Fortunes hang in the balance. In the next few months, some investors are going to make a lot of money. Unfortunately, some will also lose a bundle.
Plenty of major decisions loom large for biotech stocks in 2014. Which should investors watch most closely? Here are three impending catalysts to definitely mark on your calendars.
1. Anxious anticipation for Afrezza
To say that MannKind (MNKD 3.43%) shareholders anxiously await the U.S. Food and Drug Administration decision for Afrezza -- scheduled no later than April 15 -- might qualify as the biotech understatement of the year. It's been a long time coming for the inhaled insulin product.
MannKind first attempted to win approval with submission of a New Drug Application, or NDA, for Afrezza back in 2009. That effort failed in March 2010 with the FDA requesting more information, particularly about how the original inhaler used in clinical trials compared with the inhaler included on the NDA. Another thumbs-down followed in January 2011.
What are MannKind's chances this time around? I'd say they're pretty good. The phase 3 results for Afrezza in treating both type 1 and type 2 diabetes were solid. While anything can (and sometimes does) happen with FDA decisions, my prediction is that the third time will prove to be the charm for MannKind.
2. Catch-up catalyst for Contrave
It won't be the third try for Orexigen Therapeutics (NASDAQ: OREX) to secure approval for Contrave, but it won't be the first, either. The FDA turned down the weight-loss drug in 2011 because of potential cardiovascular concerns. Orexigen needed to undergo a major multi-year study to address those issues.
In the meantime, a couple of competitors beat Orexigen to market. Arena (ARNA) gained approval for Belviq in June 2012. Vivus (VVUS) wasn't far behind, with its obesity drug Qsymia getting the green light from the FDA the following month. However, Vivus actually emerged as the first to market while Arena waited on U.S. Drug Enforcement Administration scheduling for Belviq.
The FDA's next decision about Contrave comes on or before June 10. There don't appear to be any significant reasons for concern over yet another rejection. Barring an unforeseen roadblock, expect Orexigen to enter the fray against Arena and Vivus in just a few months.
3. Zoom or zap for Zerenex
Keryx Biopharmaceuticals (KERX) gets its first shot at FDA approval for Zerenex by June 7. The market clearly expects the chronic kidney disease, or CKD, drug to receive the green light: Keryx's shares have more than quintupled since phase 3 results were announced in early 2013.
Could investors be too enthusiastic about Zerenex's chances? Maybe -- but I don't think so. The clinical results from Keryx's late-stage study showed that Zerenex significantly reduced the phosphorus levels of dialysis patients with hyperphosphatemia, an elevated level of phosphates in the blood associated with end-stage renal disease, and presented no serious safety concerns.
The upcoming FDA decision actually isn't the most important one for Keryx, though. The biotech announced positive mid-stage results in November for Zerenex in treating non-dialysis dependent CKD. Assuming regulatory approval can be ultimately obtained for this indication, Keryx could have a near-blockbuster drug on its hands.
Most prodigious pop?
A positive decision by the FDA should propel any of these three biotech stocks to higher ground. I suspect Keryx might experience the biggest pop, though.
No one will be surprised if Afrezza gains approval at long last. The bigger question for MannKind, though, is whether a strong partner can be found for commercialization of the inhaled insulin. Announcement of a partner would provide an even bigger catalyst for the plucky biotech, in my view.
Likewise, most observers probably expect Contrave to sail through the FDA's process. Orexigen, though, will have to prove that it can achieve success more dramatically and more quickly than its rivals Arena and Vivus. I think it can potentially do so, but only time will tell for sure.
For Keryx, there shouldn't be any big asterisks with a positive regulatory decision. I expect approval for the dialysis CKD indication will whet investors' appetites for the non-dialysis indication. One of the most important drivers for a stock is anticipation of the next big positive development. Keryx shareholders should view the next few months as a potential prelude to even greater heights.