Friday, March 27, 2015

Concert Pharmaceutical: CTP-499

CTP-499 is the deuterium-containing pentoxifyline.  CTP-499 is the companies most advanced drug, which is for the treatment of diabetic nephropathy (kidney disease or kidney damage that occurs in people with diabetes). The company completed a phase 2 trial that missed the primary end point, which was to measure the change in urinary albumin to creatinine ratio, Urine Albumin-to-Creatinine Ratio (UACR).  What the company did find was that at 48 weeks, six patients out of 58 in the placebo group saw their serum creatinine levels spike more than 50%, versus just one patient out of 65 in the treatment group.
Concert is seeking a Special Protocol Assessment (SPA) from the FDA for CTP-499. In general, a SPA is an agreed upon endpoint that a company and the FDA use for a clinical trial.  If that primary endpoint data is statistically significant, than a new drug application could be filed and potential FDA approval.
A reduction in the rate of renal disease measured by a time-to-event analysis of the composite of increase of serum creatinine (greater than or equal to 50%) or end stage renal disease versus placebo treated patients, was agreed to be an acceptable Phase 3 endpoint to support the filing of a new drug application (NDA).  In addition, patients with a higher level of serum creatinine at baseline (above-median UACR) saw more pronounced benefits with CTP-499, compared to patients with below median UACR levels baseline, at 48 weeks. That could potentially be an inclusion into the study criteria, which could also benefit the results CTP-499 achieves in the trial.  I am expecting the company to announce the start of a pivotal phase 3 trial in 2015, after the FDA approves the SPA for that trial. The company has mentioned that they may seek a partner for this indication. I give this upcoming phase 3 trial a high probability of success, if the FDA approves the Special Protocol Assessment that the company has submitted.  We currently hold shares of CNCE. Thank you for reading.

Thursday, March 26, 2015

Acadia Pharma ($30.37)

After selling Acadia stock in the mid forties, and now 30% lower from there, we began to buy Acadia Pharma back in increments starting today.  The stock has been under pressure for the following reasons.

1.  The CEO abruptly resigns on March 11th.
2.  Nuplazid's new drug application delayed for a second time, now until late 2015.
3.  A general market but more specifically, biotechnology sell-off.
4.  Price Waterhouse announces their resignation as Acadia's accounting firm.

The above four reasons have had a strong effect on Acadia's stock, trading where it is currently, around $30.00 per share.  Buying in increments makes perfect sense, because we cannot predict with any certainty at what price the stock may bottom out at.  The stock is severely oversold from the chart below.
Source:  Shaw Investments, StockCharts.com
The chart has shown support in this $30.00 area in the past.  The stock is as oversold as it has been for a very long time.  The volume on the stock has been above average, suggesting that the low $30.00's area could be a place that institutions have been accumulating shares, on sale from just a few weeks ago. We currently hold shares of ACAD, and plan on buying more in increments over time. Thank you for reading.

Thursday, March 19, 2015

Concert Pharmaceuticals ($14.76)

CNCE has issued a secondary offering to raise around $52 million dollars in additional capital.  The company is issuing 3.3 million shares, and an additional 495,000 thousand shares, as an over allotment that the underwriters can purchase at the public price (less discounts and commissions) within 30 days.  The CEO has stated that they planned on retiring the $7 million in debt this year. After the company completes this offering, and assuming that the underwriters do take the additional 495,000 shares, the company should net around $46 million after all expenses on the offering, and an additional $6 million on the over allotment. Once the company retires the $7 million debt, they should have approximately $120 million cash on hand with zero debt.  The timing was right for this offering.  The company is taking advantage of a hot biotech market, (their stock hit a new high just this week at $18.29) to complete this offering.  We hold shares of CNCE. Thank you for reading.

