Thursday, 24 January 2013

FDA stock catalysts in Q1 2013

Whether it be for an avid investor or for an occasional follower of the pharmaceutical industry, significant FDA events pose some of the greatest interest, and act as some of the most explosive catalysts of change in a company’s share price. For a small biotech located anywhere in the world, a marketing approval granted by the FDA is arguably the most contested prize in the industry.
As a result of the 2009 – 2015 Patent Cliff, industry observers can expect increased crowding on the FDA calendar, as many new drugs are currently being developed to offset cliff losses. 2012 was one of the record years for drugs reaching the market, with 38 new medicines approved by the FDA, a new 16 year record. 2013 appears equally promising, with 22 scheduled FDA decisions so far – half of which are anticipated in the first quarter.

The vibrancy of the biotech industry is reflected in the performance of the NASDAQ biotechnology index, which, having returned ~35% growth in 2012 (more than 4 times that of the Dow Jones), continues to soar above the other indices (fig. 1). 

Figure 1. Stock performance of the NASDAQ Composite Index (Nasd), the Dow Jones Industrial Average (DJIAJT), S&P 500 and the NASDAQ Biotechnology Index (IBB), 2008-2013

On the FDA calendar are numerous events ranging from Investigational New Drug (IND) applications down to the very final stage of a New Drug Application (NDA) or a Biologics License Application (BLA) which, if successful, grants a new medicine approval to be marketed and sold in the US – the world's largest pharmaceutical market. The date by which the FDA aims to deliver its marketing verdict for an NDA or BLA is called the Prescription Drug User Fee Act (PDUFA) date, following which the applicant may be granted or refused marketing approval, or requested to provide additional documentation and/or conduct further studies.

The PDUFA date carries crucial importance as it can signify the birth or death of a new medicine. To a pharma and biotech investor, an FDA marketing decision can potentially crash or soar a stock. PDUFA dates normally carry a significant stock runup up to the date, and PDUFA-related intraday surges of up to 300% are not unheard of, which should be incentive enough to closely follow, and understand, the FDA calendar.

Q1 2013: Scheduled Drug Approvals Overview

The next three months (January through March of 2013) anticipate a more-than-usually saturated FDA calendar, with a total of 11 PDUFA dates (table 1). Salix Pharmaceuticals and Santarus Pharma kicked off this year’s marketing approval list with the anti-diarrhoeal drug Fulyzaq and the Ulcerative Colitis treatment UCERIS, which was granted approval two days ahead of schedule. 6 drugs are still lined up to face FDA’s advisory panel this quarter.

Table 1. Scheduled PDUFA dates on the FDA calendar; January – March 2013

(NASDAQ Ticker)
Brand Name
Generic Name
Jan 2
Salix Pharmaceuticals (SLXP)
Diarrhea associated with anti-HIV drugs such as nucleoside analog reverse transcriptase inhibitors and protease inhibitors – FDA approval granted
Jan 14
(novel formulation)
Induction of remission in patients with active, mild to moderate Ulcerative Colitis –FDA approval granted

Jan 17
(novel delivery)
Migraine Patch –FDA approval granted
Jan 21
Impax Laboratories
Rytary (IPX066)
Carbidopa and Levodopa (extended release)
Idiopathic Parkinson’s Disease (PD) - received a complete response letter
Jan 23
Hyperion Therapeutics
Glycerol phenylbutyrate
Urea Cycle Disorders –FDA approval granted
Jan 29
Isis Pharmaceuticals, (ISIS), Genzyme
Mipomersen sodium
Homozygous Familial Hypercholesterolemia
Feb 2
Hemispherx Pharma
Double stranded RNA drug for Chronic Fatigue Syndrome (CFS)
Feb 24
Dynavax Technologies
Hepatitis B vaccine
Biologic intended for immunization against infection caused by all known subtypes of hepatitis B virus
Feb 26
ImmunoGen (IMGN)
Trastuzumab emtansine
HER2+ Metastatic Breast Cancer (mBC)
Mar 1
Zogenix (ZGNX)
Zohydro ER
Hydrocodone bitartrate (extended release)
Moderate to severe chronic pain
Mar 27
A.P. Pharma
Granisetron (sustained release)
Acute- and delayed-onset chemotherapy-induced nausea and vomiting (CINV)

It is common for the FDA to announce 3-month PDUFA delays, and several of the drugs awaiting a verdict have already undergone such extensions. Statistically, only 35% of new drug applications receive FDA approval in the first review cycle[i]. It is likely that a number of drugs on the Q1-2013 calendar will face similar delays, partly due to increased application volume this quarter.

