2 Biotechs That Had a Rough 2016 But May Be Poised for a Turnaround This Year
February 23, 2017
By Mark Terry, BioSpace.com Breaking News Staff
“Know when to hold ‘em, know when to fold ‘em,” the expression says, and that undoubtedly applies to stocks as much as it does to poker. The trick, when investing in small-cap biotech stocks going through stormy weather is trying to determine if there’s calmer seas ahead. Bret Jensen, writing for Seeking Alpha, takes a look at two battered biotech businesses he thinks are headed for a turnaround.
1. Amicus Therapeutics
Based in Cranbury, N.J., Amicus Therapeutics focuses on rare diseases. Its Galafold for Fabry disease was approved by European Union drug regulators in March 2016, although the U.S. Food and Drug Administration (FDA) delayed it for potentially several years.
Galafold competes with Shire ’s Replagel in the EU, but because it has a different mechanism of action than Replagel, Galafold has the potential to be used alongside it. Replagel generated $441 million in European sales in 2016, and investors believes Galafold could hit nine-figure sales in Europe.
In addition to Galafold, Amicus is developing ATB200/AT2221 for Pompe Disease. Jensen writes, “This rare disease impacts 5,000 to 10,000 individuals globally. The company recently disclosed solid Phase I/II results and more data will be released throughout 2017. The second compound is ‘SD-101’ also known as Zorblisa for treatment of the rare disease Epidermolysis Bullosa whose Phase III trial results should come out in early summer of this year.”
Amicus also raised about $225 million in a December second offering, so Jensen believes its finances are in pretty decent shape. Galafold trials will start in the U.S., with results in late 2019 and a NDA in the first half of 2020. “The stock,” he writes, “is a good candidate for recovery in the months ahead.”
Amicus is currently trading for $6.04.
2. BioDelivery Sciences
Headquartered in Raleigh, NC, BioDelivery Sciences focuses on pain and addiction treatments. Approved products include Onsolis for breakthrough cancer pain, Bunavail for opioid dependence, and Belbuca for chronic pain. Its drug delivery technology is called BioErodible MucoAdhesive (BEMA), which is a dissolvable patch patients place inside their cheek.
Jensen focuses on Bunavail and Belbuca. For Bunavail, he notes, “The overall market is likely to grow, and not because every citizen in the United States has become a pain medicine junkie. The Department of Health and Human Services (HHS) increased the patient cap per prescribing doctor from 100 to 275 patients in August 2016. But by the end of September 2016, 1,665 physician applications had been approved for the higher cap.”
So that potentially will increase new prescriptions by 500,000 this year. Bunavail is less constipating than its rival Suboxone, and the company’s sales force now has 85 percent of the market covered.
Belbuca is a schedule III opioid, which are increasingly the target of scrutiny by regulators due to opioid deaths and addiction. But Belbuca’s long-acting mechanism has some benefits over schedule II drugs like oxycodone and morphine, primarily less abuse. Jensen also says, “Belbuca has two advantages over buprenorphine trans-dermal patch (Butrans). It enjoys a significantly great (4x’s) dosing range and has a simpler titration (daily versus weekly for Butrans). These advantages should offset some of the pricing advantages that Butrans will enjoy when it goes generic in September 2017.”
In addition, BioDelivery reacquired the license to market Belbuca from Endo Pharmaceuticals on December 8, 2016. Basically that means that instead of receiving just a piece of sales, it will receive all of them.
BioDelivery Systems is currently trading for $2.