Friday, April 17, 2015

Concert Pharmaceutical: JZP-386

JZP-386 is the deutered version of Xyrem which is manufactured by Jazz Pharmaceuticals, (JAZZ).  The drug was approved in 2002 for cataplexy in narcolepsy, and 2005 for excessive daytime sleepiness (EDS) in narcolepsy.  The patents run from 2019 through 2024 at the latest.  Xyrem is administered twice daily as a liquid dose, once before bed and again after about four hours of sleep. Xyrem has a side effect profile that includes headaches, dizziness, nausea, and potentially more serious side effects in higher doses such as convulsions, respiratory depression, coma and death, according to Xyrem prescribing information.   Concert is currently in a phase 1 trial to evaluate the deutered Xyrem version called JZP-386, compared to Xyrem, with a readout on the trial any day now.  The goal of the deutered version JZP-386, could be once daily dosing, lower dosing, or a reduction in side effects that currently exists with Xyrem. Concert would have a chance to receive royalties that run from mid single digits to low double digits not to exceed 20% on a country-by-country basis, and licensed product-by-licensed product basis. The patent for JZP-386 runs from 2030 to 2032, U.S. EU, and Japan. Thank you for reading.

Sunday, April 12, 2015

Concert Pharmaceutical: CTP-221

Investing in Concert Pharmaceuticals, is like investing in several companies under one umbrella. The reason being, is that they are applying their DCE platform (deuterated chemical entity) to several drugs already in existence for different indications. CTP-221 is the deutered enhanced drug for lenalidomide, or commercial drug known as Revlimid, which is manufactued by Celgene.  The drug targets indications in Myelodysplastic Syndrome (MDS) and Multiple Myeloma amongst others, and is expected to produce revenue up to seven billion annually for the company. This is the second Celgene drug after CTP-730 that Concert has considered for clinical trials. The patent for Revlimid gets a little more complicated as generic companies are interested in the drug, and legalities have been ongoing. But in general, I would say Revlimid is protected until around 2024 at the latest.
Concert is still pursuing patents for CTP-221, or the d-Revlimid drug.  The company has stated that there will be another new drug to advance into clinical trials in 2015. My guess is that after all patents have been established, the company will then enter phase 1 clinical trials with CTP-221.  The patents, once achieved should run into the 2030's for US, EU and Japan.
CTP-221 is approximately 18-20 fold more potent in (in vitro) immunomodulation assays than similarly deuterated R-lenalidomide.  The CEO Tung had this to say regarding CTP-221.  "These results demonstrate that CTP-221 is significantly more potent than lenalidomide in key biological activities believed to be important to clinical efficacy." Thank you for reading.


Friday, April 3, 2015

Concert Pharmaceutical: CTP-730

CTP-730 is the deutered enhanced version of Apremilast (Otezla), that is manufactured by Celgene.  The drug was approved in March of 2014 for psoriatic arthiritis, and again in September of 2014 for moderate to severe plaque psoriasis. The patent for Otezla runs until 2024 US and EU.  The drug is forecasted to bring in around $2 billion in revenue by 2020. The typical dose is 30 mg twice daily, and the drug is known to exhibit side effects such as diarrhea, nausea, and headache. A deuterated version could potentially reduce the dosage to once daily, improve the efficacy, and side effect profile.
Concert is currently in phase 1 testing to explore the safety and pharmacokinetics profile compared to placebo with a full readout around September 2015.  Once the trial is complete a one time $8 million milestone will be awarded to Concert from Celgene. More importantly, will be the trial results....the first in human trials for CTP-730.  The relevance for increased efficacy, or safety with a once a day tablet, would be valuable to Celgene, not to mention the increased patent life that the D-Apremilast version would have, to 2030. Thank you for reading.  

Wednesday, April 1, 2015

Deuteration Validation

On March 30th, Teva Pharmaceuticals agreed to acquire Auspex Pharmaceuticals for $3.5 billion, or around $100.00 per share.  A few points to consider as it relates to Concert Pharmaceuticals, which is one of our holdings.

1. This acquisition instills confidence in the science of deuterium-based chemistry.  Both Auspex and Concert are applying deuterium to existing drugs to potentially enhance their efficacy, half-life or safety profile.
2. In 2011 Concert assigned patent rights for the deuterated drug Pirfenidone to Auspex.  Under the agreement, if a change in control of ASPX, Concert would be due 1.44% of the purchase price, in this case, approximately $50 million.
3.  After completing a recent secondary offering for up to $52 million and considering the newly acquired $46 million, the company should hold approximately $170 million, after retiring $7 million in debt.  Thank you for reading.


Friday, March 27, 2015

Concert Pharmaceutical: CTP-499

CTP-499 is the deuterium-containing pentoxifylline.  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.  Thank you for reading.

Thursday, March 26, 2015

Acadia Pharma - Buy Point ($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,
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. Thank you for reading.

Thursday, March 19, 2015

Concert Pharmaceuticals - Secondary Offering ($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. Thank you for reading.


Monday, March 16, 2015

Lundbeck - New Holding ($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.


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.


Tuesday, March 10, 2015

Acadia Phamaceutical - New High ($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 - New Holding ($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:
22 million shares outstanding
330 million market cap
165 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.

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: 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.


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.
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