Biotech stocks can be a lot like lottery tickets: They're worth either a whole lot or almost nothing. It's the appeal of the grand slam, the allure of striking it rich overnight, that makes them such attractive stocks.
But this risk-reward proposition also means that you have to keep a close eye on the developments at your biotechs. Like few other sectors in the investing world, news in the biotech space can make or break a company overnight. Here are some developments taking place at three biotechs you should be watching.
- In a move fellow Fool Brian Orelli equated to a "Hail Mary," Cell Therapeutics
spent 2011 working to appeal the FDA's ruling that the company needed to run an additional clinical trial of its leading drug candidate, pixantrone, for use on patients with non-Hodgkins lymphoma. Because the company was unable to enroll enough patients during trials, the FDA applied higher standards to its evaluation of whether the trial was successful. Cell Therapeutics argued that it provided the necessary evidence to show that the drug works well enough to warrant approval. So the company resubmitted its New Drug Application to the Oncologic Drugs Advisory Committee. But earlier this week, Cell Therapeutics voluntarily withdrew its application because it didn't have enough time to prepare for the meeting on Feb. 9. It can reschedule the meeting later this year after resubmitting the application. (Nasdaq: CTIC)
- After disappointing results in the trials for its Libigel drug, which was developed to treat hypoactive sexual desire disorder, BioSante
needs to largely depend on making money through licensing deals with Teva (Nasdaq: BPAX) for its Bio-T-Gel, which earned BioSante $1.5 million upon signing and has the potential to bring in substantial royalties upon commercialization. It also has a licensing deal with Aduro Biotech to use its pancreas and prostate cancer vaccines in conjunction with Aduro's CRS-207 vaccine. This agreement did not bring in any up-front money for BioSante, but has the potential to bring in royalties if Aduro's regimen does well during clinical trials and is able to compete effectively with Provenge, a prostate cancer drug developed by Dendreon (Nasdaq: TEVA) . Aduro is currently in phase 2 of its trials. (Nasdaq: DNDN)
currently has two promising drugs in its pipeline that are up for review in mid-2012. Ariad is collaborating with Merck on a drug called ridaforolimus, which treats sarcoma cancer by inhibiting the mTOR protein, which helps prevent proliferation, cell cycle progression, and survival in cancer cells. Ridaforolimus' New Drug Application filing was accepted in October 2011, and the FDA's decision is expected on June 5, 2012. (Nasdaq: ARIA)
Another leading drug candidate for Ariad is ponatinib, which is used to treat leukemia by inhibiting enzymatic activity leading to mutations that cause resistance to treatment from existing tyrosine kinase inhibitors. If successful, this drug will help late-stage leukemia patients who have not responded to Otsuka and Bristol-Myers Squibb's Sprycel treatment or Novartis' Tasigna treatment or who have a mutation that prevents them from using these drugs.
In December, Ariad presented promising phase 2 trial results to the American Society of Hematology, showing that nearly half of patients suffering from chronic myeloid leukemia who failed to respond to standard treatment had a significant response to ponatinib. These patients saw at least two-thirds of their bone marrow return to normal, and 39% of patients who responded to the drug experienced a complete resistance. Ariad plans to submit an FDA filing for this drug by mid-2012.
With high-risk propositions on sometimes unproven drugs, biotech investing is not for everyone. And that's OK. If you'd like to invest in lower-risk companies with more certainty of success, check out our special free report: "3 American Companies Set to Dominate the World." It's available free for a limited time. Just click here to get your copy.Jim Royal, Ph.D., does not own shares of any of the companies mentioned. The Motley Fool owns shares of Teva Pharmaceutical Industries and Dendreon. Motley Fool newsletter services have recommended buying shares of Novartis and Teva Pharmaceutical Industries. 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.