IDRA: Idera Pharmaceuticals ($3.04)

Idera Pharmaceuticals is a new holding.  Idera is a clinical stage biotechnology company developing a novel approach to the treatment of autoimmune diseases and certain genetically defined forms of B-cell lymphoma.  Their technology platform is based on nucleic acid therapies to inhibit over-reaction of Toll-like receptors.

Quick Facts:
135 million shares outstanding including warrants
84 million in cash
5M / Q burn rate
810 Million Market Cap
2031 for IMO-8400, 2034 IMO-9200 Patent Expiration

Clinical Trials:
Phase 2 Moderate to Severe Plaque Psoriasis.
Phase 1/2 B-Cell Lymphoma with MYD 88 L265P.

Catalyst:
Phase 2 for Psoriasis top line results in January.
Complete enrollment Phase 1/2 B-Cell Lymphoma?

Bottom Line:  Idera is unique with their technology based around Toll like receptors.  The company is currently working on the dosing for their IMO-8400 and MO-9200 technologies.  They have cash for now that should last until third quarter of 2015, and also patent protection until 2031 and 2034.

ACAD: Acadia Pharmaceuticals ($23.03)

Two companies that we currently hold shares in, Acadia Pharmaceuticals and Omeros, both presented at the 24th annual Oppenheimer Healthcare Conference in New York this week.  From their presentations, I wanted to add any new relevant information for future reference.

ACAD
CEO Uli Hacksell presented on Tuesday.  Some new takeaway's from his presentation are below.
A)  He mentioned that the patent for Pimavanserin expires in 2028, but also mentioned the potential for filing a patent extension after that time period was a possibility.
B)  The other significant new information had to do with side effects and the box labeling for PDP.  He mentioned that under very high dosing (up to 300 mg) nausea was noticed.  Pima will only be prescribed at 40 mg for PDP.  No other side effects were mentioned as he said this is a very unique safe molecule.
C)  All timelines remained the same as far as filing the new drug application for PDP (by end of 2104) and phase 2 ADP data potentially taking up to two years for data.
D)  CEO expects at the very minimum equal pricing to other current atypical anti-psychotic drugs.
Another positive conference for ACAD. The CEO keeps hammering home the safety and efficacy of Pima compared to other Atypical anti-psychotics currently being used, and the potential for premium pricing for the unmet need of PDP and ADP.

OMER
Omeros CEO Greg Demopulos presented on Wednesday, some key information below.
A)  There was much mention regarding partnering for some of their indications, but no concrete details.
B)  The phase 2 Schizo data which was previously thought to be made public in December, now has been pushed back to January.
C)  They have been pursuing hard, getting medical reimbursement for OMS302 or Omidria, which is expected to be approved mid 2014 and launched there after.
D)  Nothing mentioned regarding their cash position.
The phase 2 announcement of OMS824 top line results in January, and the medical reimbursement for Omidria which is expected to launch after approval in mid 2014 are two important events.
Thank you for reading.

TRGT: Targacept ($5.75)

(TRGT) Targacept has developed what they trademark as NNR Therapeutics or neuronal nicotinic receptors. The company is dedicated to the discovery and early development of compounds that interact with nicotine receptors in the human nervous system to treat such diseases as Alzheimer's Disease, Parkinson's Disease, Tourette's Syndrome, schizophrenia and others.

Therapeutic Applications of Nicotine
Nicotine's beneficial effects on learning, memory and other physiological and behavioral endpoints have been well documented in scientific literature.  Some studies reported that smokers had a lower incidence rate of Alzheimer's and Parkinson's Disease.  It was also thought that nicotine could have a beneficial effect on schizophrenia.

Dvelopment of Novel Nicotinic Therapeutics
Companies like Targacept and Forum Pharmaceuticals (previously EnVivo), have worked to discover and develop nicotine-like therapeutic compounds that could be suitable for humans without the side effects of increase in heart rate, blood pressure and nausea.

Current Trials
Targacept  Alzheimer's Phase 2 Trial
- Ongoing with top line results mid 2014.
Targacept  Schizophrenia Phase 2 Trial
- Ongoing with top line results Dec. 13 or Jan. 2014.
Forum Alzheimer's Phase 3 Trial
- Still recruiting

The primary outcome measure in the Alzheimer trials above is the change from baseline in the Alzheimer's Disease Assessment Scale-Cognitive Subscale 13-item, or (ADAS-Cog-13).  ADAS-Cog-13 helps evaluate cognition and differentiates between normal cognitive functioning and impaired cognitive functioning.

Note that neither company or trial above is seeking a cure for Alzheimer's or Schizophrenia, but trying to improve cognition and dementia with their treatment for a given period of time, above the current standard of care.

MRTX: Mirata Therapeutics ($17.37)

Mirata Therapeutics (MRTX), is a microcap oncology company with their lead inhibitor mocetinostat (MGCD0103), an oral spectrum-selective HDAC inhibitor for the treatment of myelodysplastic syndrome or lymphoma.  The company has two other inhibitor products in early stages of testing but mocetinostat is the focus of this post because it is furthest along in the FDA approval process, with the initiation of a phase 3 trial scheduled for the second half of 2014.  The company believes they could be the first HDAC inhibtor to the market for first line myelodyspaltic patients, a disease that affects 10,000 to 30,000 people in the US and that may have a global MDS market of $1.5 billion by 2017, based on research here Global MDS Market.
Quick facts:
13 million shares outstanding
220 million market cap
68 million in cash
Patent Exp: 2022 for (mocetinostat)
13 clinical trials and 437 patients have used (MGCD0103)
Competition:  MEI Pharma (pracinostat) Patent Exp. 2028 for composition of matter.
Phase II Results  (Presented at ASCO June 2013 Abstract 7116)
The subset analysis involved 28 MDS patients.
54% had bone marrow blast count >10%.
64% categorized as intermediate or high risk.
Median age was 72.
Pre-treated with one or more prior therapy:  (50%) of patients.
Objective Response Rate:
(CR + CRi + Hl) 61%.
Disease Control Rate:  
(CR + CRi + Hl + SD) 93%.
Grade 3 drug related adverse events:
Fatigue (23%), Nausea (22%), Diahrea (17%), and vomiting (9%).
The results above compare favorably to current standard of care and is leading to a phase 3 trial for MGDC0103 in first line MDS patients second half of 2014.

Bottom Line:  The company plans to finalize discussions and obtain a special protocol assessment from the FDA for the design of a phase 3 trial for mocetinostat in patients with mylodysplastic syndrome in the first half of 2014.  There is competition from other companies that use HDAC therapy for myelodysplatic syndrom (MDS), but Mirati's data looks better than the current standard of care. The company is about a year ahead of Mei Pharma's trials where the data looks equal in efficacy so far.  The company can be first to market with an oral HDAC inhibitor in combination with AZA for patients in first line MDS.

Disclosure:  We currently do not hold shares of MRTX.

ACAD: Acadia Pharmaceuticals ($22.94)

Just released today, Acadia Pharmaceuticals has started a Phase 2 trial for ADP (Alzheimer's Disease Psychosis).  The press release with the fine details is below.  This trial will be conducted in London England.

The Phase II feasibility trial, referred to as the -019 Study, is a randomized, double-blind, placebo-controlled study designed to examine the efficacy and safety of pimavanserin in about 200 patients with ADP. The study is being conducted through a large network of research care homes established as part of the National Institute for Health Research (NIHR) Maudsley Biomedical Research Unit. Following a screening period that includes brief psycho-social therapy, patients will be randomized on a one-to-one basis to receive either 40 mg of pimavanserin or placebo once-daily for 12 weeks. The -019 Study will assess several key efficacy endpoints, including use of the Neuropsychiatric Inventory - Nursing Home (NPI-NH) scale to measure psychosis (hallucinations and delusions), agitation/aggression, and sleep/nighttime behavior, as well as use of the Cohen-Mansfield Agitation Inventory - Short Form (CMAI-SF) scale and the Alzheimer’s Disease Cooperative Study - Clinical Global Impression of Change (ADCS-CGIC) scale. Key efficacy endpoints will be based on the change at week six from baseline. The study will also assess additional exploratory endpoints, including the cognitive status of patients using the Mini-Mental State Examination (MMSE) scale, and the durability of response to pimavanserin through twelve weeks of therapy.

About Alzheimer’s Disease Psychosis

According to the Alzheimer’s Association, 5.4 million people in the United States are living with Alzheimer’s disease. While the criteria for diagnosing Alzheimer’s disease are mostly focused on cognitive deficits, it is often the psychiatric and related behavioral symptoms that are most troublesome for caregivers and lead to poor quality of life for patients. An estimated 25 to 50 percent of Alzheimer’s patients may develop Alzheimer’s disease psychosis (ADP), which is commonly characterized by disturbing visual hallucinations and delusions. The diagnosis of ADP is associated with more rapid cognitive and functional decline and institutionalization. There currently is no therapy approved for the treatment of ADP in the United States.

Study Collaboration   “We are delighted to pursue this clinical study in collaboration with Professor Ballard and King’s College London,” said Roger G. Mills, M.D., ACADIA’s Executive Vice President of Development and Chief Medical Officer. “We believe that their unique clinical research infrastructure and expertise will provide access to a pool of well-characterized ADP patients and enable the use of a small and geographically-focused group of highly trained raters, which we expect to enhance study precision.”

Bottom Line:  ACAD has given this phase 2 trial for ADP every chance of success by working with Clive Ballard and the King's College London.  The study will be a small geographically focused group of highly trained raters which should enhance the study precision.  Thank you for reading.

OMER: Third Quarter Financial Summary ($8.63)

Omeros released their third quarter earnings results on Thursday November 10th.  The summary of their financial condition is listed below.

* $26 million in cash, as of their earnings release on Thursday.
* The burn rate is approximately $4.5 million per month.
* $20 million in debt as of the third quarter with a fixed annual rate of 9.25%.  All interest and principle is due by December 1, 2016.
* MLV - The company has an open agreement with MLV to sell an aggregate of up to $49.3 million.  They sold 373,700 shares of common stock in October at the price of $13.29 per share raising $4.9 million leaving $44.4 million available for future funding.
* Omer has approximately 38 million shares including stock options and warrants.
* The company believes that with the cash on hand, approximately $26 million and the avenues to other financing such as the MLV agreement, the company has enough for at least the next 12 months.

Commercialization:
The FDA has accepted their application for OMS302 and the company is planning the commercial launch for the second half of 2014, if approved mid 2014.

Bottom Line:  Similar to other emerging biotechnology companies, financing is always a top priority with potential dilution of the shares.  We continue to like the quality, the potential of the companies pipeline, and the management team.  The stock will remain volatile in the near term, and we will use that volatility to add shares on weakness.  Thank you for reading.

ACAD: Third Quarter Conference Call ($21.00)

It was a positive 3rd quarter conference call from ACAD after hours today. The main points to consider are listed below.

A)  The company will start a phase 2 Alzheimer's trial in November with Pimavanserin for patients with (ADP) Alzheimer's Disease Psychosis.
B)  Three month stability testing has been completed in October.  Typically the FDA would like to see 12 month stability testing when submitting a new drug application.  Perhaps they can submit while continuing additional stability testing in progress.
C)  They will have 75 sales representatives in the US to sell Pimavanserin for PDP, and more than likely partner outside of U.S.
D)  Regarding the EU approval process for PDP.  ACAD will talk with the EU in the fall of 2013.
E)  Currently 200 patients have been taking Pima for over one year, and 100 patients over two years.  The longest patient has been taking Pima for eight years.  More proof of solid safety data that Pimavanserin offers that other atypical drugs do not.

Bottom Line:  ACAD is doing everything right by preparing to start the Alzheimer's phase 2 trial in November, and at the same time is readying data for FDA approval for PDP by the end of 2014.  The stock has come down considerably making the price today a good area to start a position. Thank you for reading.

GILD: Gilead Sciences Hepatitis C Pipeline ($70.97)

Gilead Sciences hepatitis C (HCV) drug sofosbuvir with ribavarin is currently under review with the FDA for stage 2 and 3 genotype infection.  Also under consideration, is sofosbuvir in combination with ribavarin and peglated interferon for the treatment of chronic hepatitis C in treatment naive adult patients with genotype 1 and 4 infection.  Approximately 75% of patients with HCV fall into the genotype 1 catagory.
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GILD is currently conducting a phase 3 trial called ION-3 for treatment naive genotype 1 infected patients. This phase 3 study was initiated from the positive results of the phase 2 study called LONESTAR.

LONESTAR Phase 2 Results

Treatment                      Duration         Population                  Results

Sofosbuvir + ledipasvir  8 weeks  GT-1 treatment naive  95%  (19/20) SVR 8

Sofosbuvir + ledipasvir  8 weeks  GT-1 treatment naive 100% (21/21) SVR 8

+ RBV            

Sofosbuvir + ledipasvir 12 weeks GT-1 treatment naive 100% (19/19) SVR 4
Sofosbuvir + ledipasvir 12 weeks GT-1 treatment exp.   95%  (18/19) SVR 4
Sofosbuvir + ledipasvir 12 weeks GT-1 treatment exp.   95%  (21/21) SVR 4
+ RBV

The phase 2 Lonestar trial results above suggest that a once daily all oral therapy of sofosbuvir + ledipasvir may have the potential to cure most genotype 1 HCV infected patients 100% at 12 weeks naive.

ION-3  Phase 3 Current Study Design

Sofosbuvir + ledipasvir 8 weeks GT-1 treatment naive
Achieved 95% from LONESTAR.
Sofosbuvir + ledipasvir + RBV 8 weeks GT-1 treatment naive
Achieved 100% from LONESTAR.
Sofosbuvir + ledipasvir 12 weeks GT-1 treatment naive
Achieved 100% from LONESTAR.

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GILD has just posted results of their PHOTON-1 phase 3 trial for patients with HCV and HIV.

76% SVR 12 for genotype 1 Hpc/HIV patients after 24 wks of sofosbuvil + ribavirin (no interferon)

88% SVR 12 for genotype 2 Hpc/HIV patients after 12 wks of sofosbuvil + ribavirin

67% SVR 12 for genotype 3 Hpc/HIV patients after 12 wks of sofosbuvil + ribavirin

The phase 3 PHOTON-1 trial results above are impressive given the fact that patient cohorts (Hep C + HIV) were the most refractory among drug therapy, most of them have failed prior treatment. 

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Bottom Line:  The $20 billion hepatitis C market has grabbed the attention of several companies attempting to enter with new and improved products.  From data researched, I believe GILD has the best product and safety profile coming to the market and the best pipeline for HCV.  Thank you for reading.

GILD: Reports 3rd Quarter Earnings

GILD - Gilead Sciences is a top selection for 2014. Today after the close, the company comfortably beat top and bottom line analyst 3rd quarter estimates and guided higher for the remainder of 2013.  Here are some highlights and future potential catalyst.
*  Today's earnings beat on the revenue side of 2.78 versus a 2.72 estimate and earnings per share was .52 cents versus an estimate of .48 cents. GILD also raised year end guidance numbers.
*  Stock buybacks will continue into next year.
*  On Friday October 25th, the FDA advisory panel voted unanimously in favor to approve Sofosbuvir to treat several forms of Hepatitis C.  The total HCV market is 10 billion dollars annually.
*  The final FDA approval could come at anytime from here through December.
*  Analyst are forecasting $1.85 billion in sales alone for Sofosbuvir in 2014, if it prices around $85,000 per patient.  I think that is rather conservative and I expect the company to beat the numbers throughout 2014.
The weekly chart below is near all time highs and appears to be overbought in the short term.  I expected to see some profit taking post report, but we will have to see how that plays our tomorrow.

Bottom Line:  GILD looks ready to have a strong 2014 with the launch of HCV drug Sofosbuvir. The key to the approval expected in December is how the FDA allows for the labeling on approval. Thank you for reading. 

OMER: ($11.41) More Positive Data Points

A PR from Omeros released on Thursday provided even more detail on a previously run FDA phase 1 trial with OMS824 (PDE10) program for Schizophrenia.  The company has been gathering some nice safety, tolerability, pharmakonitec, dosing levels, and PET scan data from just this phase 1 trial.  Below is a rundown of that data.

Phase I  OMS824 trial for Schizophrenia patients:

A)  OMS824 has achieved 63% engagement (PET scans) at a higher dose than previously reported at PDE10 and did not trigger the dose limiting side effects seen with other PDE10 inhibitors.
B)  Healthy male subjects received OMS824 once daily for seven days at a dose higher than previously evaluated in the target-engagement clinical trial.
C)  The drug was well tolerated, with mild somnolence as the only apparent side effect.
D)  In May, Omeros reported that a lower dose evaluated in an ongoing PET clinical trial demonstrated target engagement greater than had been previously reported for any PDE10 inhibitors.  The results showed a 50% occupancy at the selected dose without triggering extrapyramidal symptoms.

The company is currently in a phase II trial with OMS824 for stable Schizophrenia subjects, evaluating safety as the primary outcome, and pharmakonitecs and cognition as secondary outcome. The results will be released by the end of 2013.

Bottom Line:  Effective inhibition of the PDE10 is a promising mechanism for the treatment of Huntington's or Schizophrenia disease.  Omeros has been gathering some nice data on this previously run phase I trial, and is currently in a phase II trial which will gather even more data on the safety, tolerability, and some cognition reports may be possible.  The company has said that the cognition secondary outcome may not be substantial with a small size of just 32 patients.  Thank you for reading.

Omeros (OMER)

Omeros is a clinical-stage biopharmaceutical company committed to discovering, developing and commercializing products focused on inflammation, coagulopathies and disorders of the central nervous system. Below is a breakdown and timetable of potential catalyst for the stock.

OMS302 is at the top of the chart and has submitted a new dug application to the FDA in July.  The company should get notice by the end of September whether the FDA will accept the NDA.  If accepted it should be another eight months until the FDA either approves the drug or not.  Based on two strong phase III trials, the application should be accepted and the drug approved mid year 2014.  Even though the OMS302 program is the next potential catalyst on a timeline basis, the reason we have purchased OMER for investment is based on the PDE 10 inhibitor program for Schizophrenia, called OMS824.  We are mainly interested in the company for this central nervous system drug inhibitor PDE 10 or OMS824.  

  

OMS824 just began the enrollment stage for a phase II study evaluating patients with Schizophrenia announced on September 19th, with results to be released by years end.  There is currently no approved treatment, so this would be considered a drug for an unmet need.  The previous phase I studies showed that the drug, even delivered under high dosage, was well tolerated and safe for use, leading the company to start this very important phase II trial.  The potential pool of patients for this indication is around 2.2 million Schizophrenia patients in the U.S. with over $16 billion in sales of atypical Antipsychotics in 2009.
PDE10 Patent expiration:
2027 for composition of matter.

Risks:  The risks associated with OMER include financing, the phase II OMS824 upcoming trial, and the FDA approval processes.  The company will need financing shortly with only around $21 million in cash left and a burn rate of around $4.5 million per month.  The company also has increased it's debt level to $20 million and is paying 9.5% for it. So I expect some dilution within the next six months.  But that is typical for an early stage biotechnology company.  Below is a weekly chart of OMER.

Bottom Line:  The company is a high risk micro cap stock with just a $200 million market capitalization.  We are holding shares for their OMS824 Schizophrenia program that could have a huge payoff if they achieve significant results.  If the current phase II OMS824 program does show good results, then the market capitalization should double to $400 million or roughly $15.00 per share minimum.  The risk to reward at these price levels looks promising. Thank you for reading.

Contact: 586-431-8000

ACAD: ($22.63)

Acadia Pharmaceuticals (ACAD) presented at the Morgan Stanley Global Healthcare Conference on Monday at 9:25 a.m.  Here are a few takeaways from that conference.

A) CEO Uli Hacksell stated that they expect "very significant" pricing power of Pimavanserin once approved by the FDA, due to past new drug launch comparisons, safety, and the unmet need with victims with PDP.
B)  ACAD believes Pima can be used for all kinds of dementia outside of Parkinson's and Alzheimer's disease.
C)  The FDA and ACAD agree that there are no safety concerns with Pima regardless if the indication is for Parkinson's or Alzheimer's.
Overall, there were good questions asked from the Morgan Stanley analyst, and equally strong replies from ACAD management.
The priority list for ACAD was pointed out as being:
1.  To continue to gather all relevant information to submit an NDA (new drug application) to the FDA.
2.  To run a phase II trial for patients with Alzheimer's disease.
3.  Run a phase II Schizophrenia trial using Pima coupled with Risperdal.

The stock made a new all-time closing high on the day of the conference, which was Monday.  Below is a weekly chart.

Bottom Line:  ACAD is moving along nicely with their lead drug Pimavanserin and intends on submitting and NDA by the end of 2014.  They also plan on starting a phase II Alzheimer's disease trial by the end of 2013.

From my previous post Future Value of ACAD, I ran some revenue estimates and came to a near term price for ACAD of around $29.00.  Judging from Monday's stock making a new high, I think investors are starting to see the big picture of what Pimavanserin can potentially be......a new and safe blockbuster drug to treat Parkinson's, Alzheimer's and other dementia related disorders.  Thank you for reading.

Disclosure:  We hold ACAD equity and options, CBST, ONTX, and January puts on the SPY.

ACAD: Future Value of ACAD ($19.96)

The goal for this post is to compare any similar drugs on the market today, particularly a anti psychotic, and compare the prices with what Acadia's Pimavanserin might be able to sell for once the drug is approved for Parkinson's Disease Psychosis (PDP) and goes to market in 2015.  From there, we can come up with some revenue estimates and market capitalization and finally a fair stock price per share estimate based on peak revenues.

For comparison's, I have inquired about the price of Abilify, which is a anti psychotic drug used to treat various psychotic conditions and will remain a non generic drug until April 2015.  I choose Abilify because it is a non generic, and many anti psychotic drugs are the only treatments available at present to treat PDP off-label. Clozapine is another anti psychotic drug used, but, it is now generic, so an apples to apples comparison cannot be made.  I was quoted prices at CVS and Sam's Pharmacy for Abilify.

Cost of Abilify at CVS Pharmacy
$14,484.00 per year supply 30 mg daily tablet.
$1,207 for a 30 day supply of 30 mg tablet.
$40.23 per pill cost daily 30 mg tablet.

Cost of Abilify at Sam's Pharmacy
$11,587 per year supply 30 mg daily tablet.
$965.60 for a 30 day supply of 30 mg tablet.
$32.18 per pill cost daily 30 mg tablet.

We'll use the average of the CVS retail price and discounter Sam's to derive the annual cost of Abilify 30 mg tablets for comparisons purposes of what Acadia's Pimavanserin might be able to sell for once it reaches commercialization in 2015. Which is $40.23 + $32.18 = $72.41 / 2 = $36.20 per 30 mg Abilify daily tablet.
But to be conservative, I am going to discount the daily cost of the Abilify tablet down around -10% to $32.80 per daily use priced to the consumer.

Which equates to:
$11,808 per annual supply.
$984.00 monthly supply.
$32.80 per pill daily 30 mg tablet.

I am going to refer to different analyst revenue prediction reports and Acadia presentations to draw further conclusions on future revenue based on the overall US Parkinson's Disease Psychosis market.
1,000,000 With Parkinson's in US.
30% develop PDP or Parkinson's Disease Psychosis at some point.
300,000 total patients with PDP.
50% penetration rate of those with the psychosis.
150,000 the actual number treated for PDP with Pima out of 1 million Parkinson's total victims - conservatively.
$32.80 = retail price per tablet per day of treatment, based on the Abilify retail pharmacy prices.
$18.00 = Sales to Acadia per 40 mg tablet before all the wholesale roughly (35%) and retail (35%) markups prior to being sold to the consumer.
$6,480 = Per patient ACAD annual revenue, ($18.00 per day * 30 days * 12 months)
$972,000 million = Total peak revenue to ACAD, (150,000 patients * $6,480 annual revenue to ACAD) U.S. Parkinson's Psychosis indication only.

The average biotechnology acquisition is a market capitalization of 3-4 times peak sales.  So, at three times peak sales from Pimavanserin for U.S. PDP, we calculate a share price by taking peak annual revenue of $972,000 million * 3 =  $2.916B market capitalization / 100,000,000 (approx. shares outstanding) = $29.16 stock price. The stock is currently trading at $20.00 per share or just 2.0 times peak sales.

Assumptions to future stock value
A)  The price above of $32.80 per daily tablet, reflects the mark up by the wholesaler and the pharmacy company selling to the consumer, not the price Acadia sells from manufacturing.  I believe the figures above are close enough to work with and scale backwards.
B)  Pima can price at $32.80 per tablet to the public.
I view the $32.80 per tablet as fair given the fact that Pimavanserin has a clean safety profile compared to Abilify and there is not another drug to compete with Pimavanserin for PDP.
C)  ACAD can penetrate 50% of the US market (50% of  300,000) for the patients that develop PDP.
PDP has an unmet need, and Pimavanserin has a clean safety profile compared to other anti psychotics that are being used today that have black box warnings.

Further note, that these revenue figures only include PDP in the U.S. and not Alzheimer's Disease Psychosis or ADP which patient's have similar symptoms. The ADP market is roughly four times the size of the PDP market that I just ran revenue figures on above. The math get's a lot more fun if ACAD can prove through trials that Pimavanserin works as well with Alzheimer's patients as it does with Parkinson's Disease patients as they are planning a phase II Alzheimer's Disease Psychosis study by year end 2013.  Also, the company holds world wide rights to Pimavanserin and the above revenue potential does not include the rest of world outside of the US, nor does it include any potential off-label for other indications.  The U.S. patent for Pimavanserin runs until mid 2028, and European patent runs through 2024.  Thank you for reading.

Disclosure:  We currently hold shares of ACAD.

ACAD +12.64% Today

We first started buying ACAD in the $6.00 range here ACAD - Pharmaceutical in February.  Today the stock was up 12.64% to $16.58 on heavy volume.  There wasn't a public press release from the company today to prompt the move higher, so I expect it was general funds buying the story of long term potential.  Below is a daily chart of ACAD.

Bottom Line:  We have no intention of selling the shares anywhere near these prices, as the future opportunity looks strong for their lead drug Pimavanserin for both Parkinson's and Alzheimer's disease.  Thank you for reading.

ACAD Pharmaceuticals

We sold ACAD yesterday in the $14.20 range after the stock has doubled within the last few months.  We used the strength of the stock from being inducted into the Nasdaq Biotech Index as of Monday the 20th.  The nearest catalyst looks to be the starting of the Alzheimer's (ADP) phase II trial which the company guided for  the second half of 2013.  Since we are still bullish on the long term prospects of ACAD we will look to re-enter the stock at lower prices after working off severely over bought technical readings, not only on the stock itself, but on the overall market in general is also overbought.

Above is a daily chart of ACAD.  We may be interested in owning the stock again if it drops to around the $13.00 level or lower, approximately -10% lower than our sell price on Tuesday.  

Bottom Line:  Although we like the long term prospects of ACAD, we think the stock will retrace some of the move higher it has achieved over the last two months.  The retrace will be healthy and set the stage for new highs in the coming months ahead.  Thank you for reading.

ACAD Secondary Offering

ACAD is pricing 8 million shares at $12.50 for a total of $100 million.  The offering would bring their cash total to approximately $178 million at 2013 year's end company forecast.  I like the move, as it can help in potential negotiations for partnership or outright purchase by a larger entity.  The stock in pre-market is actually trading higher than the offering price which is extremely positive for now.  The cash will also aid in running the Alzheimer's (ADP) trial phase II, and a European Parkinson's trial if they wish to.  After the offering the share count will total around $88 million shares outstanding.  We hold shares of ACAD.  Thank you for reading.

ACAD: First Quarter Conference Call ($12.03)

Since ACAD is a emerging biotech, there is not much to read into the financial part of the news release, other than what their cash on hand and expected year end cash will be.
-ACAD currently has $101.5 million in cash and expects to end 2013 with around $78 million.
-With their impressive phase III results for Pimavanserin for Parkinsons disease psychosis (PDP), they are planning an expedited path to an NDA (new drug application) filing expected mid 2014.
-Plan on initiating a phase II study with their lead drug Pima for Alzheimer's disease end of 2013.
-During the conference call today the CEO also stated that the FDA has not approved any drug for the treatment for PDP, and that there is no current drug to effectively treat Alzheimer's (ADP) either.

The stock on a weekly basis above, is still overbought despite the pullback from the high upper 13.00 level.  Overall, the stock has held up quite well since doubling in price over the last few months.  

Bottom Line:  ACAD is in a very good position with plenty of cash for now, a long patent life to 2028, and a single, safe and effective drug for PDP and potentially Alzheimer's.  Thank you for reading.

Volatility Reigns

Volatility has been running high this week as the dollar more than anything is playing havoc with the markets. None of this volatility negates the uptrend that we are currently experiencing.  Technically, the markets are oversold at present in the short term.  Couple of charts below.

The S&P above shows a lot of volatility, but uptrend remains intact.

The TRIN is oversold significantly, and should retrace.  Thank you for reading.

Bottom Line:  What's moving the market is....
A)  US Dollar daily swings.
B)  Option expiration week.
C)  Subpar corporate earnings releases.

Normal Pullback Nothing to Fear

Using the last two pullbacks as history, a -4% move lower would be healthy.  Chart below.

Bottom Line:  Markets need these -4%-6% pullbacks while keeping the uptrend intact.  The last two pullbacks were -3% and -4% since implementing QE3 fully in September.  So I am looking for a similar move lower which would keep the uptrend intact and lead to new highs in the weeks ahead. Thank you for reading.

ACAD Up +50% Premarket

We originally bought ACAD around $6.00 per share here ACAD Pharmaceuticals - ACAD.  ACAD is up pre-market 50% to around $12.00 on news that it will seek FDA approval for Pimavanserin a Parkinsons disease psychosis drug.  After meeting with the Food and Drug Administration and based on data from a successful phase III study already completed the company will no longer conduct a confirmatory phase III study that was planned to start this month.  The company is currently targeting NDA submission (new drug application) by the end of 2014.
Bottom Line:  The phase III study that was released last November was statistically significant.  Having the opportunity to skip a second phase III study will eliminate approximately a year or more from potential approval to drug to market.  The company is a strong candidate for acquisition by large pharma as the patent  coverage for Pimavanserin is 2028.  Thank you for reading.

Nokia Trend Reversal

Nokia has had a couple of good days in a row, and has the look of displaying a trend reversal pattern shown from the charts below.

The daily chart above has been trading below the 20 day exponential moving average for over the last few months, but has cleanly broken above the moving average on higher than average volume today.

The weekly chart above, is shown with fibonacci re-tracement levels.  Typically a healthy pull back for a stock would be to move down to the 50% level.  Nokia did just that and has bounced off that level nicely.  The moving indicators are still bullish (green above purple line) despite the 50% re-trace over the last few months.

Bottom Line:  Nice technical picture developing with NOK, as it is trading above the 20 day ema, has volume above average, indicators still bullish, and bounce off the 50% retrace fibonacci level.  Thank you for reading.

Resilient Market

After a Friday jobs report that came in below expectations, the market has showed its resilience and has had a strong bounce back.

The chart above shows how the SPY pulled just below the 20 day exponential moving average (green line) similar to the last two small pullbacks and has headed higher since.  New highs should be attained soon.  

Bottom Line:  Many have been calling for a market correction to occur, but there is a continued bid under this market that has kept this uptrend. I am looking for new highs in the coming days to weeks.
Thank you for reading.

Ominous Market Signs Part II

A few charts to confirm what I have been seeing during the last few weeks in the market.

The NYSI Summation Index above is trading below the moving average. This is an intermediate term indicator.  In other words, the market may not necessarily track this on a day to day basis, but what's important is the trend and that it is has moved below the moving average signalling weakness.

The New High / New Low chart above has spent 2013 above the zero line but is trending down toward the zero line now which means the market is getting more balanced out.  As this indicator falls, we should see more value in some specific stocks.

The above chart is a ratio of high beta stocks / low volatility stocks. When the black ratio line falls below the  moving averages, then risk is subdued, and when the ratio line is above the moving averages then traders are more in the risk taking mood by buying the high beta stocks vs. the low volatility stocks.  

Bottom Line:  We are staying fairly conservative holding a high cash position to take advantage of any significant pullback we may see.  The Friday's Non Farm Payroll will be in the spotlight, and as usual expect plenty of volatility when that report is released.  Thank you for reading.

Ominous Market Signs

The market is displaying some signs that could indicate market weakness in the coming weeks ahead or perhaps a correction in the making.

The $TICK (short term) indicator above sold off from the start of the day and continued weak throughout the day to end in oversold territory. Typically we would like to see a bounce from the oversold territory as buyers step in.

The NYSE advance / decline line has been falling on a longer term basis for much of this year. This merits something to watch on a daily basis.

Leadership stocks like AAPL have sold off.  Apple has sold off the past four trading sessions and is heading toward it's 2013 low.  Let's see if a test of that low holds or does the stock create a new 2013 low in the days ahead putting pressure on the overall market.

Bottom Line:  Friday we have the release of the Non-Farm Payroll data, which tends to create a market reaction either way.  So perhaps that has the market on edge today as the short term $TICK indicator was weak throughout the entire day, and other intermediate term indicators have been looking rather weak over the past month.  Thank you for reading.

ACAD Pharmaceuticals + 23.91% Today

We started buying ACAD in February and wrote about it here ACAD Pharmaceuticals - ACAD.  Today ACAD advanced 23.91% on heavy volume of 22 million shares.  The company was a presenter at the (AAN) American Academy of Neurology yesterday and reiterated the November Phase 3 results of Pimavanserin.  

ACAD has to just duplicate the prior phase 3 trial they completed in November, and if they do data should be good enough for FDA approval. They will be starting that trial by April and finish the trial by the end of 2014. The lead drug Pima will also be tested for (ADP) Alzheimer's Disease Psychosis in the second half of 2013. The long patent life to 2028 makes the company a good takeover target for large pharma sometime in the next two years. 

Year to Date Asset Performance

One would think that with the amount of stimulus the Federal Reserve has been printing, that commodities and perhaps precious metals would be the benefactor of such stimulus along with stocks.  From the chart below, it looks like only stocks have received the share of appreciation rising roughly 9% year to date.

Stocks (SPY) has outperformed copper (JJC), soft commodities (JJG), oil ($WTIC), gold (GLD) and bonds (TLT) by a wide margin.  With these type of returns there would be little reason to stop the asset purchase programs currently running as long as inflation is kept in check.  Of course bonds selling off creating rising bond yields is not the ideal response that the Fed wants to occur either.  Bond yields are too low at present to worry about that scenario playing out.

Bottom Line:  The stimulus of 85 billion a month in a combination of mortgage backed securities and treasury purchases have had a positive effect on stocks, and a muted effect on other asset classes such as commodities, precious metals and bonds, putting the stimulus programs in the sweet spot for now.  I think any market pullbacks will be in the range of -3% to a -4% sell off in the intermediate term.  Thank you for reading.  

New Market High

A new market high was achieved this week depending on which index you follow.  Below is the Dow Industrial Average Index.  This week marked a new high on that index eclipsing the 2007 high of (14,198).

Although we have reached new all time highs in the market, the important thing to note is where does the market trade from here, until the rest of the year.  As of today the Dow is up about 9% as of this writing.  

Bottom Line:  Stocks on a P/E basis are not expensive at a projected (13.6) - 2013 earnings, below the historical P/E average of 15.  Against ultra low treasury yields, stocks can be deemed relatively cheap also.  I expect some market pullbacks to be short lived in the range of -3% - 4% the rest of this year as there is plenty of Fed induced liquidity waiting to enter the market.  Thank you for reading.  

Mixed Market Picture

A truly mixed picture as far as technical analysis is concerned.  So to the charts we go.

The NYSE Summation index above is already on a sell signal as it has crossed below it's moving average.

The chart above is the NYSE advance divided by declining stock ratio.  As near term history shows the market is a buy when this ratio drops below the 1.2 number.  At present there is not an edge either way to add long or short.

Above is the TRIN index.  This is a shorter term index that measures advance and declining issues and volume.  There is no edge long or short for the near term.  

This last chart is the USD index long exchange traded fund on a weekly basis.  I have shown in the past that a stronger dollar has been a detriment to stocks rising and a weaker dollar is a benefit to stocks.  In the long term a rising dollar signals a stronger economy.  The fact that the market has been strong despite a rising dollar gives merit to the strength of stocks at present.  

Bottom Line:  We have a strong trending market on an intermediate term basis, with some indicators (like the NYSE Summation Index) above signalling a change in trend should have already occurred or is about to occur.  Also the NYSE Advance / Declining stock ratio above, there isn't an edge either way, to placing new long or short positions today on the indices.

Mid Week Update

This is a confusing market that is being juiced with plenty of liquidity from the fed.  Below are a few charts as we tread the volatility the last few weeks.

The TRIN index above is a breadth indicator that compares advancing and declining stock issues and trading volume.  With today's move higher we are very overbought.  I expect some consolidation in the next couple of days to work that indicator off it's overbought readings.

The NYSE Summation Index above has given a sell signal as it has crossed through the moving average.  With the volatility as it has been the last few weeks, we can potentially move above that moving average in the next week or two.  

After yesterday's and today's move higher, I would have expected the put/call ratio to also elevate much higher also to complacency levels. The level is just above the neutral line where there is not much edge either way as to the high complacency or panic in the market.  

Bottom Line:  Today was a strong day for the markets led by some improved economic data.  I expect we see new market highs in the coming weeks with continued better data, and plenty of liquidity via the fed.  Thank you for reading.   

Acadia Pharmaceuticals ($6.09)

ACAD focuses on small molecule drugs that address unmet medical needs in neurological and related central nervous system disorders.  The lead drug Pimavanserin will be conducting another phase 3 for the treatment of Parkinson's Disease Psychosis (PDP).  The company announced positive results for a just completed phase 3 trial for Pimavanserin in November.  The FDA has requested a repeated phase 3 trail similar to the just completed phase 3.  The company plans to launch that second phase 3 by April.  They will also be launching a phase 2 trial for Alzheimer's Disease Psychosis (ADP) the second half of 2013.

The chart above is a 60 minute two month chart.  The stock has been consolidating over the past 13 days between the range of 5.80 - 6.40. The longer the consolidation lasts the greater the potential move once it breaks out.  

Bottom Line:  ACAD has to just duplicate the prior phase 3 trial they complete in November, if they do data should be good enough for FDA approval. They will be starting that trial by April.  The lead drug Pima will also be tested for (ADP) Alzheimer's Disease Psychosis in the second half of 2013. The long patent life to 2028 makes the company a good takeover target for large pharma sometime in the next two years.

Trending Higher

Stocks, commodities, high yield bonds, and precious metals have shown the propensity to drift higher behind the fuel of liquidity injections from the Federal Reserve.  So despite a global economy that has remained sluggish, stocks can rise nevertheless.  That is exactly what we have been experiencing here and abroad.  Below are a few charts that have given some shorter term sell signals.

Notice the breadth indicator, known as the Summation Index above, is at the point of crossing below the moving average.  Typically this will signal a weaker stock market in the future.

The chart above has the record high index in the upper pane and the S&P 500 in the lower pane.  The record high index has equaled the two year high and is trending sideways signalling exhaustion.  

Finally the VIX Index which has been referred to the fear gauge is at complacent multi-year lows and trending lower.  There is not a lot of fear in this market at the present time.  

Bottom Line:  Markets continue to make new highs despite the above charts signalling either complacency, or overbought readings.  I expect market highs to continue, as we are experiencing a new paradox in capital markets where induced liquidity, and currency depreciation are a top priority among central banks worldwide.  The liquidity injections and weaker US Dollar have aided the S&P 500 in moving higher.  Thank you for reading.  

Some Charts of Interest

Scanning through my charts this weekend, I noticed many displaying extreme conditions.  So below are a few.

Above is the transportation index.  The index is a leading indicator for the health of the economy by moving goods from point A to point B.  The stocks in this index are extremely overbought and in new high territory.

The new highs - new lows index has been hanging at complacent levels for the past few weeks.  Not an area to be loading new long positions. Compared to the panic low area above, buying was lower risk.

Just to show how strong of a market uptrend we are currently experiencing.  AAPL (a stock that is represented in more funds than most any stock) lost -12% this week alone and the mark closed at new highs again this week.  So any recovery by AAPL stock, would bode well for more new highs.  

The Tale of Two Stocks

AAPL reported 4th quarter earnings this afternoon.  Results came in shy of expectations. Chart below.

AAPL is selling off after hours to the tune of -10%.  We originally mentioned shorting AAPL at around $538.00 per share.  The long term play (shorting AAPL) should be held until $315.00 per share which is where the trend reversal pattern price point is displayed.  

Nokia, unlike AAPL is trending higher, and will reveal 4th quarter earnings tomorrow.  More importantly the company will reveal sales for the Lumia 920 and give some guidance.  We originally started buying NOK here Nokia Technical Pattern, at around $2.60 per share and have used options along the way also.  

Bottom Line:  AAPL is down -15% 2013 year to date, while NOK is up +17% year to date. There has been a shift in investor sentiment regarding these two stocks.  Both stocks still have significant downside (AAPL), and upside (NOK) according to their respective charts. Thank you for reading.
 

APPLE Update

I was asked to update AAPL. I mentioned that AAPL looked like a good technical short based on a head and shoulders reversal patter that it was displaying.

Above is the current pattern of AAPL.  Notice the stock has broken the neckline of the head and shoulders confirming the pattern.

Above is a daily chart of AAPL.  Notice that the 50 day moving average is trending lower (bearish). Prior to today the stock had been oversold on a shorter term basis setting up or a bounce (today).  The stock Is still under the neckline and the 50 dma, keeping the trend reversal pattern intact.

Still Bullish

We are still bullish on the markets.  Below are just a few charts that support a bullish focus for stocks continuing to move higher.

The transportation index above is right at all time highs for this index fund. The chart is still not overbought on the RSI, giving more upside ahead.  The transportation index is seen as a leading economic indicator for moving goods from point A to point B.

The bullish percentage indicator above measures the number of stocks on a Point and Figure chart that are on a buy signal.  Clearly trending higher and above the moving averages.

The NYSE Summation Index is a breadth indicator that measures daily advances minus declines.  The index is trending strongly higher and above the moving average.

Bottom Line:  We have a higher trending market that has the look of moving higher in the coming weeks before hitting extreme overbought conditions. Thank you for reading.

Nokia Update

Nokia (NOK) has received back to back negative news that has caused the stock to experience some temporary volatility.  Back taxes owed in India and patent infringement are the cause of the volatility.

On the daily chart above.  NOK is in a 17 day consolidation level that runs from approximately 3.80 - 4.30. Having stayed at this level for this period has worked off some overbought reading.

The weekly chart above, illustrates a bullish cross (13 exponential over the 34 ) after close to two years of lower trending.  The weekly chart looks good, and I would expect a move to around the 5.00 area for this trend to continue.

Bottom Line:  We originally began buying NOK at the 2.60 level, and plan to hold the stock through 4th quarter earnings, and beyond, as long as the turn around story keeps improving.  The charts look fine with the weekly chart experiencing a bullish cross.  Thank you for reading.