CRIS – approval a double edged sword apparently

CRIS seemed to be holding its own at the $4.90-$5.00 level but in the later afternoon it dropped and closed at $4.75. It will be interesting to see what happens tomorrow. It triggered the short sale circuit breaker this afternoon which should, I imagine, slow down the selling. We shall see. One could convince oneself that it respected the recent ascending trend line but I would not be surprised to see that fail tomorrow.


CRIS drug approved

CRIS received an early approval of vismodegib this morning (PDUFA date was March 6th). It was never my intention to hold through approval/CRL, but these surprises are what keep things interesting. Anyway, I disposed of 75% of my position at $5. Missed the quick spike to $5.65 and waited for a recovery from the subsequent dive. I will hold onto the remaining shares with a stop of $4.60. CRIS generated a 38% return on the portion I off-loaded.


Nice day for ASTX. This is a great company which seems to be under the radar. Perhaps that is a temporary state. up 8% today on ~2.5 times average volume. It closed at the day’s high. Curis was also strong today Both of these stocks seem to have broken through some resistance so hopefully they can build on that.

Did not get the pullback on IRWD today. It was up again – 3% – and is continuing its great run. I am kicking myself about this one It fulfilled all my criteria and would clearly have been a great position. Somehow I stopped watching it late last year and may have missed the ride now.

I will be traveling for the rest of the week so may not be updating until the end of the weekend.

IRWD chart

IRWD has been on a tear in the last 2 weeks. It is up 25% since January 9th with only two down days during that period. It broke through the 200 day MA today and is now approaching resistance at the $13.90 level. I am looking for a pullback to enter but recognise that I am late to this. Ideally I would have taken a position at about $12.50.


Ironwood Pharmaceutcals – thinking about this one

I may be too late here but I will be watching for a pull back to start a position. Here are some notes outlining my thinking.


Ironwood Pharmaceuticals is an early stage drug development company. It is developing Linaclotide, an oral drug for the treatment of irritable bowel syndrome.  The company has submitted an NDA and has a PDUFA date on June 8th, 2012. It has marketing partnerships in place to commercialise the drug worldwide.

The company was founded in 1998. Formerly known as Microbia, it changed its name to Ironwood Pharmaceuticals in 2008. In 2010 it raised $190M through an IPO that priced the stock at $11.25. Recently it has traded at the $13 level.


The company is developing Linaclotide for use in patients with irritable bowel syndrome with constipation (IBS-c) or chronic constipation (CC).  They have completed 4 double-blind phase 3 efficacy trials (two in IBS-C patients and two in CC patients). In addition two 18-month, open label, long-term safety studies are ongoing.  All four efficacy trials showed statistical improvement in symptoms over placebo. Side effects appear to be minimal with the most frequent being diarrhoea.

Here’s the IBS-C abstract

Here are the results of the CC trials

Here’s an NYT article after the release of the first phase III trial data.

An NDA was filed in the US in August 2011 and an MAA was filed with the EMA in September.  The PDUFA date is in June 2012.


The NIH estimates that ~20% of Americans experience symptoms of IBS. Of these, about one third are associated with constipation (IBS-C), one third with diarrhoea, and the remainder with both.  In addition to constipation or pain, patients often report accompanying pain.

Chronic constipation affects ~ 15% of the US population. It has a significant impact on healthcare costs as it is estimated to drive ~2.5M physician visits per year.

IRWD estimates the total market for IBS-C and CC at ~40M patients in the US.  This seems like a reasonable estimate.

There is currently only one drug marketed specifically for IBS-C – Amitiza.  Another drug, Zelnorm, was previously licensed for IBS-C, but was withdrawn from the market in 2007 due to a potential association with MIs and strokes. Prior to withdrawal it had achieved sales as high as $560M.

Amitiza’s sales have been disappointing. In 2009 it had WW sales of ~$215M. Sales had been expected to hit $800M and Amitiza has denounced its marketing collaborator, Takeda, for failing to effectively Markey Amitiza by pursuing a strategy focused on specialists (gastroenterologists) rather that a broad, primary care and DTC approach.

