Access Update- #50
A lot of news out on our stocks this week. Let’s review developments since Monday’s update.
After Cytori Therapuetics (Nasdaq: CYTX) reported a decent quarter and announced sales of its StemSource Cell Bank, the bottom dropped out of the stock. There is no fundamental reason for this.
I suspect hedge funds facing liquidation continue to puke up small cap stocks at any price in an effort to pay partners who are demanding their money.
When you consider that manufacturing partner Olympus gladly paid $6 per share to increase its investment in the company, a share price below $3 is a steal.
Don’t forget, this is a company with marketed products that are gaining traction and are being used for indications other than its original approval.
If you do not yet own shares of Cytori, it is a screaming buy right now.
ViroPharma Competition
Shares of ViroPharma (Nasdaq: VPHM) were hit hard earlier in the week when news came out about potential competition to its cash cow Vancocin.
Optimer Pharmaceuticals (Nasdaq: OPTR) said that its antibiotic OPT-80 achieved cure rates equivalent to Vancocin in treating Clostridium difficile, a hospital born gastrointestinal infection that can be fatal. More importantly, OPT-80 showed a lower recurrence rate of C. diff compared to Vancocin.
The company still has to file for approval with the FDA, which is not necessarily a slam dunk.
Additionally, Vancocin is often used as a last resort to cure patients who are not responding to less expensive antibiotics. Doctors may not be so quick to try a new drug in severely ill patients. They’ve been using Vancocin for years and know that it is safe and effective.
Particularly because these infections begin in the hospital, it’s not difficult to imagine a laywer asking the physician of a patient who succumbed to C. diff, after being treated with OPT-80, “Why didn’t you use Vancocin?”
A competitive product is certainly not good news, but it will be a long while before the drug (if approved) makes a significant impact into Vancocin’s marketshare.
There was some positive news out of ViroPharma last night. The company reported that 93% of patients with acute HAE attacks improved within four hours after being treated with Cinryze. 88% of patients saw an improvement within 30 minutes.
Cinrzye was approved as a prophylaxis for HAE. The data on the acute attacks may increase its use as a therapy after an attack has occurred.
Synta Update
Synta Pharmaceuticals (Nasdaq: SNTA) reported third quarter results, losing 78 cents per share.
However, with no product on the market, a secure balance sheet and money in the bank, thanks to its partnership with GlaxoSmithKline (NYSE:GSK), we’re more concerned with the phase III trial of elesclomol.
The company confirmed that we should receive the interim safety and non-futility analysis in December. Assuming everything is fine, this will be a short report that will simply say the drug is safe and worth finishing the study.
Synta expects to wrap up enrollment of the trial in January or February and will analyze the data shortly after. If the data is positive, Synta plans on filing its NDA for approval in 2009.
Next year, the company will also begin trials of elesclomol in ovarian and breast cancer.
New Pick Soon
I’m hard at work on my next recommendation. I’ve found a small medical device maker that no one has heard of, with some revolutionary technology. The company has products on the market, is profitable and has a great balance sheet.
I’m probably a couple of weeks away from releasing the report as I’m still making calls to distributors and institutional shareholders. But I like what I see so far. I’ll keep you posted on the progress of my research.
Have a great weekend.
Marc Lichtenfeld
Director of Research
Access Research Group
Current Portfoli
Name: SIGA Technologies
Symbol: SIGA
Current Price:$2.60
Comments: Buy up to $4.00
Name: Synta Pharmaceuticals
Symbol: SNTA
Current Price: $5.61
Comments: Buy up to $13.00
Name: ViroPharma
Symbol: VPHM
Current Price: $11.11
Comments: Buy up to $12.50
Name: Cytori Therapeutics
Symbol: CYTX
Current Price: $2.57
Comments: Buy up to $8
Name: Electro-Optical Sciences
Symbol: MELA
Current Price: $3.02
Comments: Buy up to $5.75