Jazz Pharmaceuticals (JAZZ) - unfavored by FDA panel for JZP-6 approval

Today's FDA advisory panel meeting marked a bitter wind down for Jazz Pharmaceuticals (at least before the PDUFA).  The votes were 20 NO vs. 2 YES for recommendation of JAZZ's late stage drug, JZP-6.  A minute-by-minute coverage of the panel discussion can be read here.  This outcome was broadly unanticipated and once again underscored the unpredictability of the FDA.  Of note, the FDA, while almost always, does not have to follow the panel's decision in passing a drug for marketing.  This may leave a razor thin glimpse of hope for the troubled firm and its investors.  Based on my trading strategy, readers were advised to exit between Aug 13-17 without holding positions through the panel.  Those who followed, myself included, enjoyed a handsome return from the smooth (20-30%) pre-panel runup (from ~$8.50 - $11) despite the unexpected tragic ending.

Jazz (JAZZ) Pharmaceuticals - FDA meeting notes out

FDA advisory committee meeting materials can be downloaded here.  See market reaction post FDA document release here. 

Jazz Pharmaceuticals (JAZZ) picking up strong - FDA catalyst-based trading works!!!

    

Stock price and volume soar for Jazz Pharmaceuticals ahead of critical FDA advisory committee meeting (next week Friday, Aug 20).  Price is up ~16% in 2 days and ~26% in 10 days.  Once again, the pattern of stock direction follows that would be expected prior to an FDA-based catalyst event and the trading strategy works!!!

JAZZ - upbeat trend marks FDA panel countdown

JAZZ traded up a whopping 11.11% today amid dreadful market condition, following the announcement of a stronger-than-expected balance sheet for the quarter ending June 10, 2010.  The company is expected to hear from a panel of medical experts on next FRI Aug 20 concerning its product candidate, JZP-6.  Meeting notes are usually made public 2 days before the gathering.  These documents will usually set the tone of the discussion and will likely influence the stock price immediately even before the panel meeting takes place.  As it is always risky to hold a position through a FDA event-based catalyst, the best exit point for JAZZ will be between FRI Aug 13 to TUE Aug 17, ~48 hours before the FDA panel.  Current price target:  $11.20 - $11.70. 

JAZZ - outstanding 2Q earnings contribute to 4.76% rise ahead of FDA panel

JAZZ pharmaceuticals announced better-than-expected earnings report for the second quarter of 2010 after the closing bell today, pushing the share price above the $10 mark briefly before settling at $9.90 during after-hour trading.  The EPS (earnings per share) of $0.28, according to the company's press release, was markedly higher than analysts' estimate of $0.14.  Upward momentum is expected to persist as the biotech company approaches FDA panel discussion (Aug 20) regarding its end-stage product candidate, JZP-6.  Read more about JAZZ and JZP-6.

Alexza Pharmaceuticals (ALXA) - discovering a breath of cure

Company Overview
Alexza Pharmaceuticals (ALXA) is a rapidly emerging pharmaceutical development company focused on the research, development and commercialization of novel proprietary products for the acute treatment of central nervous system, or CNS conditions. All of our product candidates are based on our proprietary technology, the Staccato® system.  The Staccato system vaporizes excipient-free drugs to form a condensation aerosol that, when inhaled, allows for rapid systemic drug delivery.  Because of the ideal particle size of the aerosol, the pure drug is quickly absorbed through the deep lung into the bloodstream, providing speed of therapeutic onset that is comparable to intravenous (IV) administration but with greater ease, patient comfort and convenience.

Alexza currently has five product candidates in various stages of clinical development, and one product candidate (AZ-004 (Staccato loxapine)) for which clinical trials have been completed and an NDA has been submitted.

Trading Catalyst
PDUFA Date:  Oct. 11, 2010

Technology
AZ-004 (Staccato loxapine) 

The Staccato System

Design Principle
The key to ALXA's proprietary technology is vaporization of drug without thermal degradation, which is achieved by rapidly heating a thin film of the drug.  In less than half a second, the drug is heated to a temperature sufficient to convert the solid drug film into a vapor.  Because the duration of drug heating is so brief, thermal decomposition is minimal.  After vaporization, the drug cools rapidly in air, condensing into pure drug aerosol particles of near ambient temperature.  The Staccato system consistently creates aerosol particles averaging one to three microns in size, which is the proper size for deep lung inhalation.  The Staccato system also produces a consistent high emitted dose, regardless of the patient's breathing pattern.

Bioavailability, Pharmacokinetics & Pharmacodynamics

The aerosol produced with the Staccato system is designed to be absorbed rapidly through the deep lung, with a speed of therapeutic onset comparable to IV administration, generally achieving peak plasma levels of drug in two to five minutes, which is much faster than oral tablet delivery.  Pharmacokinetic studies show that drugs introduced through inhalation using ALXA's delivery technology achieved 100% bioavailability within 3 minutes of administration, remarkably resembling that would be achieved through IV injection.

Furthermore, in vivo pharmacodynamic studies in an animal model conducted with a commercially available migraine drug show that the Staccato system results in more rapid absorption than subcutaneous injection or oral administration.  With the same migraine drug, the delivery technology demonstrates an onset of action of less than one minute as shown in the graph below.

Recent Stock Trend

ALXA presents yet another solid target on the rise prior to the October trading catalyst.  The company has plenty of cash, a novel technology platform, and an expansive product pipeline.  Alternative dosing strategies have been the pursuit of many biotech firms including MannKind (MNKD) and Generex (GNBT).  Avoiding needles as part of the drug administration process will significantly raise patient compliance and in turn reduce unnecessary medical expenditure as a result of failure to complete a drug course.  With a number of experimental drugs in the pipeline and a late-stage candidate, ALXA is in a potent position to grow substantially should AZ-004 successfully passes FDA's scrutiny.