There is a significant and underserved market. Patients will continue to be initially treated with laxatives and analgesia, but a significant number will fail this regimen and will have few options to progress to. IRWD claims market research that shows 70% of patients relapsing with standard treatment.

A quick back of the envelope (with some obvious assumptions) shows that there could be sizable revenue potential here:


In Q3 2011 IRWD had revenues of ~$12M and a net loss of $21M.  The company has $47M in cash on its balance sheet as well as 204M in short term investments.


If Linaclotide were to achieve revenues of $500M then IRWD could expect to receive $250M of that. A quick screen of biotech companies with revenues in that range shows some valuations that would give considerable upside based on current stock price (IRWD market cap. = $1.38B):


Forest: IRWD has a partnership with Forest Labs to jointly develop and commercialise Linaclotide in North America.  The two companies share the development costs as well as future profits/losses in the US equally.  IRWD will receive royalties from sales in Mexico & Canada.  Forest made upfront payments and is committed to ongoing milestone payments.  Payments could eventually total $330M.

Almirall: IRWD has an agreement with Almirall to develop and commercialise Linaclotide in Europe.  The license agreement (including contingent milestone payments, as well as a contingent equity investment) could total up to $55M.  In addition IRWD will receive escalating royalties from sales in EU.

Astellas Pharma: IRWD has an agreement with Astellas to develop and commercialise Linaclotide in Asia. Payments associated with the agreement could eventually total up to $45M.


IRWD has a compound before the FDA for a large, under-served primary care market. It appears to have solid partnerships with companies that should be able to successfully commercialise a drug such as Linaclotide.  Forest has a large salesforce and has several drugs in the primary care setting. It does not have any GO drugs so a question remains as to whether it will be able to engage in this area.  However, the lesson from Astexia seems to be that a primary care/DTC approach may be more promising than a specialist focused campaign.

The company is approaching a PDUFA date mid-year. The price can be expected to rise approaching this as more interest is focused on IRWD. If the FDA grants approval, and Linaclotide can be successfully commercialised, IRWD should continue to rise from its current levels.

AMRN recovers (slightly), CRIS breaks through

I still have not read anything to explain the sudden, early drop in AMRN’s price. It did recover nearly all of its loss during the day but gradually fell back again to close down 3% at $8.07. Apparently large blocks of shares were going through so perhaps it was a fund dumping its holding. If that is so, it does illustrate one of the problems with the small biotech stocks – their inherent illiquidity. AMRN is actually reasonably heavily traded with a current 3-month average volume of ~2.5M. But for a fund that has built up a decent sized position, that may not be enough to cushion a rapid exit.

In other news, CRIS managed to close the day above the $4.80 level that it set at the start of the year. Plenty of room at the top of the chart for it to keep moving.

ASTX also finished well, closing at $2.22. I think that it should do well if it can manage to get through the 200 day MA.

AMRN down

AMRN has been as low as $7.79 so far this morning. That’s ~7% down from yesterday’s close. At the moment it has rebounded to the 8 range. No news as far as I can tell. My stops are at $7.60.

Market in general is down with nervousness about the Greek situation. ASTX though is having another shot at pushing through $2.20.

Performance update

It’s been 8 weeks now since the start of the portfolio tracking on this site (performance is indexed against November 28th, 2011). As can be seen on the performance tab, the portfolio is up a shade over 30% in this time. IN the same time the NASDAQ is up 10% while the NBI is up 13%. This performance is in line with prior periods.

SPPI loses early gains

SPPI certainly enjoyed an early boost from news of its positive study results for Zevalin. Seems though that the market’s enthusiasm wore off over the course of the day. The study was quite small and it will clearly take some time to replicate the results in a larger cohort – this study involved 2-year progression free survival. Intra-day high was $15.98 but SPPI closed at $15.36.

ASTX and AMRN both closed up on Friday’s close while CRIS closed down slightly.