Seeking Alpha: Xenoport Arguably Undervalued, But Low On Options

The days of talking about XenoPort (NASDAQ:XNPT) as a biotech are pretty much over, as the company has given up developing '829 and '279 on its own and refocused its efforts on maximizing the potential of its restless leg and postherpetic neuralgia (or PHN) drug Horizant. Unfortunately, XenoPort also really isn't a specialty pharmaceutical company either, as the company has no other marketed products and still lacks the scale (and the resources) to market Horizant to full effect.

The best outcome for XenoPort would appear to be a sale of the company to another pharmaceutical company with the primary care sales infrastructure to make Horizant a lucrative "drag and drop" addition. I believe such a transaction is worth about $6.50 to Horizant today, but I believe the shares would be worth far less in a go-it-alone scenario due to a slower revenue ramp and a lack of operating leverage. I don't presently see any meaningful value in out-licensing the portfolio.

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Xenoport Arguably Undervalued, But Low On Options

Seeking Alpha: Receptos Bows Out

The Receptos (NASDAQ:RCPT) story, at least as an independent company, looks as though its coming to a graceful end for shareholders. Rumors of M&A interest have swirled around this biotech for some time now, and rumor became fact on Tuesday when Celgene (NASDAQ:CELG) announced that it had reached an agreement to acquire the company for $232 per share in cash.

Celgene is offering a fair price and you don't often see bidding wars for publicly traded biotechs. "Don't often" is not the same as never, though, and I wouldn't completely dismiss the possibility of another bidder entering the fray. That is not my base-case assumption and I'm not suggesting investors buy Receptos shares now on that basis, but if I were a Receptos shareholder I might think about hanging on for at least a little while longer to see if any rivals emerge.

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Receptos Bows Out

Seeking Alpha: Xenoport Not Getting Much Love Ahead Of Key Data

Serial disappointments have made investors understandably cagey about Xenoport (NASDAQ:XNPT) and the question of whether its "transported prodrugs" can really achieve meaningful improvements in efficacy and/or safety. Even so, I find it curious that the shares have been so weak over the past six months as the company approaches key data from a study of XP23829 (or '829) in psoriasis. I don't believe there is anything like enough evidence to say that this is "another Receptos (NASDAQ:RCPT)", a company that has seen a pronounced run in its shares on the back of strong data in multiple sclerosis and ulcerative colitis, but the fact remains that this company may yet have a clinical pipeline candidate with more than $1 billion in revenue potential in both multiple sclerosis and psoriasis.

I continue to believe that Xenoport is a long-shot story. The company has yet to establish that its R&D approach can develop meaningfully better drugs, but bulls can fairly retort that it only takes one success for the stock to work. The multiple sclerosis and psoriasis markets are competitive markets already, and likely to become more so, but even modest assumptions regarding the odds of clinical success would argue that Xenoport is undervalued ahead of what could be a significant share-moving event.

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Xenoport Not Getting Much Love Ahead Of Key Data

The Motley Fool: Is Pfizer Putting the Car-T Before the Horse?

Immuno-onocology is grabbing a large share of the headlines in oncology drug development these days and generating significant buzz for Big Pharma companies including Merck and Bristol-Myers Squibb (NYSE: BMY  ) . While Pfizer (NYSE: PFE  ) has not been seen as a leader in IO drug development, the company does have antibodies in development targeting IO targets like 4-1BB, OX-40, and PD-1. Now the company has added more shots on goal to its IO platform, striking a collaboration agreement with French biotech Cellectis to develop chimeric antigen receptor T-cell therapies, an unproven but high-potential emerging therapeutic class.

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Is Pfizer Putting the Car-T Before the Horse?

Seeking Alpha: Bluebird Takes Flight On Very Promising, Very Early Data

Investors have had good reason to be skeptical of Bluebird Bio (BLUE). Gene therapy was the "next big thing" in the mid-to-late 1990s and while it is too negative to say it has thus far produced almost nothing of value, it certainly hasn't lived up to "the medicine of tomorrow, today!" hype. While I was bullish on Bluebird Bio back in February, I wasn't entirely surprised to see the shares of this very early-stage, high speculative stock sell off when the biotech sector started wheezing shortly thereafter.

