Sunday, December 14, 2014

A Technical Look at Acadia Pharma ($32.53)

Some charts of Acadia as the stock is now making new highs on a weekly basis.
Source: Shaw Investments, StockCharts.com
Above daily chart is a nice looking breakout to new highs.  Even though overbought somewhat on the daily, the chart can stay overbought for much longer on a technical basis.  
Source: Shaw Investments, StockCharts.com
On a comparative basis, ACAD has outperformed the XBI biotech sector and the S&P 500 the last three days, as the market has sold off.  Thank you for reading.  We hold ACAD as a long term investment.  

Monday, December 8, 2014

MEI Pharma: ASH and Investor Conference Update

MEIP just finished with their annual investor / analyst conference this evening and ASH on Saturday. There are a few issues at hand that have left me to believe that Pracinostat / Vidaza combination for Newly Diagnosed Elderly Patients with AML, may not be the combo that achieves a significant improvement over existing therapy for these patients.  At least as far as overall survival may be concerned. I'll go over those details in the coming days.  The company has released positive interim CR (complete remission) data throughout the phase 2 AML trial.  What we did not hear, up until the investor conference is below.

1. Six patients out of 41 had to have dose reduction.  First Vidaza then Pracinostat reduced, with the majority being Vidaza reduced out of six.
2. The company is planning a phase 3 AML trial in June 2015, with a planned primary end point being (CR) or complete response, with overall survival as a secondary endpoint.  But the company said that discussion with the FDA is still ongoing, and will have to see if the CR is a valid endpoint for the filing of an NDA.
3. The age group for this AML phase 3 trial in elderly population is planning on being lowered from greater or equal to 65 years, down to greater or equal to 60 years of age.

The reason that the company is planning a phase 3 trial using CR as the endpoint could be because of the lowering of dose in the current trial. Patients may be exhibiting greater side effects than initially thought.  If that is the case, the lowering of the dose could impact overall survival, and may be the reason that they are planning a phase 3 trial using CR as the primary endpoint rather than OS.  There has to be a trade off between receiving enough of the drug for efficacy and the safety profile for the elderly population.  In this case, with six patients, the lowering of the dosage of Vidaza to keep patients on therapy was the step taken.  The inclusion criteria for the planned phase 3 trial of 60 years of age rather than the current trial design of 65 years, is another reason to believe that the combination may be too adverse for patients 65 years and older, and that an extra five year reduction could make the drug combination more tolerable.  

Tuesday, December 2, 2014

MEIP: Completes Enrollment Front Line AML

Today MEI Pharma announced that enrollment for their phase 2 trial for patients who are elderly, newly diagnosed with AML (acute myeloid leukemia) is complete.  This trial enrolled 50 patients extremely fast since August 1st, when they only had 14 total enrollments.  Since then, the company announced that they achieved 8 (CR) complete remissions, or 57% in November with no progressions.  The company will give an update at ASH on December 6th, for 33 patients who have been enrolled, and the other 17 would be deemed too early to evaluate.  This is all positive news, as the patient responses were improving, as the trial progressed.  If the 57% of complete responses create a durable overall survival (OS) of 12 months or longer, then the combination of Pracinostat / Vidazza for AML, would improve on the current therapy for patients where there is an unmet need.  Current median overall survival for Vidazza alone, in a similar patient category is 10.4 (12.1 with sensitivity analysis) months in this trial Phase-III-Study-AML-001-VIDAZA.  Thank you for reading.

Avanir Pharmaceuticals: Buy Out

A busy day as one of the stocks we hold received a buyout offer from Otsuka Pharmaceuticals (the maker of Abilify) for $3.54 billion or $17.00 per share, in a stock transaction. My initial impression is that Otsuka received a good deal, as they will get a nice pipeline including indications such as agitation / aggression in Alzheimer's patients (phase 3 2015), along with Major Depressive Disorder or (MDD), which is in the early stages of a phase 2 trial.  AVNR patents extend out to 2030.  

Monday, November 24, 2014

Acadia Pharma: New High ($29.53)

Acadia has closed at a new all-time high on a inter-weekly basis.  The stock finished the day strong, on above average volume.  Below is a weekly chart of ACAD.
Source:  Shaw Investments, StockCharts.com
Bottom Line:  Even though the company announced a short delay for filing their new drug application for Nuplazid, the stock held up well, and has actually advanced higher.  Last week, the analyst house Cowen Group, provided coverage on ACAD with a buy rating, and a $46.00 price target on the stock. Perhaps that, and a strong biotech sector has contributed to the new high.  Thank you for reading.  We currently hold ACAD, and AVNR.  

