Progress update

I started this exercise 3 months ago, on November 28th. In that time I have held positions in 11 securities: SPPI, DSCO (twice), CRIS, ASTX, AMRN, CORT, CHTP (via options), IRWD, PGNX, PLX and HZNP. Four positions are still open.

As of today the portfolio is up 39%. The max return was 42% which was on February 6th. The average daily return on the portfolio was 0.6%. There have been 42 up days and 21 down days. Clearly this has been a strong period for the overall market – since Nov. 28th the NASDAQ is up 18% while the NBI is up 21%.

SPPI recently fell back from its 52 week high of $16 to ~$13. After a few strong days it got knocked back today to $14.13. The company reports Q4/2011 on Thursday.

 

 

 

 

 

 

 

 

PGNX broke through $10 late last week but has failed to hold this week. It has good support at $9.30.PDUFA is April 27th.

 

 

 

 

 

 

 

 

PLX has yet to close the gap it established after its secondary offering was announced. I bought at $5.60 and the position has been underwater ever since. It is currently trading at ~$5.40. Its PDUFA is May 1st.

 

 

 

 

 

 

 

 

HZNP is slow but still looks like it has put in a double bottom. PDUFA is July 26th.

Better day

Pulled back a bit today. Biotech buoyed probably by the outcome of yesterday’s VVUS Ad Comm meeting. VVUS shot up and opened up ~100% this morning. Possibly a little bit too much excitement! Ad Comm meetings are a killer when their negative but when they are positive things are less certain.

CHTP also had a positive Ad Comm outcome (this afternoon). It was up 75% in after-hours trading.

I started a position in HZNP this morning ar $3.41. I have been watching it for a few days as it fell towards its 52-week low. Looks like it has put in a double-bottom and might start to see some strength now as investors start to look towards its PDUFA in July.

 

 

 

 

 

 

 

 

I will be watching my old friends IRWD and AMRN for a re-entry tomorrow. Also thinking about AFFY.

Tough day in the office

The portfolio was down 2.3% today on Friday’s close. IRWD and SPPI were both hit pretty hard. The NBI was down 2% today. Today was the 3rd worst day for the portfolio since I started following it on this site. The worst single day decline was -3.6% on Jan. 26th. The 2nd worst was -2.9% on Dec. 21st.

To balance this with some positives:

  • The portfolio is up 34% since November 28th,
  • The average daily return during that period has been +0.5%,
  • The biggest daily return (on Jan 9th) was +6%,
  • There were 37 up days vs. 20 down days.

IRWD battered about

IRWD has had a rough morning and is currently down ~5% on Friday’s close. As previously mentioned, I had moved my stop on Ironwood to my entry point ($14.40) so I was stopped out of the position just after noon for a flat trade. Disappointed with this but I still think the drug has a lot of potential so I will be looking for a re-entry point ahead of the PDUFA.

CHTP had an even worse morning with briefing documents released ahead of its upcoming Ad Comm meeting. The documents recommended that Northera not be approved and highlighted concerns over the drug’s safety profile. CHTP is down ~30% on this news.

SPPI also down this morning. Concerns about other companies producing generic fusilev apparently.

Looking at PLX

Overview

Protalix Biotherapeutics (PLX) is a company focused on the development and commercialization of recombinant therapeutic proteins based on its proprietary plant cell-based protein expression system. Its lead candidate is taliglucerase alfa which is being developed for Gaucher’s disease and has a PDUFA date set for May 1st, 2012.

Last week Protalix Biotherapeutics (PLX) announced a secondary offering aimed at raising $24M.  This involved plans to sell 4.5M shares at $5.25. The price represented a 15% discount to the close prior to the announcement. The market reacted as might be expected with PLX opening down 12% the morning after the announcement.

Market

PLX is developing taliglucerase for the treatment of Gaucher’s disease (GD). GD is the most common Lysosomal Storage Disorder. It is a genetic disorder which results in fat being deposited in various organs including the spleen and liver.  In the US it has an incidence of ~1 in 12,000 live births.

The most common signs and symptoms of GD are enlargement of the liver and spleen, anemia, nosebleeds, reduced platelets (resulting in easy bruising and long clotting times), severe joint pain (usually hips or knees), and osteoporosis. Weakening of the bones can lead to spontaneous fractures.

Current treatment for GD is enzyme replacement therapy. Cerezyme is a recombinant enzyme manufactured by Genzyme (GENZ). It is extremely expensive with treatment costing > $200K per year. Treatment must be continued for the life of the patient.

