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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Good morning, fellow Foolish investors! Let's take a look at three stocks -- Avanir Pharmaceuticals (NASDAQ: AVNR.DL ) , Sanofi (NYSE: SNY ) , and GW Pharmaceuticals (NASDAQ: GWPH ) -- which could loom large in health care headlines this morning.
Avanir's fourth-quarter loss and phase 2 failure
We should first take a look at Avanir Pharmaceuticals, which is set to plunge this morning after posting a wider-than-expected loss yesterday and reporting disappointing news regarding one of its most promising pipeline drugs.
For its fourth quarter, Avanir reported a net loss of $15.4 million, or $0.10 per share, wider than the loss of $11.7 million, or $0.09 per share, it reported a year earlier. Analysts had expected a loss of $0.08 per share.
Revenue came in at $21.7 million -- a 61% year-over-year gain -- primarily due to higher sales of its only marketed product, Nuedexta, a treatment for emotional incontinence, also known as uncontrollable crying or laughing syndrome. Nuedexta accounts for 93% of Avanir's top line. The remainder is comprised of royalties from the cold sore treatment Abreva.
One of Avanir's most promising pipeline drugs is AVP-923, a treatment for agitation in Alzheimer's disease, neuropathic pain from multiple sclerosis and diabetes, and levodopa-induced involuntary movements in Parkinson's disease.
Unfortunately, Avanir announced this morning that AVP-923 had missed its primary efficacy endpoint for treating neuropathic pain in MS patients during a phase 2 trial. This won't completely sink AVP-923, but it's one less indication that the drug can be expected to be approved for.
Looking forward, the main concern for Avanir is its cash flow. The company burned through $10.1 million in cash during the quarter, excluding a $20 million one-time payment associated with AVP-825, its experimental migraine treatment. Total operating expenses jumped 50% to $36.2 million. Those figures are troubling considering that the company is unprofitable, and it finished the quarter with $55.3 million in cash and equivalents.
However, Nuedexta could eventually hit annual peak sales of $500 million, according to analyst estimates, which means sales could still improve considerably over the next few quarters.
Sanofi's new oral drug for Cerdelga gets priority review from the FDA
Meanwhile, Sanofi announced that the FDA had granted a six-month priority review designation for its new drug application for Cerdelga, an oral drug for type 1 Gaucher disease.
Gaucher disease is a rare genetic disease which affects less than 10,000 people worldwide. Patients lack a certain enzyme which causes fatty acids to accumulate in cells and organs. Type 1, the most common form of the disease, leads to bone disease, anemia, an enlarged spleen, and a low blood platelet count. Type 2 starts at infancy and is usually fatal, while type 3 causes liver, spleen, and brain problems. All current Gaucher disease drugs are aimed at treating type 1.
There are currently three major companies producing Gaucher treatments -- Sanofi, Shire (NASDAQ: SHPG ) , and Pfizer (NYSE: PFE ) , through a partnership with Israeli company Protalix BioTherapeutics.
Sanofi's Cerezyme is currently the leading treatment, and generated $226 million in global sales last quarter -- an 8.6% jump from the prior year quarter. Sales of Shire's Vpriv, the second-most commonly used drug, rose 17% last quarter to $88 million. Pfizer and Protalix's Elelyso/Uplyso trails at a distant third, only generating $1.4 million in product revenue for Protalix last quarter.
All three drugs are administered intravenously -- which means that Sanofi's Cerdelga, an oral pill, has tremendous growth potential. In addition, Cerdelga will play a key role in growing revenue at Sanofi's rare disease unit (Genzyme), which is one of the company's fastest growing business units with 21% year-over-year growth last quarter.
GW Pharmaceuticals gains new U.S. patent allowance for treating brain tumors with cannabis
Last but not least, GW Pharmaceuticals, the company best known for its cannabis-based drugs, moved a tiny step closer towards market approval in the U.S. for its treatments.
This morning, GW announced that the U.S. Patent and Trademark Office had issued a Patent Allowance for the use of cannabinoids to treat glioma, a term that describes any tumor that forms in the glial tissue of the brain, such as gliboblastoma, commonly referred to as brain cancer. The patent allowance is likely for two drugs -- GWP42002 and GWP42003, two glioma drugs currently in pre-clinical studies.
GW's primary product is Savitex, a cannabis-based mouth spray for the treatment of moderate to severe spasticity in MS patients which has been approved in 23 countries in Europe. Sales of Savitex haven't been impressive so far -- throughout fiscal 2013, sales of the drug fell 14% year-over-year to $3.6 million.
GW is currently partnered with Otsuka Pharmaceuticals to attempt to bring Savitex and other cannabis-based drugs to the U.S. market. Gaining U.S. market approval for Savitex and other upcoming cannabis-based drugs is a long-term goal for GW, but it expects plenty of resistance due to the controversial nature of medical marijuana.
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