One great thing about biopharma is that you never need to wait long for something dramatic. Shares of Incyte Corporation (INCY 2.27%), TG Therapeutics Inc. (TGTX 9.58%), and Cara Therapeutics Inc. (CARA 4.04%) are extremely likely to move following some important events on the horizon.
Here's what you need to know about the catalysts that could make these biotech stocks surge or swoon.
1. Cara Therapeutics Inc.: A better opioid
This company's lead drug, CR845, is an opioid painkiller that does its business in the periphery, where pain signals are generated, instead of in the brain, where traditional opioids cause side effects that lead to abuse and respiratory failure upon overdose. As such, it could be an important new tool for physicians leery of prescribing more addictive painkillers.
Cara Therapeutics sports a fairly small $412 million market cap at the moment, so carving out a slice of the $60 billion per year global market for pain-management drugs could create a giant windfall over the long run. By the end of the second quarter, we should find out if CR845 has a shot in the post-abdominal surgery setting. Any day now, the company could announce data from a pivotal study that started all the way back in 2015.
We're still waiting for results because a spike in sodium levels among a handful of patients led the Food and Drug Administration (FDA) to halt the study in 2016. There haven't been any major safety issues since it resumed, but the deck could already be stacked against CR845's success.
In order to convince the FDA to lift the clinical hold, Cara reduced dosage levels in the active cohorts from a range between 1.0 ug/kg and 5.0 ug/kg down to just 0.5 ug/kg and 1.0 ug/kg. Investors might not be expecting much from watered down CR845 in this setting, and a surprise success would go a long way to bolster confidence in the candidate's potential.
An injected version of Cara's pain drug is also in late-stage development as a treatment for chronic kidney disease patients who suffer from uncontrollable itching. Success in the post-operative setting would go a long way toward funding the drug's development in this fairly large, chronic indication.
2. TG Therapeutics Inc.: Leukemia combo
This clinical-stage biotech's lead candidate, ublituximab, is an anti-CD20 antibody similar to Ocrevus from Roche (RHHBY 7.17%). Ocrevus racked up $900 million in sales during its first year as an FDA-approved multiple sclerosis (MS) treatment. TG Therapeutics is developing ublituximab to treat MS and blood cancers.
TG Therapeutics finished enrolling patients into the Unity study last October, which means the company should have initial response-rate data in the second quarter. The pivotal leukemia study is testing ublituximab in combination with umbralisib, another TG Therapeutics candidate. To succeed, TG's combo will need to show a progression-free survival benefit over standard care. Survival data can take an awfully long time to play out, but response rates far above the control group would tell us the trial's moving in the right direction.
TG Therapeutics included newly diagnosed, treatment-naive patients in the study. Since this relatively large group tends to stay on treatment longest, a strong performance here could propel the stock's recent $1.1 billion market cap much higher.
3. Incyte Corporation: Big meeting ahead
This biotech's big pharma partner, Eli Lilly (LLY 7.55%), has a date with an FDA advisory committee to discuss an application for Olumiant, a rheumatoid arthritis (RA) drug Lilly licensed from Incyte years ago. The world's best-selling RA drug, Humira, racked up $18 billion in sales last year, and Olumiant produced results for a higher percentage of patients during a clinical trial supporting its application.
While the drug was clearly effective, the FDA rejected Olumiant's application about a year ago citing safety concerns. Although it looked like the partners would need to conduct another lengthy safety study, the agency instead has opted for an independent advisory committee meeting. On April 23, a panel of independent experts will weigh in on the drug, which has already earned a European approval.
The FDA doesn't need to follow committee recommendations, but it usually does. A positive opinion could help Eli Lilly make Olumiant into a $2.5 billion-per-year franchise, with Incyte eligible to receive a royalty percentage that tops out in the high twenties.
Incyte already has a blockbuster drug called Jakafi, but it was responsible for 74% of total revenue last year. Jakafi's patient population is limited, and it might need to share the space with a potential competitor that could be tough to beat. The company's big investment into another cancer drug looks like a bust, which makes big U.S. Olumiant royalties a necessity if Incyte wants to reduce dependence on the myelofibrosis drug in the years ahead.
Look further ahead
While it's important to understand why certain catalysts quickly send biotech stocks screaming in one direction or another, trying to trade around those movements is a fun way to lose a lot of money. Product sales make Incyte the safest of the three, but I think ublituximab could make TG Therapeutics' a top biotech stock to own for the long run.
Without much to fall back on, there's a lot to lose if the candidate flops. That said, we've already seen that adding it to Imbruvica led to an 80% response rate versus just 47% among leukemia patients taking Imbruvica alone. That gives the pair that market Imbruvica, AbbVie and Johnson & Johnson, billions of reasons to promote ublituximab if it keeps serving up results.