Wednesday’s Top Biotech Stories: Roche, Zogenix, and Aratana Therapeutics

Roche, Zogenix, and Aratana Therapeutics could be the top health care stocks to watch this Wednesday morning. Here’s why.

Jul 2, 2014 at 9:08AM


Let's take a look at three stocks -- Roche (NASDAQOTH:RHHBY), Zogenix (NASDAQ:ZGNX), and Aratana Therapeutics (NASDAQ:PETX) -- which could all loom large in health care headlines this Wednesday morning.

Roche plans to acquire Seragon for up to $1.7 billion
Roche has just announced plans to acquire Seragon, a breast cancer research company, for $725 million. Roche could pay an additional $1 billion based on the new subsidiary's future performance. Seragon was spun off of Aragon Pharmaceuticals when the latter was acquired by Johnson & Johnson.

Seragon has a portfolio of next-generation oral selective estrogen receptor degraders (SERDs), which could potentially treat hormone receptor-positive breast cancers. Seragon's lead drug candidate, ARN-810, is currently in phase 1 trials for patients with late-stage estrogen receptor-positive (ER+) breast cancer. ER+ breast cancer accounts for roughly 80% of all breast cancer cases.

Roche's three main breast cancer treatments are Herceptin, Kadcyla, and Perjeta. Herceptin, a blockbuster treatment for HER2-positive breast cancer (15% to 20% of all breast cancers), generated 6.08 billion Swiss Francs ($6.8 billion) in sales in 2013. Kadcyla, which was approved in the U.S. and Europe last year, is an antibody-drug conjugate (ADC) version of Herceptin, and acts as a "cancer smart bomb" which increases Herceptin's efficacy by injecting infected cells with chemotoxins.

This is notably Roche's third recent major acquisition. In May, Roche agreed to pay $450 million for IQuum, a maker of medical testing equipment. Last month, it acquired DNA sequencing company Genia Technologies for $350 million.

Zogenix plans to submit an sNDA for tamper-resistant Zohydro
Zogenix is up 10% in pre-market trading, after the company announced plans to submit an sNDA (supplemental new drug application) for a next-generation version of Zohydro which makes the drug more tamper resistant. If approved, the new version of the drug could be launched by early 2015.

The lack of tamper resistant technology in the original version of Zohydro ER, which was approved by the FDA last October, has been a controversial issue which has helped cause Zogenix's stock slump of more than 40% over the past six months.

Zohydro (an extended-release version of hydrocodone) is a painkiller which can be ten times as potent as Vicodin. The controversial history of opioid painkillers in the U.S. has caused 29 state governments to urge the FDA to reconsider Zohydro's approval.

Aratana submits a product license application for AT-014
Aratana Therapeutics has just submitted a product license application with the USDA for AT-014/ADXS-cHER2, its cancer immunotherapy for dogs. Aratana is partnered in the development of the drug with Advaxis.

AT-014 has potential implications for human cancers as well (although it's only in preclinical development for pediatric osteosarcoma), so the drug could have some interesting opportunities. The current standard of care for dogs with bone cancer is the amputation of the leg followed by chemotherapy. In a clinical study of 21 dogs treated with AT-014 after the standard of care, the treatment showed a statistically significant prolonged overall survival benefit. AT-014 is one of Aratana's 18 pipeline product candidates.

Neither Aratana nor Advaxis has any marketed products. Aratana went public last July and has more than doubled since then.

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Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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