s Avelumab Granted Breakthrough Therapy- Pfizer and Merck KGaA announced that the U.S. FDA has granted their avelumab a Breakthrough Therapy designation for the treatment of patients with metastatic Merkel cell carcinoma (‘MCC) who have progressed after at least one previous chemotherapy regimen. Avelumab is a fully human anti-PD-L1 lgG1 monoclonal antibody. Meanwhile, Pfizer also announced positive top-line results from its Phase III trial comparing XALKORI(NYSE:R) to chemotherapy in previously untreated East Asian patients with ALK-positive advanced non-small cell lung cancer (‘NSCLC).
Oncolytics Commences Phase Ib Trial of REOLYSIN in Multiple Myeloma- Oncolytics Biotech (NASDAQ:ONCY) announced that enrollment in a Phase 1b study of REOLYSIN combined with standard doses of VELCADE(R) and dexamethasone in patients with relapsed or refractory multiple myeloma (REO19). Kevin Kelly, MD, Ph.D., of the Keck School of Medicine at the University of Southern California (‘USC) will serve as the trial’s principal investigator.
Huge Rally in Anavex After Company Provides Update on Anavex 2-73 Development Program- Anavex Life Sciences (OTCQX:AVXL), which has come under significant selling pressure since November 6th, saw a huge rally on Wednesday after the company announced that it is moving forward with the development program for Anavex 2-73. AVXL said that guidance received from the FDA confirms its strategy to advance Anavex 2-73 for the treatment of Alzheimer’s disease in a larger double-blinded, randomized, placebo-controlled Phase 2/3 trial. AVXL shares rose more than 60% in regular trading and another 15% in after-hours trading on Wednesday.
Otonomy Commences Patient Enrollment in Phase III Trial of OTO-104- Otonomy (NASDAQ:OTIC) announced that it has commenced enrollment of the first patients in the U.S. Phase III clinical trial of OTO-104 in Meniere’s disease. The company expects to initiate a second Phase III trial in the EU in the first quarter of 2016.
Aduro Biotech Earns Milestone Payment- Aduro Biotech (NASDAQ:ADRO) announced that it has received a milestone payment from Janssen (NYSE:JNJ) for submission of an Investigational New Drug (‘IND) application to the U.S. FDA for ADU-741. The IND will allow Janssen to commence a multi-center Phase I trial to evaluate the safety and immunogenicity of intravenous administration for ADU-741 in patients with metastatic castration-resistant prostate cancer (mCRPC).
BIND Therapeutics Earns Milestone Payment- BIND Therapeutics (NASDAQ:BIND) announced that it has earned a $4 million milestone payment from AstraZeneca (NYSE:AZN). BIND became eligible for the milestone payment after AstraZeneca initiated patient dosing in Phase I clinical trial of the Accurin AZD2811 drug candidate in solid tumors. AstraZeneca and BIND had entered into a collaboration agreement in 2013. Under the agreement, AstraZeneca is responsible for the clinical development and commercialization, while BIND is responsible for conducting clinical manufacturing.
BioTime Appoints New CFO- BioTime (NYSEMKT:BTX) announced the appointment of Russell Skibsted as its new CFO. Skibsted, an industry veteran, will succeed Robert Peabody. Skibsted brings to BTX more than two decades of financial management and life sciences business experience.
Marina Biotech Receives Milestone Payment – Marina Biotech (OTCQB:MRNA) received a milestone payment of $200,000 from its licensee MiNA Therapeutics Limited.
Drug Approvals
No drug approvals to report on.
Deals
Spectrum Divests Rights to ZEVALIN(R) in Some Territories- Spectrum Pharmaceuticals (NASDAQ:SPPI) announced the divestment of ZEVALIN rights in Japan and other countries in Asia Pacific (excluding India and China), Middle East, Africa and Latin America to Mundipharma. The company will receive an upfront payment of $15 million plus another $5 million in profits on initial ZEVALIN supply. Spectrum will continue to own the rights to the drug in U.S., Canada and Europe.