With the recent dilution, the stock price dropped overnight from the pre-dilution level of $3 to $2.46.  While the 18% cut was unfortunate for those already holding positions, it screams an excellent entry point for investors to catch the run-up wave at a generous discount before the Oct 11 PDUFA.

Price Target
JMP Securities:  $10 --> $12 price target (Market Outperform)
Wedbush Morgan Securities:  $6  (Buy --> Strong Buy)
WBB Securities:  Buy --> Strong Buy

JAZZ - increased demand lifts price as FDA panel meeting nears

JAZZ pharmaceuticals will meet with a panel of medical experts on Aug 20 to grasp the likelihood of gaining the FDA's approval for its late-stage experimental drug, JZP-6 (read more about the drug here) for the treatment of fibromyalgia.

Trading Strategy
Volatility in stock price often, if not always, spikes up ahead of a significant catalyst. Based on this, I've adopted a trading strategy for small-cap biotech/pharmaceutical stocks by which shares of companies meeting a specific set of criteria are acquired at a time (~2-4 weeks) sufficiently far from the catalyst and sold just before the catalyst takes place. The criteria include 1) announcement of outstanding clinical results, 2) FDA panel meetings involving discussion of end-stage drug candidate, and/or 3) PDUFA (prescription drug use fee act) dates on which the FDA publicizes its final drug approval decision. This strategy allows traders to follow a specific and semi-predictable pattern to profit by buying low and selling high (see examples here).

Stock Update
Let's look at JAZZ right now!

Sitting merely 13 trading sessions away from FDA's panel gathering, JAZZ saw heightened trading volume today at ~15 million. This boost in the demand of the company's shares carried the price over the resistance level of $8.75. The price peaked at $9.54 at one point and closed at $8.96. What's significant is that once a stock breaks out above strong resistance, it is usually poised for a run. With the catalyst around the corner (Aug. 20), it is expected that the uptrend will continue for the next week and a half. My current target is $12 (see here for an encouraging article from TheStreet.com on JAZZ pre-panel position).

Jazz Pharmaceuticals (JAZZ) - Jazz it UP!!!

About Jazz Pharmaceuticals Inc.
JAZZ is a Palo Alto-based (California) specialty pharmaceutical company engaged in identifying, developing and commercializing innovative products to meet unmet medical needs in neurology and psychiatry. The firm's objective is to build a expansive portfolio of products through a combination of internal development and acquisition/in-licensing activities and to utilize its specialty sales resources to promote products in target markets. Jazz Pharmaceuticals applies novel formulations and drug delivery technologies to pre-approved drug compounds, and compounds with the same mechanism of action or similar chemical structure as marketed products, to enhance patient care by improving efficacy, minimizing adverse side effects or increasing patient compliance relative to existing therapies.


Trading Catalyst
FDA Advisory Panel Meeting - August 20, 2010
PDUFA Date - October 11, 2010

What is sodium oxybate?
Sodium oxybate is the sodium salt form of gamma-hydroxybutyrate, an endogenous neurotransmitter and metabolite of GABA. While the precise mechanism of action is unknown, the effects may be mediated in part through interaction with GABA(B) and GHB receptors. Sodium oxybate is the active ingredient in XYREM (sodium oxybate) oral solution, approved by the FDA and marketed by Jazz Pharmaceuticals in the U.S. for the treatment of excessive daytime sleepiness and cataplexy (the sudden loss of muscle tone) in adult patients with narcolepsy. The most commonly reported adverse drug reactions in narcolepsy patients are dizziness, nausea and headaches. Sodium oxybate has the potential to induce respiratory depression and neuropsychiatric events. Sodium oxybate has not been evaluated by regulators for the treatment of fibromyalgia and is not approved for this use.

What is fibromyalgia?
Fibromyalgia is a chronic condition characterized by widespread pain. Fibromyalgia is believed to be a central nervous system condition, resulting from neurological changes in how the brain perceives and responds to pain. In addition to pain, the main symptoms are fatigue, disturbed sleep and morning stiffness. The exact causes of fibromyalgia are unknown. It may be triggered by physical trauma, emotional stress, chronic pain or infection. Genetics, neurochemicals that affect pain modulation, neurohormones and sleep physiology abnormalities are thought to play a role. Research also has suggested a relationship between sleep and pain. Fibromyalgia patients experience a high prevalence of sleep problems, including a reduction in non-restorative or deep sleep.

Drug in Spotlight - JZP-6 (sodium oxybate)
The U.S. Food and Drug Administration's (FDA) Arthritis Advisory Committee and Drug Safety and Risk Management Advisory Committee will review JZP-6 (sodium oxybate) for the treatment of fibromyalgia at a joint meeting on August 20, 2010.

Clinical Data
On Dec. 15, 2009, JAZZ submitted an New Drug Application (NDA) for JZP-6 based on a comprehensive clinical development program for the drug, including results from two Phase III clinical trials.

In both trials, sodium oxybate significantly decreased pain and fatigue as well as improved daily function, patient global impression of change (in activity limitations, symptoms, emotions, and overall quality of life), and sleep quality. Sodium oxybate has not been evaluated by regulators for the treatment of fibromyalgia and is not approved for this use.

Recent Stock Trend

An upward momentum is apparent in advance of the catalyst date of Aug 20. JAZZ closed at $8.74 today on a volume of 658,701 (avg 557,000). It appears that $8.75 may be the current resistance as the stock price touched and retracted from this level on many occasions in the past 10 days. If this resistance is broken, we'll be in for a wild ride up before Aug. 20 arrives. Given that the price is at a 'transient peak' as of today, I do think that the entry point should be aimed lower at around $8.40-8.50.