Add These Two Biotech Stocks To Your Watchlist
Several companies made news this week,
news that could have some serious short-term implications on their stock price
and provide opportunity for traders. A small biotech firm called
NexMed
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announced that it will release
preliminary results from two phase III clinical trials testing its lead product
(Alprox-TD) for the treatment of erectile dysfunction (ED) in men, in mid
June. Conservative numbers show erectile dysfunction to affect over 30 million
men in this country and over 130 million worldwide. The current market for drugs
to treat ED is over $1.5 billion and expects to climb to $5 billion in three
years. Obviously, this target disease is a large market with incredible
potential to grow. Any company that can even nibble at this market and take away
from Pfizer (maker of Viagra), will add millions to their bottom line.
NexMed has developed a unique
transdermal (TD) drug delivery technology that facilitates the skin absorption
and ultimate action of any new drug. Alprox-TD is a proprietary drug with a
compound called alprostadil (PGE-1) as the main ingredient. Alprostadil is a
compound known to stimulate erections. The drug is administered as a topical
cream and applied directly to the penis before intercourse. The company’s unique
transdermal delivery system allows for a rapid, more efficient absorption of the
drug while minimizing side effects.
Some of the potential benefits
of Alprox-TD over current drugs on the market (and those to soon arrive) are its
ease and quickness of action and minimal side effects. Alprox-TD is devoid of
the potential interactions with heart drugs and patients with coronary artery
disease often a concern with the use of Pfizer’s Viagra. The phase II clinical
data published is promising and does show significant efficacy in patients with
ED when compared to placebo. In addition, the safety profile has been acceptable
in the published data so far.
However, this is only phase II data and the phase III clinical
trial will ultimately reveal its true efficacy? What does this mean for
traders? It presents an opportunity for some short-term gains, if the phase III
data is positive. Over the next several months, new drugs to treat erectile
dysfunction will be a hot topic in the press and on Wall Street. Pfizer is
bracing for two high-profile newcomers to the growing erectile dysfunction
market. NexMed may also get caught up in this momentum as the release day for
the data approaches. The stock is trading at $1.50/share and was up slightly on
the news on Tuesday. If the phase III data is convincing, there will be an
opportunity for some nice short-term gains. Keep this company in focus as June
begins.
MGI Pharmaceuticals
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the news Monday after USB Piper Jaffray upgraded the company to a “strong
buy.â€Â During the day, the stock price did hit a 52-week high of $18.23 but
ultimately closed at $17.17 (up 6.25%). The company’s lead new drug (Palonosetron)
is being developed to prevent chemotherapy-induced nausea and vomiting. Again,
like erectile dysfunction, this is a large, growing disease market. In addition,
this is often a difficult problem to treat in cancer patients being treated with
chemotherapy, with current drugs often inadequate.
Several large phase III clinical trials have proven Palonosetron’s safety and
effectiveness against this difficult problem. The drug does have some advantages
over existing therapies. These include its selectiveness in working on specific
receptors in the brain to prevent nausea and vomiting. In addition, Palonosetron
does have a longer half-life and acts longer once inside the body.
Two events may move this stock even higher than
current levels over the next several months. The first is the annual meeting of
the American Society of Clinical Oncology (ASCO) at the end of May and early
June. As Wall Street is well aware, this is the
BIGGEST, most profiled
medical meeting of the year for many biotechs. Data presented at this meeting
will move stock prices. MGI Pharmaceuticals is on my ASCO focus list (stay tuned
for the full list next week) and will make several presentations at the meeting.
In addition to clinical data on Palonosetron, the company will also present
phase II data on its developing cancer drug Irofulven. This drug is being
targeted to treat many different types of cancers (ovarian, prostate, liver, and
brain) and has shown some efficacy in previously published data.In addition to an ASCO stimulus,
MGI Pharmaceuticals also expects the FDA to make a marketing decision on
Palonosetron by late July. The anticipation of this decision will surely
generate interest in the company.From what I have researched, this drug has a
very good chance of getting the approval of the FDA. The next several months
could be very exciting for this small biotech.
Stay tuned for my full ASCO focus list next week.
Good
Luck,
Paul Ruggieri, MD