Top Pick of the Day: CTRV

Acadia Pharmaceuticals (ACAD 26.01 +2.20 9.24%) shares, not surprisingly, surged on Wednesday following a positive recommendation from the FDA’s Ad Comm late Tuesday. With Nuplazid now a step closer to reaching commercialization stage, the question is how much is ACAD worth. Analysts believe that the drug could achieve peak sales of $1 billion. Based on this ACAD trades at just under 3.5x sales, which is well below the industry average of around 10x. Even if you assign a conservative multiple of just 6x sales (almost double the current multiple), ACAD has significant upside from current levels. Remember ACAD had been trading at around $50 last summer before the sell-off in the biotech sector began. I will be publishing a detailed valuation report for ACAD next week.

Focus Ticker: ACAD

Valeant Pharmaceuticals International (VRX 27.07 -1.91 -6.59%) continues to be in news. On Wednesday, the stock dropped more than 6% even as the company announced that it has initiated the process to secure an amendment and waiver to its credit facility. The amendment will allow VRX to extend the deadline to file its 10-K to May 31 (from April 29) and its Q1 10-Q to July 31 (from June 14).

The amendment will provide VRX some much needed breathing space. While VRX has sufficient liquidity, there have been concerns about a potential default. But my major concern right now with VRX is whether the company’s new business model sustainable. I continue to remain on the sidelines with VRX and see it as a value trap.

Sector News

Opko Issued CRL for RAYALDEE NDA- Opko Health (OPK) shares dropped more than 10% on Wednesday after the company’s New Drug Application (NDA) for RAYALDEE for the treatment of secondary hyperparathyroidism in patients with stage 3 or 4 chronic kidney disease and vitamin D insufficiency was rejected by the FDA. The FDA issued a Complete Response Letter (CRL). The CRL has been issued due to deficiencies observed during an on-site inspection initiated at the company’s third-party manufacturer on March 14th. I will be reviewing the CRL and OPK in a report later today.

Intercept to Present Eight Abstracts on OCA at the International Liver Congress- Intercept Pharmaceuticals (ICPT) announced that it will present eight abstracts on obeticholic acid (OCA), its lead product candidate, at the International Liver Congress 2016, which will be held in Barcelona between April 13th and April 17th. The abstracts will include new analyses of the Phase 3 POISE study and Phase 2 FLINT trial in NASH. The company will also present results from the Phase 2 CARE study in biliary atresia (bile duct is abnormally closed or absent).

Galmed Reports Encouraging Data on Aramchol- Galmed Pharmaceuticals (GLMD), which like Intercept focuses on the NASH space, reported encouraging data on its lead product candidate Aramchol. The data reported by the company showed anti-fibrotic activity in a mouse model of fatty liver disease. GLMD shares rose sharply on Wednesday before shedding some of their gains to finish more than 3% higher.

Israeli Regulators Investigate Biondvax CEO- Biondvax Pharmaceuticals (BVXV) disclosed in a regulatory filing that its CEO, Dr. Ron Babecoff, was investigated by the Israeli Securities Authority (ISA). The investigation relates to the alleged use of internal information by certain shareholders. BVXV said that its CEO cooperated with investigators and has been released, subject to certain restrictions.

Hedge Fund Manager Joe Edelman Bullish on Sarepta- Hedge fund manager Joe Edelman is bullish on Sarepta Therapeutics (SRPT) despite the setback suffered by the company earlier this year. Speaking to CNBC, Edelman reiterated that SRPT’s DMD drug eteplirsen will be approved by the FDA. The Ad Comm review for the drug is scheduled for April 25th. Edelman’s fund Perceptive Advisors returned more than 50% last year and was one of the best performing funds.

Janssen Stops Darzalex Late-Stage Study for Expanded Use After Reaching Primary Endpoint- Janssen (JNJ) announced that its Phase 3 clinical trial, MMY3004 (CASTOR), evaluating the combination of DARZALEX (daratumumab), Takeda's (TKPYY) VELCADE (bortezomib) and dexamethasone compared to bortezomib and dexamethasone alone in patients with relapsed/refractory multiple myeloma met its primary efficacy endpoint. The company has therefore decided to stop the trial early.

Deals and Collaborations

The U.S. Federal Trade Commission (FTC) has asked for additional information from Pfizer (PFE) and Allergan (AGN) regarding the two companies’ pending merger.

Secondary Offerings

ContraVir Pharmaceuticals (CTRV) shares tumbled after the company announced the pricing of its public offering. CTRV is offering 4,929,578 shares of common stock and warrants to purchase 2,464,789 shares of common for a fixed combined price of $1.42. The stocks and warrants will be issued separately. The warrants can be exercised at a price of $1.70 per share.

Anacor Pharmaceuticals (ANAC) announced that it has initiated a private offering of $250 million aggregate principal amount of Convertible Senior Notes due 2023. Initial purchasers will be given a 30-day option to buy up to an additional $37.5 million of the Notes.

This is an excerpt of a larger article available to members.