RiverBabe's Baby Biotechs

[riverbabe]

I have been thinking about how critical I have been lately about some of the baby biotech stocks brought to Mr. Market's Forum, and have decided it might be the right time to be more pro-active and useful by analyzing some of these stocks for would-be investors and traders here who are considering them.

My background is in biotech: in training (PhD), research, patenting, limited licensing consults, investing. I'm not the only person here with similar or equivalent experience, so I invite all views of my analyses whether positive or negative. This will be a very open thread. Go for it!

To begin with, if you are interested in a particular baby biotech, either post it here or PM me. By "baby biotech" I mean little known biotechs that are not yet well-known pharma names. (Analysis of big pharma is a whole different ballgame, and that's not what I'm offering here.) So, fire away and I'll do my best. Riverbabe

[riverbabe]

Alxa

One of you PM'd me last week to ask for my take on ALXA (Alexza Pharmaceuticals). I think Pete Hansen first brought it to the table. I intend to be brief, so you will have to do your own DD on the company itself, science, management, and the products it is developing. http://www.alexza.com/about

From an investing point of view, what is most interesting to me is the fact that they have submitted a New Drug Application (NDA) to the FDA for the first of their product line (AZ-004), an inhalable nasal aerosol for rapid systemic drug delivery with a first indicated use in rapid treatment of agitation in patients with schizophrenia or bipolar disorder. But their pipeline includes using the same technology for other drugs for migraines, break-through pain, acute panic attacks, insomnia. Wow, sounds like something some of us can use! And also sounds like a huge market should any or all of these get approved!


The NDA for AZ-004 is due to be acted on Oct. 11 or before. Has completed Phase III clinical trials with good results. (This meets one of my criteria.) Also has the nice pipeline mentioned above already in clinical trials.

Although the company is still operating at a loss as of end of 2009, they are getting steady milestone payments from their partnership with Biovail. (Partnerships with deep pockets and sales forces are good.) http://www.biospace.com/news_story.a...ntityId=172111

The stock price is in a steady uptrend. Looks good. Av. daily volume is >100,000 limit = one of my criteria. Has good institutional ownership also. http://finance.yahoo.com/q/mh?s=ALXA+Major+Holders

ALXA reports earnings May 10th.

I think this could be a good pick, but that's just my humble opinion, so don't hold me to it. It could continue to inch up until October. But if there is no approval, or the FDA has questions it still needs answers to, this could involve putting off approval for a year or two. In that case, the stock price could take a hit.

Overall, I think it has potential. Good luck.

(Disclosure: I bought a few shares of ALXA as a beginning position on Friday, 4/30.)

[skiracer]

i like the stock and would consider buying it but it's so close to reporting earnings i feel uncomfortable. but the fda approval is big if they get it. i think it's worth owning a few shares.

[skiracer]

there must be some anxiousness going on with ALXA this morning in front of that upcoming earnings report. down around 5-6 %

[wooish]

very nice thread, we're lucky to have a biotech expert here.

[riverbabe]

i like the stock and would consider buying it but it's so close to reporting earnings i feel uncomfortable. but the fda approval is big if they get it. i think it's worth owning a few shares.

Thanks Ski.

[peanuts]

This is going to be a great part of the forum, riverbabe. I'm really looking forward to it.

What about DNDN... how much further can it run before share price acceleration defeats potential sales growth?

[riverbabe]

there must be some anxiousness going on with ALXA this morning in front of that upcoming earnings report. down around 5-6 %

You may be right. Don't see any other news to justify it other than simple profit-taking because of it's recent run-up.

[riverbabe]

This is going to be a great part of the forum, riverbabe. I'm really looking forward to it.

What about DNDN... how much further can it run before share price acceleration defeats potential sales growth?

I think we're definitely looking at a short squeeze here. From Yahoo Finance:

Avg Vol (3 month)3: 4,789,310
Avg Vol (10 day)3: 11,550,900
Shares Outstanding5: 134.14M
Float: 132.18M
% Held by Insiders1: 8.59%
% Held by Institutions1: 59.60%
Shares Short (as of Apr 15, 2010)3: 13.12M
Short Ratio (as of Apr 15, 2010)3: 4.60
Short % of Float (as of Apr 15, 2010)3: N/A
Shares Short (prior month)3: 13.30M

As a short term player, I am watching for a good exit.

In the long term, the technology can be developed for all different kinds of cancers and is part of Dendreon's pipeline. http://dendreon.com/research-development/pipeline/

In the intermediate term, they are working on ramping up production to meet the much-anticipated demand for Provenge therapy. According to the CC, they are going-it-alone for now, sans partnership. They must have deep pockets.

It's a 3X treatment in a period of a month, @ $31k per treatment for $93k. They say it's fairly priced in comparison with other cancer treatments. Remains to be seen how much will be covered by Medicare and other insurance. But, now that it's approved it's no longer "experimental." Sales v. share price? Don't know.

[riverbabe]

Thanx

very nice thread, we're lucky to have a biotech expert here.

Thanks Wooish and thanks Peanuts. Am looking forward to it.

[wooish]

River

This stock is definately looking good in the long run, in the short term I don't see it make a huge run with the exception of a short squeeze like you just mentioned. If there is a short squeeze, it will be sometimes this week and anyone playing the spike in the short squeeze better watch closely. BTW, what do you think of RNN, it seems to lose all the momentum.

[riverbabe]

Rnn

River

This stock is definately looking good in the long run, in the short term I don't see it make a huge run with the exception of a short squeeze like you just mentioned. If there is a short squeeze, it will be sometimes this week and anyone playing the spike in the short squeeze better watch closely. BTW, what do you think of RNN, it seems to lose all the momentum.

I have posted before on what I think of RNN at Pete's place. I think the previous momentum was the result of Dr. Ahn's ego-inflation, booking "Carnegie Hall" for a presumed-to-be major announcement. Traders really thought that a new partnership with big pharma (in addition to the existing TEVA partnership) was going to be announced. When all they got was iffy data (probably after-the-fact data mining where they found a subgroup of a subgroup with low number "n" of patients that showed positive but not hugely statistically significant results) from a Phase IIa study. Whoops. Momentum stalled.

[wooish]

In your opinion, do you think RNN is worth holding long term at this price level?

[steelman]

Alxn

River,
Thanks for giving us the 411 on ALXN. It looked good from my end and now I feel really good about the Aug calls I picked up with your analysis.

[wooish]

Steel

I think River is talking about ALXA but not ALXN