Thursday, November 20, 2014

MEI Pharma: AML Trial Update ($6.90)

Trial updates are coming in quite fast now, as companies seeing positive results want to bring that information to the public as soon as possible. Many are scheduled to appear at the ASH Conference on December 6th. MEI Pharma just updated investors on their AML phase 2 trial using Pracinostat (an HDACi) in combination with Vidaza for elderly newly diagnosed patients. Below is a running total of updates the company has provided to help us understand as time goes by, which direction the trial has taken with the percentage of (CR) or complete remissions achieved.
November 7th, 2014
N = 14
CR = 57%
August 1, 2014
N = 14
CR = 21%
CR + CRi = 57%
June 10, 2014
N = 9
CR = 22%
CR + CRi = 33%


From the timeline above, and the most up to date data from November 7th, out of 14 patients, 8 have achieved a complete remission, or 57%.  In other words, as time goes by, we are seeing improved rates of remission in the phase 2 trial. Patients are tolerating the drug well to get the benefits of a complete remission, as 57% in this trial have.  Remember that the trial is Pracinostat in combination with Vidaza.  Celgene has run similar elderly patient trials in AML using Vidaza as stand alone treatment, with complete remissions of around 20%.  So one has to confer, that based on these interim results, that by adding Pracinostat (an HDAC inhibitor) to Vidaza is having a positive effect for this patient population. Pracinostat is generally safe, as it has been used in up to 300 patients with different indications.

The ultimate test of success for this group of patients is OS (overall survival). There is some correlation between Complete Remissions (CR) and overall survival, but the correlation is dependent on whether the patient has abnormal cytogenetics (ACR) at first diagnosis and first day of documented Complete Remission (CR), or has normal cytogenetics (NCR) at time of first day documented CR.  ACR patients had significantly shorter OS and higher rates of cumulative incidence of relapse (CIR).  The relative risk of death or relapse was 2.1 times higher for ACR patients than for NCR patients according to study ncbi.nlm.nih.gov/pubmed/15197203 . The next update for this trial will have up to 30 patients and will be presented December 6th, at the ASH (American Society of Hematology) conference. Thank you for reading.  

Thursday, November 13, 2014

MDS & AML: Assessing the Landscape

There has not been an effective, and safe, FDA approved drug for MDS (myelodysplastic syndrome) or AML (acute myeloid leukemia) since Vidaza in 2004 and Dacogen in 2006.  This post will examine the competitive landscape of companies with the hope of meeting the unmet need for MDS and AML patients.

MDS
Array - ARRY-614 Low or intermediate risk-1 MDS
MEI - Pracinostat/Vidaza  intermediate-2 or high risk, and refractory MDS
Mirati - Mocetinostat intermediate or high risk MDS
Onconova - Rigosertib various MDS
Sunesis - Vosaroxin intermediate-2 or high risk refractory MDS

AML
BioLine - BL-8040 relapsed or refractory AML
Boehringer Indelheim - Volasertib relapsed or refractory, front line elderly AML
Cyclacel - Sapacitibine/Dacogen combo front line elderly AML
MEI - Pracinostat/Vidaza front line elderly AML
Sunesis - Vosaroxin IV Front line elderly AML

MDS Brief
Array Biopharma was involved with their drug ARRY-614 for low or intermediate risk-1 MDS, but after a phase 1 trial, they had this in their company literature, "Array has no plans to invest internally at this time in ARRY-614".

Mirati Therapeutics and their drug Mocetinostat an oral HDAC inhibitor ran a phase 1/2 trial for MDS and AML patients in 2013.  The results were not overly impressive with just 9% achieving a CR and median overall survival was 12.4 months.  There is a phase 2 intermediate or high risk MDS listed trial as of December 2013, with the completion December 2015.  The company is exploring a subset of patients and dosing in a phase 2 for MDS.  So the trial is ongoing at a very slow pace as the company has used the term "exploring".

Onconova Focuses on MDS patients with their lead drug Rigosertib IV.  In a phase 3 trial for high risk refractory victims, the trial achieved a median overall survival of 8.5 months, compared to 4.7 months best support care.  They have been working on an oral Rigosertib for MDS groups of patients.

Sunesis Has their drug Vosaroxin IV single agent for intermediate-2 or high risk refractory MDS. There has been a phase 1/2 trial posted since November of 2013 Phase 1/2 Vosaroxim IV, single agent for intermediate-2, or high risk refractory MDS, but there has been no movement or mention from Sunesis of the progress of that trial.

