Madness

ava-in-the-black-and-white-room

I have no position in any of the stocks mentioned but may initiate a position in Sarepta (SRPT) in the next 72 hours.

Love

I wish I could help you to understand what it is I’m experiencing.  Or, perhaps, that would be to burden you unnecessarily.  Who wants to be the one to awaken someone from their slumber?  To intrude upon their self-imposed sleep.

I’ve failed miserably as an analyst.  But I was meant to fail.  For it is through the exertion of our futile efforts that we at last abandon all sense of self direction.  Amidst the cacophony of greed that is the biotechnology sector of the stock market one’s voice cannot possibly be heard.  If there’s one thing that trumps Love it is agenda.  It appears that the carefully laid plans of men are no match for the consciousness of Christ Jesus.  But appearances are, as they say, deceiving.

After recoiling in disgust from the hedge fund dominated platform of Seeking Alpha, I sought refuge in the salt mines of the Yahoo Message boards.  The very same venue that had caused me so much pain in the past.  The pain of betrayal.  The pain of realizing the weakness of men.  Only my naiveté could possibly lead me back to such misery.  But I retraced these steps of innocence time and time again.  I had to.  If only to learn that the same vested interests control the flow of communication there too.  It seems that the vested agents of finance are everywhere to be found.

It would be nothing more than folly to recite what it is that I said on the Sarepta (SRPT) message board.  But a wounded ego and loss of memory where the log in my own eye is lodged compels me to do so.

My Original Thesis

On Seeking Alpha I told you that Biomarin’s Kydrisa, or drisapersen, would be rejected at adcom.  This formed the basis of my investment thesis.  Namely, that one of these two drugs – eteplirsen or drisapersen would have to be approved.  And since drisapersen was not, eteplirsen would be.  Parenthetically it’s worth noting that the much reviled Ronald Farkas chaired the drisapersen adcom just as he did the eteplirsen debacle but with no complaints from the YMB crowd.

After Adcom

I stopped authoring content on Seeking Alpha following the publication of that article.  Amidst the ripples of negativity infusing that bureaucratic fiasco, I changed my investment thesis to: the FDA would have to approve the eteplirsen application due to the enormous political pressures exerted by DMD professionals; U.S. Congressmen (most notably Senator Marco Rubio of Florida); patient advocates (especially their parents); and because the performance of FDA representatives at adcom was so deplorable as to dissuade opening the door to public censure.  Board participants clung to the scientific precepts contained in the company NDA documentation.

A Warning

Although I repeatedly wrote of “disappointment” attending to Accelerated Approval which arrived in the most decelerated of fashions, I did so with the unpopular caveat that the FDA would include something in the wording of approval to discourage a rampant rise in the stock price.  This cautionary proviso of a poison pill, if you will,  brought upon me the universal disdain of board participants who sought to marginalize my effect on the platform viewership.  Sadly, it worked.  Several contributors to the conversation asserted that formal approval wasn’t typically accompanied by agency appraisals on the application but was, rather, a straightforward yes or no.

What I Stated

I repeated the following points based upon my Thaumaturgical analysis.

  • Approval would be disappointing to those with high expectations.
  • The share price upon approval would be between $45 and $60.
  • There would be something discouraging in the FDA official press release.

What Happened

The application was approved.  In that press release, the FDA unexpectedly required a confirmatory study in exon-51 that was not named (PROMOVI) or (ESSENCE).  It was these latter two trials that board participants focused upon.  The former, was believed to be sufficient by some as it was already designated conformational, and the latter, was thought to be the outgrowth of a cooperative effort between the agency and the applicant.  Neither proved to be true.  And it was this added burden assigned that kept the stock price from a sharp ascension that many believed to be inevitable.

If that wasn’t bad enough, the agency also formally requested that the study which had formed the bedrock of justification for scientific consideration of approval be invalidated.  For the most part, this latest jab at the company’s integrity has been ignored by the investment community.