Therapeutic landscape

Just over half of the drugs (6 out of 11) on the FDA calendar this quarter are novel chemical or biological entities, whilst the rest are non-innovative reformulations and repositioning of formerly approved drugs, combination therapies, etc.  In terms of therapeutic area, nearly a third of NDAs in Q1 adress Central Nervous System (CNS) disorders, followed by gastrointestinal and autoimmune/inflammatory targets (fig. 2). Only one of the drugs, Dynavax’s HEPLISAV vaccine, is a biologic.

Figure 2. Drugs awaiting FDA marketing decisions in Q1- 2013, by therapeutic area

Market capitalization

Interestingly, the Q1 2013 FDA calendar does not feature Big Pharma players, with the exception of those which have partnered with the drug developers covered in this report. In what has become the standard prior to FDA applications, all of the companies featured in this Q1 2013 report are public. The majority have a market capitalization of US$ 2 billion or less (fig. 3), with only one mid-cap company – Salix Pharmaceuticals, worth US$ 2.69 billion.

 Figure 3. Market capitalization of companies awaiting FDA approval in Q1 of 2013 (US$)

Read on about individual company description, stock quotes and prognosis in Bioassociate's latest free white paper here


Wednesday, 16 January 2013

China's Innovative Pharma Landscape: Companies Currently Conducting R&D in China

Several pharmaceutical companies are actively growing pipelines of their own in China, although at present the cumulative R&D expenditure of all Chinese pharma businesses amount to less than the spent of a single multinational corporation (MNC) in the West. Almost all the businesses to date started off as generics producers who used existing cash flows and pharma positioning to move into the local innovative sector. Furthermore, whilst previously 90% of all pharma were state-owned, today roughly 6 out of 10 are already private.

A downside to local Rx businesses most often quoted by VCs and investors is the inexperienced approach to R&D and clinical trials: many companies have burned cash with little consideration or understanding of regulatory approval prognosis. In addition, the frame of mind of Chinese businesses still suffers from relative short-sightedness when it comes to achieving success: many investors and executives do not yet appreciate the difficult-to-fathom time span of drug development. Unlike in the US VC arena, where early-stage deals are widespread, in China the lack of confidence and immaturity of the industry push investor confidence towards later-stage and established players, particularly ones which have previously received product approval.  

Some of the current drug developers in China are presented in the table below It is noteworthy that, to date, only one Chinese product has gained FDA approval—Levonest, a non-patented compound marketed by Novast Pharmaceuticals. Despite several Chinese INDs currently undergoing clinical trials in the US, all other products mentioned below have only thus far been approved by the SFDA.

