Biotech investors are going to get their own version of March Madness starting next week, when three companies are due to hear decisions about their drugs over the course of two days.
On March 6, Astex Pharmaceuticals
In the clinical trial supporting the marketing application, Dacogen didn't seem to do any better than the standard of care. At least the company compared the drug to something -- Genzyme, now Sanofi, and Johnson & Johnson
A rejection of Dacogen seems likely.
The company didn't give up, because most of the issues have related to manufacturing, something that's more easily correctable than a drug's efficacy.
Is the fifth time the charm for Discovery Labs? Who knows. It appears the company has fixed everything the FDA wanted since the last rejection in 2009, but I went out on a limb and suggested a likely approval after the second rejection -- and after the third. Unlike with clinical trial data, investors get little visibility into the manufacturing issues. I'll stick with a caveat-laden prediction of an approval and hope it’s the last one I have to make on Surfaxin.
The next day, NeurogesX
The FDA isn't required to follow its advisory committee. I would be stunned if it didn’t.
Quetenza is already on the market and clearly works for postherpetic neuralgia, the pain associated with shingles, so a rejection just keeps NeurogesX from marketing the patch for HIV patients that have nerve pain.
Be careful day trading
It's become popular to buy shares in a company with an upcoming FDA decision, hoping for a run up as more people jump into the stock to get a piece of the binary action. The run-up crowd then jumps out, avoiding the binary event.
That works fine as long as the FDA makes its decision on that specific date (and you correctly predict that others will jump in behind you). But the FDA has handed down quite a few early decisions recently. Curis
The early decisions seem to be primarily early approvals, as opposed to early rejections, which makes getting caught holding the bag fairly benign. But investors should realize that the FDA decision dates are goals -- not days set in stone. An early rejection could be very painful for the short-term trader.
Fill in your bracket
Unfortunately there are no powerhouses with easy wins here. Of the three potential Cinderella stories, Discovery Labs looks like it has the best chance at approval. Let's call it a seven or eight seed. The other two are long-shot 15 or 16 seeds going up against a strong FDA defense.
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