Contact:  portfoliomgt1@gmail.com

Monday, March 16, 2015

Lundbeck ($19.19)

We recently purchased shares of Lundbeck under the symbol (HLUYY).  I previously mentioned this company before here Lundbeck and here Clinical Trial Update.  The company is located in Copenhagen Denmark, and their description from their website is as follows.
Lundbeck's R&D strategy is aimed at enabling the discovery and development of new pharmaceuticals targeting the underlying mechanisms of brain disorders. This approach allows us to treat the symptoms more effectively and also to potentially alter the course of the diseases.  The strategy requires comprehensive research into the brain and the biology and mechanisms of brain diseases, as well as improved understanding of research targets and clinical outcomes. 
The company falls into the catagory of a CNS, (central nervous system) research and development company. I best describe this as a value investment and a turnaround story. The company and its partner (Otsuka), have suffered from patent expiration from their main producer Abilify. But during the past two years the company has produced some successful clinical trials with extended patent dates for drugs that treat MDD, (major depressive disorder) and acute schizophrenia, both of which I am expecting FDA approval mid 2015.  The new products coming on line with extended patent dates, makes this a lower risk value proposition.  My initial price target on the stock is around $27.00 in the intermediate term.  Thank you for reading.  We currently hold shares of Lundbeck.

Contact:  portfoliomgt1@gmail.com

Wednesday, March 11, 2015

Acadia CEO Resigns - Effective Immediately

We sold our ACAD shares this morning at the market open, taking advantage of the recent strength in the stock to sell shares, after a really nice run. We first purchased the stock around $6.00 here, Acadia Pharmaceuticals ($6.09).  
After hours today the CEO has announced his resignation and the company has delayed the filing of their new drug application (NDA) again, until the second half of 2015. The stock has sold off hard based on that new information, chart below.
Bottom Line:  This example shows the risks of biotechnology investing.  We made the right move by selling our shares after the big run up yesterday, this morning. We may revisit the company sometime in the future, but for now we'll stay clear until there is more clarity why the CEO has resigned immediately, and the status of the filing of their application with the FDA.  Thank you for reading.
We currently do not hold shares of ACAD.

Contact: portfoliomgt1@gmail.com

Tuesday, March 10, 2015

Acadia Phamaceutical ($45.88)

Speculation that there is a buyout coming for ACAD today, has led the stock higher by 17%.  But I believe the advance in the stock today, is due to the planned filing of their NDA (new drug application) for Nuplazid, for Parkinson's Disease Psychosis or (PDP), and an analyst price reiteration at noon.  Either way the stock is getting a nice upside lift today, even as the overall market is selling off. Below is a daily chart of ACAD.  We currently hold shares of ACAD.


Tuesday, March 3, 2015

Concert Pharmaceuticals ($14.73)

Concert Pharmaceuticals (CNCE), is an interesting company, with a well established and cohesive management team.  The company description below is directly from the most recent 10-K. "We are a clinical stage biopharmaceutical company applying our extensive knowledge of deuterium chemistry to discover and develop novel small molecule drugs. Our approach starts with approved drugs, advanced clinical candidates or previously studied compounds that we believe can be improved with deuterium substitution to provide better pharmacokinetic or metabolic properties, thereby enhancing clinical safety, tolerability or efficacy. We believe our approach may enable drug discovery and clinical development that is more efficient and less expensive than conventional small molecule drug research and development".
The company is taking existing drugs, and potentially improving them with selective deuterium.  They plan on developing drugs in-house and through partnership with other companies.  Some quick facts below.

Quick Facts:
18.3 million shares outstanding
270 million market cap
79 million in cash

Intellectual Property:
AVP-786 (Otsuka) (2028 - 2030) U.S. EU, Japan
CTP-499  (2029 - 2030) U.S. EU, Japan
CTP-730 (2029 - 2034) U.S. EU, Japan
JZP-386 (2030 - 2032) U.S. EU, Japan
D-Ivacaftor (2032) U.S. EU, Japan

As you can see above, the company has done a fine job of protecting their intellectual property with extended patent dates, which gives them enough time to get through clinical trials to commercialization, either in house or through partnership. A $280 million market cap puts CNCE in microcap territory (less than $300 million). I doubt one can find a microcap stock with this much future potential, with an established and cohesive management team in place. We'll have more to say about Concert Pharmaceuticals. Thank you for reading.

Disclosure:  We currently hold shares of CNCE.

2014 Portfolio Returns

Portfolios managed by Shaw Investments had the following returns before fees in 2014.

