5 Can't-Miss Health-Care Events This Week

Normally we have a nice blend of health-care events to take notice of each week. This week I'm steering you squarely toward the biotechnology sector, which has two big FDA decisions due, as well as earnings reports from three highly followed biotechs.

Beginning with the FDA decisions, Onyx Pharmaceuticals (UNKNOWN: ONXX.DL  ) , which reported much better-than-expected earnings results last week, is slated to receive a decision on Stivarga by Feb. 28. Stivarga, which is being developed with Bayer and is designed to treat gastrointestinal stromal tumors, was approved by the FDA in late September as a secondary treatment for metastatic colorectal cancer. The drug looks to be in line to gain an addition indication given that, in phase 3 trials, it produced a progression-free survival of 4.8 months, as compared with just 0.9 months for the control arm. Onyx has been on a tear lately, and an approval would just be icing on the cake.

On the flipside, Zogenix (NASDAQ: ZGNX  ) is expected to go before the firing squad on March 1, for Zohydro ER, its moderate to chronic pain management drug. The all-oral drug, which is safer for the liver since it uses hydrocodone without acetaminophen, excelled in late-stage trials, but was knocked off the ladder by the FDA's panel in December, falling more than 50%. The panel voted 11-2, with one abstention, against recommending Zohydro ER for approval primarily because of its abuse potential. Although the FDA isn't required to follow the recommendation of its panel, I'd be shocked if Zohydro ER was approved on Friday. 

In the earnings column, Ariad Pharmaceuticals (NASDAQ: ARIA  ) is scheduled to report on Monday. While the current quarter isn't expected to hold any major surprises, investors will be waiting on the edge of their seats for Ariad's 2013 revenue guidance. Iclusig, Ariad's drug developed to treat two rare forms of leukemia, was approved in December, and sales estimates from analysts have been all over the place, considering the black box warning placed on the drug. Keep a close eye on Ariad's 2013 revenue figures, as it'll give us a better idea of how quickly it expects sales to ramp up.

The highly embattled Questcor Pharmaceuticals (NASDAQ: QCOR  ) is up to bat on Tuesday and is expected to deliver sales growth of roughly 89% and EPS of $1, more than double what it reported last year. There's little question Questcor's been raking in profits, given the 19 current indications for its Acthar Gel; however, the company also faces the ongoing overhang of a U.S. government probe into its marketing activities. As we saw with ABIOMED, sometimes these probes end favorably with no penalties assessed; and sometimes they end with a whopper of a penalty, as Johnson & Johnson found out when it paid $2.2 billion in settlements last year. Clearly, Quesctor's bottom-line numbers matter, but I'd almost prefer to hear more about what's going on with the investigation.

Finally, Medivation (NASDAQ: MDVN  ) is expected to report its year-end results on Feb. 28. As with Ariad, losses are expected, but investors will be waiting on pins and needles to see what Medivation has to say about sales of advanced prostate cancer drug Xtandi. The drug was approved three months earlier than its PDUFA date -- a rarity, as my Foolish colleague Brian Orelli noted at the time -- so expectations for the drug are high. For the quarter, sales are expected to rise 130% to $34.4 million, but growth could slow to just 21% next year. Look for Medivation to soothe investors' growth concerns with additional info regarding its potential for approval in Europe, or its possible use in earlier stages of prostate cancer treatment within the U.S. in the future.

Can Questcor deliver for shareholders?
Questcor is one of the most debated names in all of biotech. Its premium priced drug, Acthar, is growing at a torrid pace -- and minting money in the process. However, recent events have created significant doubts about Questcor's future. Will insurance companies continue to cover the drug? Will a government investigation lead to huge fines? We highlight these high-profile issues inside our brand new premium research report on Questcor. In it, you'll learn about the key opportunities and threats facing the company, as well as multiple reasons to buy and sell the stock. We're providing a full year of analyst updates as key news hits, so make sure to claim a copy today by clicking here now.


Read/Post Comments (3) | Recommend This Article (3)

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  • Report this Comment On February 24, 2013, at 1:13 PM, trismigistus wrote:

    Wells Fargo's Research Report on ZGNX

    .