MEI Pharma  Is currently involved with two MDS trials for lead drug an HDAC inhibitor Pracinostat in combination with Vidaza.  Front line MDS is fully enrolled, and refractory MDS is in progress.  We should have an interim readout on the refractory MDS trial by end of 2014, and a complete readout in the Pracinostat / Vidaza combo front line previously untreated intermediate-2 or high risk MDS trial in the first quarter of 2015.

AML Brief
BioLineRX  Located in Isreal is involved with relapsed or refractory AML patients with drug BL-8040 in a current phase 2 study.  The drug is in combination with Cytarabine a chemotherapy product. The trial is expected to complete in June 2015.  This company competes with Sunesis and Boehringer Indelheim refractory AML patients.

Boehringer Indelheim  Located in Germany has Volasertib IV, as their main drug for refractory and frontline AML.  This company has many phase 1 trials currently running in combination with low dose cytarabine or Vidaza. Current phase 3 trial Volasertib IV Frontline Elderly AML competes directly with Cyclacel, and MEI Pharma in front line elderly AML.  The differentiating factor is an IV infusion plus low dose chemo (Dacogen) against oral availability. Median overall survival in a phase 2 elderly AML, N=42, was 8.0 months vs. 5.2 in the chemo arm, and the CR+CRi = 31%.

Cyclacel  Currently has a phase 3 trial 90% complete using their lead drug Sapacitibine oral and Dacogen IV experimental arm, against comparator Dacogen control arm, for frontline elderly AML patients called SEAMLESS. This trial has a total of 485 patients and has been running for 3.2 years and is expected to complete in early 2015.  This trial competes directly with MEI Pharma, Sunesis and their currently running phase 2 trial.  Early results from SEAMLESS phase 1/2 pilot, pooled top line achieved, N=46, CR=22%, CR+PR+HI = 37%, with median overall survival of 8 months, 60 day mortality was 13%.  

MEI Pharma  Currently has oral Pracinostat in combination with subcutaneous Vidaza in front line elderly AML patients.  The trial is being sponsored by MD Anderson. The latest interim results show N=14, CR+CRi = 57% with zero progression since August 1st, and seven others too early to evaluate. The plan is for 40 patients total to be evaluated.  MEI Pharma competes with Cyclacel and Sunesis for this indication.  We may get a further update in December at ASH.  The differential will be safety and overall survival with all three companies as the trials progress.

Sunesis  Is currently in a phase 1/2 trial with lead drug (Vosaroxin IV combo Dacogen IV) experimental and, Dacogen IV control arm for front line elderly AML. The interim results early on June 2nd at ASCO look good, with N=16, CR=56%, CRp=13%, CRi=13% for an ORR=81% with seven too early to evaluate.  The most recent update as of November 3rd, N=34, CR=50%, CRp=17%, CRi=9% for an ORR=76% and a CR+CRi=59%, with a 14% mortality rate at week eight.  This trial competes with Boehringer, Cyclacel and MEI Pharma.  The abstract is below.

ASH 2014 Vosaroxin

Bottom Line:  Some of these companies will be announcing trial results in the next few months, so having this information available is important. Currently, there is only one curative treatment for MDS - allogeneic hematopoietic stem cell transplant (HSCT). However, old age and poor general performance status classifies approximately 75% of patients as ineligible for this treatment.  I think we will see at least two indications approved in the next few years from the list of companies above. Thank you for reading.

Monday, November 10, 2014

ACAD: Third Quarter Conference Call ($28.21)

There was good and somewhat bad news that ACAD announced today. First the somewhat bad news. The company is delaying the filing of their new drug application with the FDA to the first quarter of 2015, from previously the end of 2014.  They stressed that the delay is not an FDA issue, but more an internal issue of gathering all the pieces, for a well planned filing.  So the company is losing about three months by delaying this filing, not a big picture game changer.
The new information that we have not heard before, was the marketing research the company has been working on over the last year.  The research is below.
  • 11,000 U.S. PDP treating physicians, mostly Neurologist
  • 1 million Parkinson's Disease patients
  • 400,000 thousand patients with PDP
  • 50% have disruptive disturbances, (think sleep, or agitation/aggression (my notes)
  • Reimbursement Payee is positive on the drug, (commercial, medicaid)
  • Pricing of Nuplazid similar to Abilify 20 mg or $13,000 / year per patient
From the research above, I estimate a U.S. PDP market opportunity of $1.296 billion revenue to Acadia, and I am using more conservative numbers than the above research that the company provided. Here's how I came up with that figure after accounting for the wholesaler +40% and retailer +40% markups prior to the final price a consumer could end up paying.

