Two companies up despite market losses - MannKind (MNKD) and pSivida (PSDV)

MNKD and PSDV were mentioned in my previous blog post as year-end biotech stocks with a chance to pop prior their PDUFA (prescription drug user fee act) actions date, Dec. 29, 2010 for both.   

ALERT - Mela Sciences (MELA) bounced back more than 100% post FDA advisory panel

Mela Sciences (MELA), developer of handheld skin cancer detector, received marginal support from FDA's advisory panel yesterday, boosting its share price back up over 100%.  As mentioned in my previous post, anything is possible; the biotech may in fact receive 'non-negative' recommendations from the panel.  The vote came out 8-7.  Eight out of 15 medical specialists on FDA's advisory committee voted FOR the passing of MELA's device.

MELA's shares more than doubled in pre-market trading.  This may be a good opportunity to SHORT the stock as this overreaction is expected to wean in the next few weeks.   

Mela Sciences (MELA) - the ugly side of biotech

Mela Sciences (MELA), the Irvington, NY-based developer of handheld skin cancer detector, fell more than 55% in 3 trading sessions after FDA announced that the company's device might actually 'cause harm' to patients if approved. Adding to this, the biotech is under investigation for potentially violating federal securities law by 'misleading' investors with its reporting.  It seems that ugly has turned uglier for Mela Sciences!  Trading over $6 merely 48 hours ago, Mela Sciences has crashed to below $3 per share.

MELA will be facing FDA's advisory panel today to discuss the potential clearing of the device for marketing.  While the general consensus is that the maker of MelaFind (handheld detector of skin cancer) will not receive positive recommendation from the panel of medical experts, it is never 100% sure what the outcome will be.  A close tie may even relieve the biotech from the current doom.  In any case, the path to device approval will no doubt be treacherous for Mela Sciences from this point on. Stay tuned for FDA's panel conclusion.   

Biotech stocks to keep an eye on - year-end biotech stockwatch 2010

1. Valeant Pharmaceuticals International (VRX)

- Product candidate: Ezogabine (adjunct treatment of partial onset of seizures in adults)

- PDUFA: Nov. 30, 2010

2. pSivida Limited (PSDV)

- Product candidate: Iluvien (treatment of Diabetic Macular Edema)

- PDUFA: Dec. 29, 2010

3. MannKind Corp. (MNKD)

- Product candidate: Afrezza (inhaled insulin)

- PDUFA: Dec. 29, 2010

Vivus Inc. (VVUS) - unfinished battle for Qnexa

Vivus surged on Friday despite FDA's issuance of a complete response letter (CRL) to the company's experimental obesity drug, Qnexa.

The reasons for the substantial spike in Vivus' share price are the following:

1) Vivus' follow-up data package, ready to be submitted in 6 weeks (no lengthy additional trials needed)

2) FDA's seemingly 'neutral' stance on the possibility of approving a new diet pill (based on their response to Arena's angry investors)

3) Renewed investor confidence/interest after Arena's failure to obtain FDA's approval (potentially 'larger' market share for Vivus)

4) Qnexa's impressive efficacy in inducing weight loss (12-15% compared to placebo)

5) Qnexa's additional efficacy in diabetes
6) Qnexa's relatively mild side effects (non-tumor associated, unlike Arena's Lorcaserin)

Based on their interpretation of the CRL, JP Morgan upgraded VVUS from neutral to overweight and shifted the price target up from $13 to $16.  

It's a NO: FDA rejects Arena Pharmaceuticals' diet pill after all

FDA's decision
A CRL (complete response letter) was issued to Arena Pharmaceuticals by the FDA this morning regarding the biotech's experimental medicine, Lorcaserin, citing the following concerns:

1) Tumor-related incidents in preclinical female rat studies
2) Marginal efficacy in obese patients
3) Lack of data to support the irrelevancy of the correlation between increased tumor incidents and Lorcaserin in human patients
4) Incomplete assessment of Lorcaserin's benefit-risk profile


Arena press release


Coincidental jump in Arena's stock
As predicted, the FDA was slightly delayed in their drug assessment announcement of Arena's weight management drug, Lorcaserin.  Coupled with a letter sent from FDA to the firm addressing shareholders' complaints about the absence of toxicologists in the advisory panel, which could have represented an unbalanced and biased review of Locaserin during the panel meeting, it almost seemed as though there might have been a chance that the drug could gain an approval despite the unfavorable recommendation forwarded to the FDA.  The coincidence boosted ARNA as high as 26% at one point before closing at +11.64%.  This was a completely unexpected event and should not be treated as a lost opportunity!  Watch what happens when the market opens on Monday.  It is very likely that the stock would suffer a 30-50% cut as soon as trading opens.  

Arena Pharmaceuticals (ARNA) - Lorcaserin's fate to be decided today

The FDA is anticipated to announce its decision on the New Drug Application of the weight management treatment developed by Arena Pharmaceuticals.  The drug received a 9-5 vote against its approval by FDA's advisory committee on Sept 16, 2010.  The general sentiment is that the drug will NOT receive FDA's nod this time around.  However, additional studies are already underway at Arena to shift the focus to diabetes patients.  If encouraging results are seen, the company may be able to jump back into the game in late 2011-2012.  While shares may seem extremely CHEAP post FDA's decision today, it may still be a while until we see another pop in ARNA's shares due to the expanded timeline for the company's ongoing studies.  We may just sit out and watch this time!  *FDA is notorious for delaying, so don't be surprised if we don't hear anything concrete today*

The obese is waiting...