3 Stocks with FDA Catalysts Incoming

For many companies, FDA decisions represent the hallmark of years of investment. Due to the amount of time and money that was spent developing these drugs, they can also represent significant catalysts for investors.

Jun 16, 2014 at 4:31PM

For biotech investors, no catalyst can match the FDA’s decision on drug approval (known as the Prescription Drug User Fee Act, or PDUFA date). The FDA's decision represents the culmination of years of clinical research (not to mention millions of dollars). The decision will impact the company's growth timeline for years into the future and will often meaningfully impact the company's bottom line. Let’s dive into three that investors should keep a close eye on.

Afrezza
One of the first notable decisions from the FDA will be on MannKind Corporation (NASDAQ:MNKD) and its drug Afrezza, for which it is expecting a decision on July 15. MannKind is developing Afrezza as an inhaled insulin product for type I and type 2 diabetes. Afrezza has previously been turned down twice by the FDA (a rejection is known as a “Complete Response Letter” or CRL).

Management believes they have addressed the FDA’s previous concerns.  With overwhelmingly positive recommendations from the FDA-appointed advisory committee for both type 1 and type 2 diabetes, MannKind may finally get Afrezza through – although it’s important to note that the FDA does not always follow advisory committee recommendations.

MannKind will then need to successfully market Afrezza in order to have any hopes of becoming profitable. MannKind will need to start generating revenue fast, as it lost $52 million last quarter. Peak sales estimates for the drug vary widely, with some analysts having Afrezza being a blockbuster at over $2 billion in revenue, while others do not believe that it will catch on in the market at all. Assuming approval, investors should watch two things closely: Afrezza’s sales and whether MannKind is able to snag a marketing partner on favorable terms.

Ruconest
On the day after MannKind’s PDUFA, Salix Pharmaceuticals (NASDAQ:SLXP) will have a PDUFA date of July 16 for its drug Ruconest. Ruconest is being developed for the treatment of acute angioedema attacks in patients with hereditary angioedema (HAE), and analyst estimates for the drug have hovered around $100 million. That may not seem like a lot, but for a company with under $400 million in revenue last quarter, including a net loss of $44 million, every little bit helps. Investors should also keep an eye out for potential label expansions for Xifaxan, which is currently indicated for a cirrhosis complication called hepatic encephalopathy. Xifaxan brought in over $100 million last quarter, and Salix is testing the drug in a series of new indications and formulations, including Crohn’s disease.

Oritavancin
Another FDA decision to watch closely will be The Medicines Company (NASDAQ:MDCO) as it attempts to obtain approval on August 6th for its antibiotic Oritavancin. Oritavancin was granted priority review by the FDA, and Medicines is trying to get the antibiotic approved for use in acute bacterial skin and skin structure infections caused by susceptible gram-positive bacteria. The FDA has recognized the importance of this drug by granting Qualified Infectious Disease Product Status, which will give The Medicines Company additional years of exclusivity on the drug after approval. This antibiotic is clearly important to the FDA, but it is also very important to the long term growth potential of The Medicines Company. Analysts estimate that Oritavancin could bring in peak annual sales as high as $400 million – nowhere near blockbuster potential, but still significant to a company which reported under $200 million in revenue last quarter. Sales of Oritavancin would hopefully help The Medicines Company swing to profitability – net loss last quarter was $5 million, so it’s already on the edge of breaking even.

Bottom line
These FDA decisions will be significant catalysts to each of these three stocks, particularly given how important each of these drugs is to its respective company – particularly MannKind, as Afrezza is its only drug. Of course, if the FDA approves, the next big question for each of these companies will be commercialization.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need to Motley Fool’s new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Alexander Maxwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers