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.