    Equity Research

    Zogenix, Inc.

    ZGNX: AdComm Said No To Zohydro ER, But FDA May Not Listen

    Maintain Outperform

    • Summary: FDA AdComm voted against approval of Zohydro ER, but FDA

    decision (PDUFA: 3/1/2013) could be different, in our view. The vote was more

    reflective of dissatisfaction of the drug class and its current REMS, and we are

    unsure if FDA will single out hydrocodone by imposing more stringent

    requirements. We continue to believe an approval is a probable outcome, but

    cannot rule out a modest (several months) delay. We would buy on weakness

    resulting from the "negative" vote.

    • AdComm voted 2-11 against approval of Zohydro ER. On the surface, the

    panel appeared overwhelmingly negative, but we believe the direction of the vote

    reflects dissatisfaction of the entire class (extended-release C-II opioids) rather

    than with Zohydro ER itself. The panel was uncertain about the robustness of the

    class-wide REMS program. Specific to Zohydro ER, the panel was concerned

    about the lack of tamper-resistance characteristics in the formulation under

    review. Zohydro ER is an extended release hydrocodone for the management of

    moderate to severe chronic pain. The PDUFA date is 3/1/2013.

    • FDA has a dilemma. The main complication for FDA is that it has to view

    Zohydro ER in the context of the entire class of extended release C-II opioids, and

    at several instances encouraged the panel to highlight any Zohydro ER-specific

    differences over the class. So should FDA single out hydrocodone by requiring

    longer-term studies to #$%$ safety/efficacy and a more stringent REMS

    program? Also, will FDA require tamper-resistance to be incorporated into

    Zohydro ER when there is no labeling for tamper-resistance? And what happens

    to the other non-tamper-resistant C-II opioids that are on the market now?

    • Approval is still a probable outcome, in our view. Our reasoning is based

    on FDA's acknowledgement that Zohydro ER is effective and safe when used as

    intended. At the same time we do not believe FDA will require a more stringent

    REMS program for Zohydro ER, other than incorporating the voluntary measures

    proposed by ZGNX. Of course, we cannot predict FDA action with certainty, and

    FDA could extend the review period to buy itself more time.

    • The major risk to our position is requirement of tamper-resistance in

    the Zohydro formulation. By ZGNX's admission, its tamper-resistance

    formulation is several years away, so such a requirement would result in a multiyear

    delay. However, such requirement would run counter to the fact that FDA

    has not allowed tamper-resistant claims in the label of approved opioids.

    Valuation Range: $3.50 to $4.00

    We derive our valuation range by applying a P/E multiple of 13.0-14.0x our 2015E

    EPS of $0.35, discounted back for two years at 14.8% per year. Risks to the stock

    trading to our valuation range include regulatory setback for Zohydro ER and

    deceleration in Sumavel DosePro Rx growth.

    Investment Thesis:

    We like the value proposition of Sumavel DosePro and Zohydro ER. We believe

    management's ability to hit financial guidance, grow Sumavel DosePro, and

    advance Zohydro ER are potential catalysts.

  • Report this Comment On February 25, 2013, at 8:01 AM, drdonrs wrote:

    You Fools just can't let it go when it comes to Questcor. Just continue playing the part of real fools and look for all the negatives. The investigation becomes more of a minor or non issue as time progresses and the positives keep adding up. I guess you have to peddle your premium research reports to the unsuspecting public. Get a life, Fools.

  • Report this Comment On February 26, 2013, at 11:35 AM, Itsawhiz wrote:

    In regards to QCOR. As any analyst will tell you most Investigations result in little or no fines to the companies. J&J or the major Drug manufacturers with the largest Market Caps are the exception. Your insistence to present the facts negatively, as seen in many articles written seems slanted at best. Misinformation or Misleading information reduces your creditability to provide investors with useful trading guidance. I, personal, have followed the articles from September when the stock was trading at $17. At no time did you tell your investors of its valuation, growth potential, hiring, earnings, or revenue growth expectation and the possibility of this trading at $32 before yearly earnings. Doesn't surprise me that you still take negative position. What will you tell your readers when in three months this trades over $40. GLTA readers

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