$13,000 / 12 months / 30 days = $36.11 per 20 mg Abilify tablet to patient pricing.
$12,736 / 12 months / 30 days = $35.38 per 20 mg Nuplazid tablet to patient pricing.

$18.00 (acad revenue per tablet) * 40% (wholesale markup) * 40% (retail markup) = $35.38, 20 mg Nuplazid to consumer.
$18.00 * 30 * 12 = $6,480 per patient ACAD revenue prior to wholesale and retail mark up.
200,000 U.S. patients (50% penetration rate from 400,000 total) * $6,480 = $1.296 billion, U.S. Nuplazid revenue to Acadia Pharmaceuticals for PDP.  Thank you for reading.

Thursday, November 6, 2014

MEI Pharma: ($7.87)

MEI Pharma (MEIP), updated investors this morning on the phase 2 trial of Pracinostat / Vidaza combo for elderly patients with AML.  The trial is about 50% complete, with a total of 14 patients currently evaluated.  The update is positive with (8) or 57% of AML patients achieving a CR + CRi response. This update came four months after the initial trial update that saw (3) or 33% of patients achieve a CR+CRi response.  The mid trial results will be presented at the 2014 ASH (American Society of Hematology) conference December 6-9.  Below is the abstract.

ASH 2014 Pracinostat

MEIP has two other phase 2 trials with Pracinostat / Vidaza for patients with MDS.
- Phase 2 study of Pracinostat and Vidaza in patients with previously  untreated MDS, (enrollment complete).
- Phase 2 study of Pracinostat and Vidaza in patients who have failed to  respond to single agent  HMA.

Pracinostat has been generally well tolerated in over 300 patients to date.
MEI Pharma owns worldwide rights to Pracinostat, and has patent until  2028.

Below is a weekly chart of MEI Pharma.
Source:  Shaw Investments, StockCharts.com

Bottom Line:  Pracinostat combo with Vidaza has shown nice potential for patients with AML and MDS, where there are few options available. The company has two MDS trials in progress, and plans to release those results in the first quarter of 2015. Sunesis has released some positive data for similar patients with AML.  The important factor outside of safety will be how long the therapies last.  Thank you for reading.

We hold shares of MEIP.

Monday, November 3, 2014

Acadia 3rd Quarter Conference Call 11-10-14

Acadia Pharmaceuticals will host their third quarter conference call on Monday the 10th, at 5:00 p.m. eastern standard time.  The important issue will be any news on the filing of the new drug application of Nuplazid for Parkinson's Disease Psychosis.  The latest guidance was around the end of 2014, which could include the month of January.  Other news related to a clinical trial for sleep disturbances in Parkinson's patients may also get announced.  The chart below of ACAD really shows the tight correlation of the stock to the small capitalized biotechnology index (XBI).
Source:  Shaw Investments, StockCharts.com

Bottom Line:  This will be the last time investors should get an update on the timing of the filing of the new drug application to the FDA for Parkinson's Disease Psychosis.  So this conference call is important. Should the company delay the filing until January at the earliest, the stock will take a hit to the downside on that news.  Any news on a sleep disturbance trial will be welcome.  

Disclosure:  We are hedged going into this conference call.  We currently hold ACAD stock and November puts as a hedge for potential downward protection.  Thank you for reading.

Saturday, November 1, 2014

Japan Goes All-In On Quantitative Easing

This is certainly worth writing about, and is important for equity investors worldwide. Just 48 hours after the U.S. Federal Reserve concluded their QE (quantitative easing) program after six years, Japan announced they are increasing their QE program to $80 trillion Yen from $70 trillion, or to total $720 billion per year in dollar, which would amount to approximately $3 trillion per year total if applied to a US scale GDP. Quantitative Easing, is an unconventional form of monetary policy where a central bank creates new money to buy financial assets like government bonds from banks all in an attempt to increase private spending in the economy and return inflation to target. The banks then take the new money and buy assets to replace what they sold to the central bank.  This could lower interest rates and raise stock prices which in turn boosts investment.

In addition to the QE details announced above, Japan's largest pension fund, the $1.1 trillion Government Pension Investment Fund (GPIF) is expanding their allocation as follows.
25% from 12% Domestic Japan stocks
35% from 60% Japan Bonds
25% from 12% Overseas Stocks
15% from 11% Foreign Debt

What happened to the Japan Nikkei Index once the above observations were made public.
Source: Shaw Investments, StockCharts.com

The Nikkei Japan Index advanced +4.83% in a single session.  A great one day return for anyone who may have known that this was coming. 

