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Several biotech stocks made big moves at the end of last week. Let's take a look at three major movers -- Dendreon (NASDAQOTH: DNDNQ ) , Zogenix (NASDAQ: ZGNX ) , and Ampio Pharmaceuticals (NYSEMKT: AMPE ) -- and check out the headlines moving these three stocks.
Dendreon looks for potential buyers
Investors should expect continuing volatility in shares of Dendreon, the maker of the prostate cancer drug Provenge, after the company followed up several consecutive quarters of weak sales with an announcement that it was looking for a buyer.
Last Friday, Dendreon closed up nearly 5%, although the stock has declined more than 40% over the past six months. Last quarter, Dendreon's revenue -- completely comprised of Provenge sales -- rose 8% year-over-year to $73 million. However, the company stated that Provenge's full-year sales would not exceed the $352.3 million in sales it reported in fiscal 2012.
Dendreon's precipitous decline started in 2011 when the company withdrew its original sales forecast for Provenge, causing shares to crash 65% in a single day. The European approval of Provenge last month was a rare bit of bright news for Dendreon, but the company still lacks a major marketing partner to help it penetrate the region.
Two competing prostate cancer treatments -- Johnson & Johnson's (NYSE: JNJ ) Zytiga and Medivation (NASDAQ: MDVN ) /Astellas' Xtandi -- exacerbated Dendreon's problems. During clinical trials, Zytiga and Xtandi were both shown to extend patients' lives slightly longer than Provenge. Moreover, Zytiga and Xtandi are orally administered treatments, whereas Provenge requires an intravenous injection. The proof is in the numbers -- peak sales estimates for Zytiga and Xtandi currently run as high as $1.8 billion and $2.2 billion, respectively.
In addition, Zytiga and Provenge were originally the only two drugs approved as pre-chemotherapy treatments, while Xtandi was only approved as a post-chemotherapy treatment. However, Medivation and Astellas recently announced that a phase 3 trial for the use of Xtandi as a pre-chemotherapy treatment had met its primary endpoints -- which means that Provenge's already dwindling market could shrink even further.
Therefore, it's doubtful that anyone will swoop in to acquire Dendreon -- there's just too much downside and no upside potential to be seen.
An FDA approval grants Zogenix a second marketed product
Another company that could make a big move today is Zogenix, which soared 36% last Friday after the FDA approved an extended-release version of its narcotic painkiller hydrocodone, known as Zohydro ER (extended release). However, the FDA approval came with a big catch -- a DEA classification as a Schedule II controlled substance due to its potential for abuse.
Previous pain medications that contained hydrocodone were less potent, and combined the drug with weaker painkillers such as acetaminophen. Zohydro ER is the first pure hydrocodone treatment approved in the U.S., and can only be prescribed when all other viable pain medications have failed.
The approval of Zohydro ER is a big step forward for Zogenix, which generates the majority of its revenue from its only other marketed product, an injectable migraine treatment known as Sumavel DosePro. Sumavel DosePro was launched in January 2010 and is co-marketed in the United States with Astellas.
Last quarter, Zogenix's revenue rose 11.4% year-over-year, but the company remains unprofitable.
Investors should be careful with Zogenix -- Zohydro ER is by no means a blockbuster drug. During the company's December presentation to the FDA, the company only expects peak sales to 90,000 patients after five years on the market, compared to the 1.1 million patients currently given the two major chronic pain medications: oxycodone ER and morphine ER.
Moreover, Zogenix is not the only company that has been working on an extended release version of hydrocodone. Teva Pharmaceutical and Purdue Pharma both have similar products in phase 3 trials, which are notably tamper-resistant, whereas Zohydro ER is not -- which could quickly spoil Zogenix's temporary victory.
The NYSE contacts Ampio in regards to "unusual market activity"
Last but not least, investors should keep an eye on Ampio Pharmaceuticals, which fell nearly 5% on Friday after it announced that it had been contacted by the New York Stock Exchange on Thursday for "unusual market activity" in its common stock. Ampio, a development stage company with no marketed products, declined to comment on the matter.
Ampio recently reported positive trial results for its inflammation drug Ampion for the treatment of osteoarthritis of the knee. It also reported positive results from an independent panel review of interim trial data for its eye disease treatment, Optina, for the treatment of patients with diabetic macular edema, or DME.
Optina could be a revolutionary treatment in comparison to Roche's Lucentis, which is approved for DME in the U.S. and Europe, since it is an orally administered drug in comparison to Lucentis, which is injected into the eyes.
It's unclear if shares of Ampio, which are already up 160% over the past 12 months, will continue experiencing headline-driven volatility. However, market movements in pre-revenue biotechs like Ampio can be tough to predict, due to their lack of solid fundamentals.
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