*The average portfolio returned +23.75% in 2014.
The average monthly return was +1.98%.
The highest performing month was +16.26%.
The lowest performing month was -13.60%.
There were 7 out of 12 positive months 58%.
Monthly standard deviation was 9.38%.
Monthly correlation to the S&P 500 was .481.

*Past performance is not necessarily indicative of future results.

Shaw Investments is an investment advisory firm that invests primarily in early to mid-stage Life Science companies.  Thank you for reading.

Contact Information:  portfoliomgt1@gmail.com or 586-431-8000.

Friday, February 27, 2015

ACAD: Fourth Quarter Conference Call ($37.78)

The company reiterated their timeline for filing the new drug application (NDA), with the FDA, for the indication of Parkinson's Disease Psychosis, in the first quarter of 2015.  The company also gave more confidence in starting a phase 2 clinical study for patients with Parkinson's Disease who have experienced sleep disturbances. That trial is expected to start in the first half of 2015.  The currently running phase 2 Alzheimer's Disease Psychosis (ADP) trial is expected to complete, and announce data mid year 2016.  The timeline to announce that data has been steadily pushed back in time, previously stated as a two year trial (November 2013 - November 2015) to around two and a half years now. The company has stated that patient selection for the study is a critical process for trial success.  The stock is trading near all-time highs, with a market cap of approximately $3.8 billion. Below is a daily chart.  We are long term holders of ACAD stock.  Thank you for reading.

Contact
portfoliomgt1@gmail.com

Saturday, February 21, 2015

Top Selling Drugs in 2014

The top selling U.S. drugs by sales (as opposed to prescriptions) in 2014 are listed below. The sales were tracked on a 12 month rolling basis from mid 2013 to mid 2014 by research firm IMS Health.

1.  Abilify $7,240 billion

2.  Humira $6,310
3.  Nexium $6,303
4.  Crestor $5,672
5.  Enbrel $5,097
6.  Advair Diskus $5,064
7.  Sovaldi  $4,469
8.  Remicade $4,342
9.  Lantus Solostar $3,829
10. Neulasta $3,688

Abilify achieved the number one spot in 2014 despite receiving an FDA issued black box warning in 2006.

Elderly people with psychosis related-dementia treated with antipsychotic 
medicines including ABILIFY, are at an increased risk of death compared to placebo. ABILIFY is not approved for the treatment of patients with dementia-related psychosis.

I continue to believe that Acadia Pharmaceutical's drug Nuplazid will become palliative care for the elderly, and follow in the footsteps of Abilify, on a sales growth basis over time. The drug has shown an improved safety profile to that of other atypical antipsychotics already approved. The company has mentioned that a clean label is highly probable when Nuplazid gets approval for Parkinson's Disease Psychosis in 2015.  A clean label for Nuplazid could prompt Neurologist and Psychiatrists to switch at a high rate, and prescribe the drug more readily off-label for similar indications. Sales will likely start strong, as new patients will be prescribed Nuplazid for Parkinson's Disease Psychosis (PDP), existing patients under another therapy will switch at a high rate, and the drug could eventually become an add-on, to existing therapies in other areas, such as cognition. Thank you for reading.   

Monday, February 16, 2015

Alzheimer's Disease - Clinical Trial Success Rate .04%

There has not been a newly approved drug for Alzheimer's Disease since 2004, when Namenda (memantine) was approved to treat the symptoms in moderate to severe AD. In research initiated by Jeffrey Cummings of Cleveland Clinic Lou Ruvo Center For Brain Health, Alzheimer's disease drug-development pipeline: few candidates, frequent failures, found that 244 compounds were assessed in the decade from 2002 to 2012, one was approved for marketing; excluding the 14 compounds currently in phase 3, the success rate for advancing agents for regulatory approval was 0.4% (99.6% attrition). The success rate is among the lowest in any therapeutic area.  The attrition rate for AD treatment is high, with 72% of agents failing in phase 1 clinical trials, 92% failing in phase 2, and 98% failing in phase 3 during the period of 2002 to 2012. Most trials address symptomatic agents to improve cognition, and most therapies address amyloid-beta targets than any other. Thank you for reading.

