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kids ray bans $167 million market cap

kids ray bans  $167 million market cap
 

6 Ways to Trade FDA and Clinical Trial News

Beyond the strategy of selecting a basket of small/micro cap stocks with pending binary events such as FDA decisions and clinical trial results, another means of achieving diversification is by selecting a basket of companies with different types of pending catalysts. Below are some examples of how to categorize pending bio catalyst events and some specific examples for each category. FDA decision or clinical trial results) approximately 3 6 months ahead of the expected catalyst date and sell into the expected upward momentum in both stock price and trading volume.

The goal of this strategy is to greatly reduce the risk of investment losses by taking profits ahead of the binary event by capitalizing on the expected increase in both stock price and volume as more short term momentum and day traders become active, which typically occurs at about 2 3 weeks out from the catalyst date and results in extreme price volatility and intraday swings.

Some examples of this strategy include Cadence Pharma (CADX) ($7.51, $379 million market cap), which has an early November PDUFA date and expected FDA decision for OFIRMEV (intravenous or IV acetaminophen). In addition, several other small/micro cap bio pharmaceutical stocks have expected FDA decisions in October including Jazz Pharma (NASDAQ:JAZZ) ($8.20, $259 million market cap) for JZP 6 (sodium oxybate oral solution) to treat fibromyalgia and Avanir Pharma (NASDAQ:AVNR) ($2.50, $213 million market cap) for ZENVIA (dextromethorphan and quinidine) for the treatment of a neurological condition known as pseudobulbar affect.

Cash Plus Catalyst Pain Therapeutics (NASDAQ:PTIE) ($5.67, $242 million market cap) ended 1Q10 with $176 million in cash/equivalents, zero debt, and an estimated cash burn of under $10 million for 2010. PTIE expects partner King Pharma (KG) to resubmit the NDA for REMOXY (controlled release, abuse deterrant oxycodone) during 4Q10. In addition, PTIE also plans to advance an early stage skin cancer compound PTI 188 (radio labeled, anti cancer monoclonal antibody) into Phase 2 trials based on its Phase 1 results.

Correlated Trades Privately held Boehringer Ingelheim Pharma has an upcoming FDA Reproductive Health Drugs Advisory Panel meeting on 18 June for GIROSA (flibanserin), seeking FDA approval for the treatment of hypoactive sexual desire disorder in pre menopausal women. LibiGel is a hormone based treatment being studied in surgically/post menopausal women while Flibanserin affects serotonin levels in the brain similar to the mode of action for anti depressants (centrally acting) for pre menopausal women.

Despite the different patient populations and modes of action, the outcome of the FDA panel meeting will likely have an impact on BioSante Pharma (BPAX) ($1.90, $101 million market cap), which is currently evaluating LibiGel (testosterone) in pivotal Phase 3 clinical trials under SPA (Special Protocol Assessment) for the treatment of female sexual dysfunction with a NDA filing expected next year.

Extreme TradesJavelin Pharma (JAV) ($1.51, $98 million) represents the extreme trade strategy of stocks trading under $5 per share (priced similar to an option with a high risk/reward profile) that also has a near term catalyst in the form of an extended tender offer (2 June) by Hospira (NYSE:HSP) at $2.20 per share ($145 million) in cash. At issue is a recent recall of DYLOJECT (intravenous or IV diclofenac) (a non steroidal, anti inflammatory drug or NSAID) in the UK, which also has a pending NDA for FDA approval in the US with a PDUFA action goal date of 10/3/10 under a standard, 10 month review.

Last month, JAV terminated an all stock merger agreement with Myriad Pharma (OTCPK:MYRX) in favor of the higher all cash bid from Hospira. I own a small position in JAV since the UK recall was not drug related, but involved a substance discovered in the vials related to the supply chain activities. In addition, HSP would market DYLOJECT in North America and Asia Pacific so the major looming catalyst would be the pending FDA decision rather than the UK market recall due to issues unrelated to the effects of the drug.

Long Term HoldsEXACT Sciences (NASDAQ:EXAS) ($4.17, $167 million market cap) expects external validation study results from the Mayo Clinic during 2H10 for its stool DNA (sDNA) based colon cancer diagnostic test kit. Recent product development updates include improved DNA extraction (automated, higher yield) and pivotal study preparation (8,000 patients) (engaged CRO, clinical trial team in place). A pivotal study is expected next year to support a potential FDA filing in 2012 for a diagnostic screening test intended for the average risk population over age 50 to improve detection of pre cancerous polyps and early stage disease compared to current tests (FIT/FOBT) that detect presence of hidden (occult) blood in the stool.

EXAS is targeting a large unmet medical need (approximately 90 million people over age 50 in the US not being adequately screened for colon cancer), has solid partners such as the Mayo Clinic, solid patents/IP surrounding sDNA, and a proven management team in molecular diagnostics from Third Wave in place to guide the Company through the key developments expected over the next two years.

Get Paid to Wait Bristol Myers Squibb (NYSE:BMY) ($23.25, $40 billion market cap) is one of the smaller "big pharma" companies that currently offers a 5.5% dividend yield and forward price to earnings (P/E) ratio of about 10X. BMY acquired ipilimumab (fully human antibody that binds to CTLA4) with its Medarex acquisition and will present Phase 3 melanoma data and Phase 2 lung cancer data at ASCO 2010 (June 6) with potential new drug filings in both US and EU by year end 2010 for metastatic melanoma.

BMY faces patent cliffs for key products such as Plavix and Avapro, but could also become an acquisition target if compounds in its pipeline such as ipilimumab and belatacept (a selective T cell immune system co stimulation blocker to prevent kidney transplant rejection) are successfully in achieving FDA approval. Other recent acquisitions of smaller "big pharma" companies include Wyeth and Schering Plough, which were acquired by Pfizer (NYSE:PFE) and Merck (NYSE:MRK) respectively.

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