Company Name


Main products/leads
MNC partners
Novast Pharmaceuticals Ltd
Nantong, Jiangsu &
Sterling, VA, USA
Private; Venture-backed: Bioveda China Fund, Lilly Asian Ventures, New Enterprise Associates, SAIF partners, Sequoia Capital
Generics; First and only FDA-approved Chinese ANDA available in USA:  Levonest (levonorgestrel and ethinyl estradiol); pipeline under construction.
Eli Lilly
C & O Pharmaceutical Technology Holdings
Hong Kong; Wide distribution across China
Public (SIN:COPT)—current subsidiary of Shionogi & Co (Japan) and associate company of Sumimoto Corp (Japan)
Generics; Three potential Category 1* leads: anti-Hepatitis B, an immuno-enhancer, and antibiotic targeting resistant bacterial pathogens.
Optimer Pharma
Harbin Pharmaceutical Group
Harbin; Wide distribution across China
US$ 250 million invested by Warburg Pincus (NY) and Citic Capital (HK)
One of three largest pharma companies in China.
Generics; Aim to spend 5% on R&D annually in the near future.
Shijiazhuang Hebei;  Wide distribution across China
Butylphthalide (NBP)—a compound derived from celery seeds, acquired from Chinese Academy of Medical Sciences and indicated for the treatment of mild and moderate acute ischemic stroke; approved by the SFDA in 2002.
Public (AMEX:SVA)
Most established vaccine producer in China. Major products, vaccines against: Hepatitis A&B, SARS, Mumps, Rubella, Rabies, H5N1 & H1N1 influenza, all approved by SFDA for marketing in China. Pipeline consists of: Hand, foot & mouth disease vaccine, Pneumococcal conjugate vaccine, Rotavirus, Chickenpox, Viral Meningitis vaccines.
Being largest vaccine maker in China, Sinovac highly likely to benefit from new US$ 125 billion healthcare budget & become standard provider in new hospitals being built.
San Diego, CA, USA
State-backed; Anticipating NASDAQ/London IPO within 2 years
Marketed and SFDA-approved products: Recombinant Human Neureglin-1 for the treatment of heart failure; Recombinant Human ErbB3 vaccine against tumors—both anticipating FDA approval & currently in USA clinical trials. Pipeline includes vaccines to overcome immunosuppression and small cell lung cancer antibodies
Sihuan Pharmaceutical Holdings Group Ltd
Tongzhou, wide distribution across China
Public; Multiple stock exchanges: (HKSE:0460), (Berlin:TEL1)
Generics: largest cardio-cerebral vascular drug franchise; IND in development: Tylerdipine Hydrochloride—calcium channel blocker for hypertension, accepted for clinical trials by SFDA, FDA IND application pending.
Simcere Pharmaceutical Group (also trademarked as Zailin, Yingtaiqing and Bicun)
Nanjing; wide distribution across China
Public (NYSE:SCR)
45 Generic products; 6% of total annual revenue dedicated to R&D; 5 IND applications filed to the SFDA since 2010 in oncology, cerebrovascular and cardiovascular areas.
Merck (joint venture);
Bristol-Myers Squibb (partnership in oncology)
SinoPharm: China National Pharmaceutical Group Corporation
Shanghai; wide distribution across China
State-owned; Major public subsidiaries:
Sinopharm Group (HKSE:1099); China National Medicines (SHA:600511); Beijing Biological (SHA: 600161)
Largest pharma group in China (distribution, logistics, retail, R&D); specializing in generics and traditional medicines; intent on becoming innovative through acquisitions, MNC partnerships & franchising
Merck partnership in vaccine development; Rare disease research partnership with Sanofi
VenturePharm Laboratories Ltd
Public (HKSE:8225)
Services provider & Products; Main business centered around CSO/CRO/CMO services, but growing own pipeline
Shaanxi Bicon Pharmaceutical
Shaanxi; Wide distribution across China
Generics and Traditional Medicines; Recent PAG-Asia US$ 250 Million investment due to be directed towards R&D centre construction
3SBio: Shenyang Sunshine Pharmaceutical
(Prospects of going private in near future)
Substantial number of protein-based products and leads obtained through in-licensing and in-house R&D: 4 genetically-engineered protein-based products, 8 other protein-based products are in clinical trials or undergoing SFDA registration process
DaVita, AMAG Pharma & others
Yangtze Pharmaceutical Group
San Francisco, CA
Generics; US$ 500 million invested in R&D; US$ 30 million invested in an innovative research centre in Taizhou; ten products in the pipeline for neurological disorders
Leiden Bio Science Park, Netherlands
MicuRx Pharmaceutical
Hayward, CA
venture-backed by Morningside, HK
Drug discovery of antibiotics targeting antibiotic-resistant organisms
Cumencor Pharmaceutical
Zheingjiang Hi-Tech Park
Drug discovery of multiple resistant tuberculosis and other organisms
Chipscreen Bioscience
Shenzhen Hi-Tech Industrial Park
Private; Venture-backed
7 leads in the pipeline targeting the areas of oncology, autoimmune disorders, diabetes
HUYA Bioscience, Quintiles
Hutchison China MediTech
Public (LON:HCM);
Pipeline of 8 products based on traditional Chinese medicine, in the areas of oncology and inflammatory disease
J&J, Eli Lilly, Merck, Procter & Gamble