Monday, February 9, 2015

Analyst Price Targets for Acadia Pharma

The list of analyst covering Acadia Pharma has grown, and so has the price targets they are anticipating in the future.  So, below is a list of a few that have recently updated price projections.

Price Target:
2-24-15  Wainwright: $50.00
2-5-15  Roth: $42.00
11-21-14  Cowen: $46.00
9-22-14  JP Morgan: $33.00

The predominate theme among the analyst is that FDA approval of Nuplazid (pimavanserin) for Parkinson's Disease Psychosis (PDP), is a very high probability event to occur in 2015. Below are the revenue estimates for PDP in the U.S. that Acadia will be addressing with a direct sales force of approximately 135 representatives.

U.S. Peak PDP Revenue:
2-5-15 Roth:  $2.7 billion 
11-21-14 Cowen:  $1.1 billion 
9-22-14 JP Morgan:  $1.0 billion 

US Patent for Nuplazid (pimavanserin) runs to mid 2028.

Bottom Line:  Always interesting to see what analyst are thinking with their price targets and revenue estimates.  The above revenue estimates exclude Europe and the rest of world for PDP. Also, excludes any revenue for Alzheimer's Disease Psychosis (ADP), Schizophrenia, or sleep maintenance. Thank you for reading. 

Saturday, January 31, 2015

Nuplazid for Juvenile Psychosis

Acadia plans to run a phase 2 trial using their lead drug Nuplazid (pimavanserin) for juveniles with psychotic symptoms in the second half of this year.  This is an area that would be addressing an unmet need, because the current anti-psychotics being used today have been difficult to tolerate for an extended period of time. Some of the side effects exhibited include weight gain, high blood sugar, pleasurelessness, movement disorders, low energy and motivation. The current drugs being used for this age group include, Risperdal, Zyprexa, Serequel, Geodon, Clozaril, and Abilify.  The company plans on testing Nuplazid for patients in the maintenance phase of schizophrenia, which is the time period between acute psychotic episodes, and it will be tested as mono-therapy treatment. We'll have more to say on this trial, and the market opportunity in the future. Thank you for reading.

Wednesday, January 14, 2015

Acadia - JP Morgan Healthcare Conference ($33.76)

Acadia (ACAD) presented yesterday at the annual JP Morgan Healthcare Conference.  Not much new information was presented, just a reiteration of timelines, and current, and future clinical trials.  The breakout session afterwards yielded a few questions regarding their phase 2 ADP (Alzheimer's Disease Psychosis) trial.  
  • The company is looking for a -3 point reduction from placebo on the hallucinations and delusions sub-scale at six weeks, as primary endpoint.
  • Also at six weeks into the trial, they will be using a more broad scale, the NPI - NH (Neuropsychiatric Inventory-Nursing Home) and the CMAI-SF (Cohen Mansfield Agitation Inventory - Short Form) respectively.  The NPI-NH scale encompasses behavioral as well as psychosis as one complete measure.
  • At 12 weeks, they will measure cognition, functional and behavioral performance since the beginning of the trial using the ADCS - CGIC (Alzheimer's Disease Cooperative Study - Clinical Global Impression of Change).
Bottom Line:  Management did another fine job explaining the science, clinical trial updates, and timelines for 2015.  Thank you for reading.

Sunday, January 11, 2015

Lundbeck Clinical Trials - Update

Lundbeck and their marketing partner Otsuka (the manufacturer of the #1 selling drug Abilify) are major players in the central nervous system (CNS) space.  An update on new phase 3 trial data for depression and schizophrenia are listed below.  The links are below.

12-10-2014
Lundbeck 2014 Press Releases
Trial: (NCT01360645) Phase 3
Brexpiprazole as adjunct for Major Depressive Disorder (MDD)
Study 1 (2mg + ADT (N=175): -3.21, p=0.0002)  MADRS

12-11-2014
Lundbeck 2014 Press Releases
Trial: (NCT01396421) Phase 3
Brexpiprazole as mono-therapy for adults with Acute Schizophrenia.
Total Score (4mg: -19.65, p=0.0006) PANSS

Both studies achieved significant efficacy results, which may lead to approval from the FDA mid 2015.  Brexpiprazole has patent exclusivity through 2026.
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