What’s Next

On the conscious plane of thought, I’m writing this to alert you to an opportunity.  I’ve already made a good deal of money on this equity, albeit, while diminishing my holdings so as to reduce my risk exposure.  That said, I’ll be looking to reinitiate a position in light of my new findings.  Yes, the company is now at a hefty $3bn market capitalization.  But the recent equity raise participants, in at just below $60 per share, are due a boost up for their display of loyalty.  And I believe they’ll get it.  The source of this catalyst, or these catalysts, could come from the following quarters.

  • A positive readout from the Phase-1 flu study.
  • A European approval or talk of interest from the EU.
  • An ex-U.S. marketing partnership.  Yes, they’ve played this down but that’s a sure sign of interest in consummation.
  • A sale of the Priority Review Voucher, or PRV.  This was granted shortly after approval was given.  A PRV voucher is a highly prized asset that grants a reduced time frame of consideration relative to a commercial application.  Many are bought by big pharma companies not to take advantage of their intrinsic worth but to keep them from falling into the hands of companies with competing products to their own marketed drugs.
  • And finally, a big pharma buyout.  Yes, every desperate retail investor dreams of an acquisition that will double or triple their stake in an equity despite the fact that most of these occur at a modest premium to the previous days closing price (Allegan’s recent purchase of Tobira (TBRA) being a notable exception).  But in the case of Sarepta, the likelihood is greater if only because their product, Exondy51, will bring in an immediate flow of uncontested cash revenue.  That PRV voucher becomes an added bonus.

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In Conclusion

I honestly believe that Sarepta will release stock tickling news this very morning.  It’s only fitting given the fact that I cashed out for a sizeable gain while other loyalist hung in there in my absence.  If that proves not to be the case, I’ll reinitiate a large position at the earliest opportunity.  Hopefully, fear of an assault on the outrageous price of therapeutics in the U.S. by our two presidential debate participants will cause the sector to stumble today and Sarepta right along with it.

Staking out a position in the equity at this point in time is an easy call for me.

Always be well…

Additional disclosure: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute any suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing information, the accuracy of which is as good as the public sources it was derived from. Do not act on anything I have written. Rather, do your own due diligence and consult an investment professional before making any investment decision. Acting on what any one writer, including me has imparted to you is foolish at best. I have no better access to resources or gift of opinion formulation than you do. I sometimes make mistakes. There are a myriad of things, which can happen in lieu of any forward-looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences, which can change its value in dramatic fashion upwards or downwards. These events can be of a wide variety not limited to news-related occurrences, managerial decisions, trial failures, stock manipulations and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence, invest at your own considerable risk attaining the just reward your efforts have wrought.

 

 

Important Upcoming Events For Sarepta and Trevena

Calendar of Events

I’m long SRPT and TRVN

Sarepta (SRPT)  Just a few thoughts here.  I’ll begin with Sarepta which has new briefing documents due by no later than Wednesday, April 20th.  While there’s no guarantee that they’ll be revised it seems likely that they will be.  Since the original briefing documents were published, Sarepta has submitted a rebuttal to the thoughts expressed by the agency in those documents and additional 6MWT data was also provided.  The FDA received a letter authored by no less than 36 Duchene Muscular Dystrophy physician experts recommending conditional approval along with letters from both the U.S. House of Representatives and the U.S. Senate.  This is a cumulative expression of political power and will directed at the agency that has not been focused in a similar manner before.  What effect, if any, it has remains to be seen.

On April 24th, the greater DMD community will march on Washington D.C. in an historic rally on behalf of eteplirsen approval.  There will be many speakers of note and several events including DMD patients participating in a 6MWT.  How many of the still ambulatory Sarepta 12 will take part remains to be seen.

Then on Monday, April 25th quite possibly the biggest advisory committee meeting in the history of biotechnology will occur with Adam Feuerstein of The Street conducting his live blog of the event.   Trading in Sarepta shares will be suspended after market close on Friday the 22nd and will likely resume at market open on Tuesday the 26th.