The total market for GD treatments is currentl estimated at $1.3B per year and is growing. There are approx. 10,000 patients worldwide but only about half of them receive treatment.

VPRIV  is an enzyme replacement that is manufactured by Shire (SHP). It was approved by the FDA in February, 2010. PLX’s drug is also a recombinant enzyme. However, it is plant derived and if approved it would be the first plant-made pharmaceutical.

Pivotal phase 3 trial

PLX completed its pivotal trial of taliglucerase alfa in September 2009. The trial had a primary endpoint, mean reduction in spleen volume after 9 months, that was specified in an SPA agreed upon prior to the trial’s start.

Results were as follows:

  • The trial met its primary endpoint at both doses tested
  • Secondary endpoints were also met; including decreased liver volume, increased hemoglobin concentration, increased platelet count.
  • No serious adverse events were reported; all adverse events were mild or moderate in nature.

The company recently announced long-term safety and efficacy data form a 15- month follow on study that followed 26 patients originally enrolled in the pivotal trial. These data were consistent with the results of the 9-month trial.

In addition the company has completed a switch-over study to assess safety and efficacy of taliglucerase alfa in patients with GD disease that are currently undergoing enzyme replacement therapy with Cerezyme. Patients with stable disease were switched from intravenous Cerezyme treatment every other week to intravenous infusions of taliglucerase alfa at an equivalent dose, every other week for a 9-month period. After 9 months:

  • Patients remained stable with regard to spleen volume, liver volume, platelet count and hemoglobin concentration
  • Taliglucerase alfa was well tolerated, and no drug related serious adverse events were reported

Partnerships

PLX has an agreement with Pfizer (PFE) for the development & commercialization of taliglucerase alfa. Under the terms of the agreement PFE has exclusive worldwide licensing rights with the exception of Israel.  PFE and PLX will share revenues and development costs on a 60:40 basis.

PFE mad upfront payments of $60M and will make additional milestone payments upon the drug receiving US approval ($25M) and European approval ($25M).

Conclusion

Clearly, the primary concern here is that the company has chosen to raise money so close to the PDUFA date. This may be taken as a negative signal that management does not believe that they are well positioned for approval.  It may also be seen as a prudent move to generate some capital now capitalizing on the recent string biotech market and the positive long-term data that the company announced earlier this month at the Annual Meeting of the Lysosomal Disease Network.

To me this seems like an attractive place to start a position in PLX. The uncertainly about capital raising, always an issue with biotech stocks, has been taken off the table. The risk:reward is attractive in that the $5.25 level may represent a good floor for the stock price. The company has good clinical data for an indication that is underserved. While the number of patients is extremely small, currently available treatments are expensive enough that the market opportunity is attractive.

Biotech slowing down?

The binaryleverage portfolio has slowed down during February. It has hit 41% return (since November 28th) twice in the last two weeks but both times stopped at this level and fell back. It has mirrored the NBI in this respect. The NBI is also essentially flat for February after a very strong December and January. It has been difficult to find biotech stocks approaching a catalyst that have room to appreciate given the overall rise in the market. A pullback might be helpful in bringing some of these companies valuations down a bit.

Good news for CORT

Corcept received good news from the FDA yesterday. Its drug Korlym ( Mifepristone) was approved to the treatment of Cushing’s Syndrome. This makes it the first drug approved for this indication. I was a bit surprised by the approval. I held CORT for 8 days – from Jan 31st until Feb 2nd. It traded sideways during that time and after I exited it dropped to the mid $2’s (I sold at $3.40). When trading resumed yesterday after hours the market responded very favourably to the news of the approval with CORT trading as high as $4.80.

Out of AMRN

AMRN has been very irritating recently. After yesterday’s nice move I was hoping for some follow through. I decided to close my position this morning when looked like it was not going to be able to hold the $9 level. I got out at $9.06. I have been in this since Jan 17th when I entered at $7.55 so this is a 20% gain. I will keep an eye on it and may reenter if it breaks through the $9:35ish area.

 

 

 

 

 

 

 

 

IRWD is not looking too healthy here either. I have raised my stop to my entry price ($14.40). After a nice initial move this has been unable to follow through. I might have been just too late to this one and I don’t want to lose anything on it.

 

 

 

 

 

 

 

 

PGNX is slightly down from where I bought it. This is a new position so I am prepared to give it some room. My current stop is at $8.70.