The potential for QE programs to lift asset prices can be beneficial to the overall economy, unless the prices of things we live on increase also, like food commodities or oil (gas at the pump). Japan has the most ageing population in the world, with many on fixed incomes. How will these individuals cope with a potentially higher cost of living from an inflationary QE program designed to lift asset prices.

Bottom Line:  
The central banks have created new boom-bust cycles that we have to become familiar with as the new normal.  As these programs come and go, so do stock market performances worldwide.  The monitoring of QE programs is very important for anybody that has equity investments, since most of the programs are aimed at increasing asset prices including stocks, and could have a reverse effect once a QE program comes to conclusion.  Thank you for reading.

Wednesday, October 29, 2014

World without QE

At 2:00 p.m. the federal reserve chairperson Janet Yellen acknowledged the conclusion of QE (quantitative easing) for the foreseeable future.  At one point, in the depths of madness during the past six years, the government was buying up to $85 billion a month in assets to stimulate the economy. That $85 billion a month equates to around a trillion dollars a year.  In hindsight, stocks did incredibly well with few and short duration market corrections.  But how will stocks behave after pulling liquidity. That is the question moving forward, and will the small pullbacks that we have seen over the past few years, grow into full corrections of -10% or more? Below is a chart of all the market pullbacks over the past two years.
Source: Shaw Investments, StockCharts.com

Up to this recent September pullback of -9.9%, the largest fall was -7.4% in 2013 with many small moves lower in between.

Bottom Line:  The announcement today to the conclusion of the Quantitative Easing programs is the right monetary policy for the long run. So congratulations to Janet Yellen for concluding the multiple asset bubble creating type policy that has occurred for many decades.  But, as we all know, there is "no free lunch" and we should prepare for a less liquidity fueled market ahead, with more volatility, and deeper and longer bear market corrections in the future.  Thank you for reading, we currently hold shares of Acadia Pharmaceuticals.

Friday, October 17, 2014

Acadia Pharmaceuticals: ($26.06)

It's been a wild week in the markets, and individual stocks will get tossed around with the predominate trend. To keep perspective a look at a daily chart of ACAD with fundamental comments attached.
We just experienced a -9.9% overall market correction low ending this week, and ACAD pulled back to around $22.00.  The stock held up well under the conditions.
The above chart is a current month (October) to date.  Despite the market correction of -9.9% that bottomed this week, the stock is up mid-month around +5%.  

Bottom Line:  Acadia has many potential catalyst's ahead listed below.

1.  Filing the new drug application for Parkinson's Disease Psychosis with Nuplazid by year end.
2.  FDA acceptance of the application within sixty days of filing.
3.  Potential priority review (6 months review time) with FDA application acceptance.
4.  Potential FDA approval in six or ten months from filing date.  
5.  Six to nine months after filing with the FDA, the company plans to submit to the EU for the same indication.
6.  The start of a phase 2 clinical trial for Parkinson's patients who have sleep disturbances, by year end.

Disclosure:  We are long term investors in ACAD.

Monday, October 13, 2014

Another Volatile Day

Some extreme technical readings are at play now that could signal a market bottom, or at least a strong bounce higher over the next few days.
 
The fear gauge, also known as the VIX Index has spiked to levels not seen since 2012.  The VIX can be used as a contrarian indicator.  In other words, when many are fearful (buying put protection) a buying opportunity could present itself, which is the contrarian view.
The New Highs / New Lows indicator is also at extreme levels that suggest, the risk of entering the market is less than buying when the indicator is at extreme high levels.  

Bottom Line:  These two indicators along with others that I follow have been reliable in the past to help determine market bottom readings, or at least presents a lower risk opportunity to buy stocks. Can the market continue to fall, by all means yes, but if you are looking to add a little market exposure here, the risks are less than when the market was at an all time high in September.  Thank you for reading.

We currently hold ACAD.

Friday, October 10, 2014

Keeping It Simple

As the world markets sell-off, keeping it simple with charts is the soundest way to manage risk.  With that said, we have two charts to show below. First is the S&P 500, and following is the German DAX Index.
 
Simple chart of the S&P 500 with the prior support level at 189.66.  A break of that level then we are looking at more than just the average pullback that we have seen for the past two years.
Germany is Europe's most important country from an economic perspective, and as that country goes, so does the rest of Europe.  The chart above is the German DAX Index.  These are German corporations that trade within that index.  The index just broke prior support to the downside, and is down -12.6% from the high of 2014, putting that index closer to bear market territory.

Bottom Line:  Easy to see we are in a down trending U.S. market, and have confirmation from Germany's DAX Index that we have a global slowdown in particular.  The charts above have an intermediate term down trending outlook. Thank you for reading.

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