Because all of these calendar events are binary, I won’t be buying more Sarepta shares.  I’m presently underwater on my Sarepta holdings by about 30%.  I will, however, be holding my shares through April 25th whereupon I will reassess the idea of holding through the eteplirsen PDUFA date.

Trevena (TRVN)  I’ve been regularly adding to my shares of Trevena Inc. in anticipation of the BLAST-AHF data which can come anytime in the Month of May.  The company announced that it will be presenting that data set in Florence Italy, on Saturday, May 21st at the annual congress of the World Heart Failure Association of the European Society of Cardiology.  While I’ve seen a biotechnology company make a similar announcement as a head fake to retail investors thereby allowing their near-proximity stakeholders an opportunity to flee, I don’t believe that’s the case here.  Notably, the presentation will be made by G. Michael Felker, M.D., Professor of Medicine at Duke University Medical Center and co-chair of the BLAST-AHF Steering Committee.  Since he’s close to the personal patient experience in this trial, and is travelling on the company dime, I see this as indicating that nothing negative is known at this time and that something positive is much more likely.  That, however, is pure speculation.

It very well might be that if good data were generated especially in the 5 mg arm, then Trevena could wait until the afternoon of Friday, May 20th to make the announcement and follow that up with a conference call to discuss the results before market open on Monday, May 23rd.  Should that be the case, you can look for Trevena shares to rise from between 50 and 100%.  There will then be a waiting period of up to 2-weeks before we are told if Allergan (AGN) will exercise or pass on the TRV027 option.  The implications surrounding this decision are binary as well.  Allow me to explain.

Allergan will have 3 choices.  The 1st, is to exercise the TRV027 option.  This will include payment to Trevena of a $65mm option fee; $365mm in milestones; and 10 – 20% sales royalties.  Obviously, news of this would stabilize Trevena shares well above what they currently trade for.  The 2nd, would be to buy Trevena outright.  While talk of buyouts is ludicrous at best, and harmful at worst, in this particular instance it isn’t all that crazy of a possibility.  Allergan was thwarted in its recent aspiration to purchase Pfizer (PFE) and has money burning a hole in its pocket from the sale of its generic division to Teva (TEVA).  Scanning about for valuable assets will reveal those positioned right beneath its nose.  Trevena’s late stage asset, Oliceridine, is a potential blockbuster intravenous pain therapeutic and would be positioned beautifully with TRV027 as an emergent care product – easily marketed to roughly the same clients.

And finally, Allergan’s 3rd choice would be to walk away from TRV027.  I want to emphasize that this could happen on good data or bad.  There are many variables at play here including, but not limited to, how successful the therapeutic could be marketed if it should be approved.  Make no mistake, news of an Allegan pass could prove to be devastating to Trevena because some degree of BLAST-AHF success is already built into the share price.  How Trevena management handles this issue will determine how quickly the equity rebounds.  I certainly hope that plans B, C, and D are already in place and ready to be implemented.  Those could include partnering TRV734 – long the company’s intention; selling the company outright to another interested party; selling a TRV027 option to another big pharma partner; or simply going it alone with funds from an equity raise at the pinnacle of the share price rise on BLAST-AHF success.

The month of May will be pivotal for both Sarepta and Trevena.  As with all nano-to-small-cap biotech you’re encouraged to recognize that your investment could be lost at a moment’s notice.

Always be well…

Additional disclosure: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute any suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing information, the accuracy of which is as good as the public sources it was derived from. Do not act on anything I have written. Rather, do your own due diligence and consult an investment professional before making any investment decision. Acting on what any one writer, including me has imparted to you is foolish at best. I have no better access to resources or gift of opinion formulation than you do. I sometimes make mistakes. There are a myriad of things, which can happen in lieu of any forward-looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences, which can change its value in dramatic fashion upwards or downwards. These events can be of a wide variety not limited to news-related occurrences, managerial decisions, trial failures, stock manipulations and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence, invest at your own considerable risk attaining the just reward your efforts have wrought.