Depomed Acquires U.S. and Canadian Rights to Pain Product- Depomed (NASDAQ:DEPO) announced the acquisition of the U.S. and Canadian rights to cebranopadol and its related follow-on compound from Grunenthal GmbH. Cebranopadol is a first-in-class analgesic currently in development for the treatment of moderate to severe chronic nociceptive and neuropathic pain. Depomed sees cebranopadol as an important addition to its leading portfolio in pain and neurology.
Pfizer and Novartis Sign Development Agreement with Thermo Fisher-Pfizer and Novartis (NYSE:NVS) have entered into a long-term agreement with Thermo Fisher Scientific for the development and commercialization of a multi-marker, universal next-generation sequencing (‘NGS) oncology test that will serve as a companion diagnostic (CDX) for non-small cell lung cancer (‘NSCLC) across multiple drug development programs.
Secondary Offerings
No secondary offerings to report on.
IPOs
No IPOs to report on.
Earnings
EDAP TMS (NASDAQ:EDAP) reported a loss of euro 0.19 per share for the third quarter. The company’s revenue for the quarter was euro 6.4 million, down 7.2% on a year-over-year basis.
Aclaris Therapeutics (NASDAQ:ACRS) reported a loss of $5.11 per share for the third quarter. The company ended the quarter with cash, cash equivalents and marketable securities of $38.4 million on its balance sheet.
Insider Transactions
ContraFect Insider Sells- Daniel Couto, SVP, Manufacturing & Facilities (NASDAQ:CFRX) sold 2,872 shares at $3.81. The total value of the transaction was $10,937.
Intercept Insider Sells- David Shapiro, CMP and EVP-Development at Intercept Pharmaceuticals (NASDAQ:ICPT) sold 4,264 shares at $178.53. The total value of the transaction was $761,237.
FibroGen Insider Sells- K Peony Yu, VP, Clinical Development at FibroGen (NASDAQ:FGEN) sold 5,000 shares at $28. The total value of the transaction was $140,000.
Calithera Biosciences Insider Sells- Curtis Hecht, VP, Business & Corporate Development at Calithera Biosciences (NASDAQ:CALA) sold 970 shares at $6.58. The total value of the transaction was $6,385.
Kite Pharma Insiders Sell- Margo R. Roberts, Chief Scientific Officer at Kite Pharma (NASDAQ:KITE) sold 6,145 shares at $78.16. The total value of the transaction was $480,270. Rizwana F. Sproule, VP Regulatory Affairs at the company, sold 9,567 shares at $78.13. The total value of the transaction was $747,507.
Atara Biotherapeutics Insiders Sell- Gad Soffer, COO at Atara Biotherapeutics (NASDAQ:ATRA) sold 7,586 shares at $31.22. The total value of the transaction was $236,846. Carol G. Gallagher, director at the company, sold 1,184 shares at $31.10. The total value of the transaction was $36,822.
Anthera Pharmaceuticals Insider Sells- Anthera Pharmaceuticals Chief Medical Officer Colin Hislop sold 12,500 shares at $5.31. The total value of the transaction was $66,341.
KaloBios Insider Buys- Anthion Partners, a 10% owner in KaloBios Therapeutics bought 713,726 shares in four separate transactions. The average buying price was $1.495 per share.
Big Movers
NYSE- Puma Biotechnology (NYSE:PBYI) was one of the major movers on the NYSE. The stock closed 8.25% higher. Axovant Sciences (NYSE:AXON) was another major gainer, closing 6.95% higher.
NASDAQ- Anavex Life Sciences was one of the biggest gainers on the NASDAQ. The stock closed 63.58% higher. Global Blood Therapeutics (NASDAQ:GBT) was another major gainer, closing 16.65% higher. Veracyte shares closed 15.95% higher. Conatus Pharmaceuticals (NASDAQ:CNAT) was one of the major losers on the NASDAQ. The stock closed 8.94% lower. Adaptimmune Therapeutics (NASDAQ:ADAP) shares ended the day 7.89% lower.
NYSEMKT- Palatin Technologies (NYSEMKT:PTN) was one of the major losers on the NYSEMKT. The stock closed 8.18% lower.
OTC- Cellceutix (OTCPK:CTIX) shares closed 2.99% higher on Wednesday.
The post Premarket Biotech Digest: Seattle Genetics’ Upside, Pfizer/Allergan Deal, KaloBios Soars appeared first on Hot Stocks NYC.