Now, investors have some enticing data to mull over. Over the weekend, Bluebird Bio presented data on two patients in its HGB-205 study of LentiGlobin gene therapy in beta-thalassemia, and while two bluebirds may not make a summer, the surprisingly strong response in these two patients suggests that Bluebird may just have something big on its hands.

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Bluebird Takes Flight On Very Promising, Very Early Data

The Motley Fool: Is the Market Undervaluing Celgene?

Celgene (NASDAQ: CELG  ) admittedly does not leap off the page as a cheap stock, at least not with a cursory glance. The shares are up about 40% over the past year (and more than 100% over the past two years) and trade at more than nine times sales and 11 times book, not to mention more than 16 times forward earnings.

Look closer, though, as this oncology-focused bio/pharma not only has a deep early stage pipeline of oncology drugs, but meaningful label expansion opportunities for approved drugs. Celgene is also preparing to launch its first immunology drug and the Street's expectations are quite a bit lower than those of management. A patent challenge to the company's lead drug is definitely a serious matter, but the shares appear undervalued even amid an ongoing bull market in the health care space.

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Is the Market Undervaluing Celgene?

Seeking Alpha: Bluebird Bio May Turn Dreams Into Reality

Gene therapy has generated exceptional excitement and interest over its potential for over three decades, but actual clinical progress has been painfully slow and frustrating. Bluebird Bio (BLUE) (and I am choosing to capitalize the name, even though it is officially lower case) may be on its way to transforming at least part of the dreams and hopes of gene therapy into reality.

Bluebird has developed a platform that management believes will allow the company to deliver therapies via lentivirus vectors to treat single-gene rare/orphan disorders. The company's lead compound addresses a small market, but the second could be a potential billion-dollar therapy. The risks here are definitely elevated, but Bluebird may be in the early days of establishing a leadership position in a major therapeutic class.

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Bluebird Bio May Turn Dreams Into Reality

Seeking Alpha: Cyclacel Still Steeped In Doubt

Around five months ago, I thought Cyclacel Pharmaceuticals (CYCC) looked like an interesting speculative biotech play, as the market seemed to be hugely pessimistic on a drug (sapacitabine) that had shown encouraging evidence of efficacy in a seriously under-treated patient population. Since that report (and two by Seeking Alpha contributor Scrying Biotech), the shares are up about 50% and I would argue that these shares are still an interesting speculation for the risk-seeking biotech investor.

To be very clear, I'm still not unreservedly bullish on these shares. I think bears will remain fixated on the risks represented by running a Phase III trial with an unapproved drug as a control, not to mention the more typical risk that the drug doesn't work. Likewise, there are risks of competitive products from other oncology companies including Celgene (CELG) and Sunesis (SNSS). But even with what I consider to be conservative assumptions, it would seem that the shares are undervalued and worth a look for very aggressive biotech investors.

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Cyclacel Still Steeped In Doubt

Seeking Alpha: Receptos Coming Along Nicely

In making Receptos (RCPT) an Alpha-Rich pick on August 13, I certainly had bullish expectations for the company and the stock. I was attracted by the company's S1P1 modulator technology and the prospects of the lead drug RPC1063 in both multiple sclerosis and ulcerative colitis. Combined with an earlier-stage drug for eosinophilic esophagitis (for which there are no pharmaceutical treatments) and a preclinical oral GLP-1 program, I thought it likely that Receptos would see a higher share price as the MS program matured and the probability of partnership or acquisition grew.

I didn't expect the pace or magnitude of the move that was to come. Receptos shot up almost 100% in just two months. While at least some of that action was likely due to rumors of multiple bidders for the company and the shares did ease off, Receptos still stands about 60% higher today than it did when I first wrote about it. What's more, incremental data from the RADIANCE multiple sclerosis trial will be pushing the drug forward into a Phase III study. Expectations are definitely higher for these shares now, but given the revenue potential of Receptos' pipeline and the possibility of incremental data points over the next year or two, I can see these shares continuing to move higher.

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Receptos Coming Along Nicely

The Motley Fool: Does Sanofi Need to Turn to M&A to Bulk Up Its Oncology Assets?

It's hard to say that there's anything particularly wrong with Sanofi (NYSE: SNY  ) today. Like most of its big pharma peers, revenue growth remains a challenge (sales were down 7% as reported in the third quarter and up less than 1% in constant currency), and investors are worried that generics, biosimilars in this case, will chew into Sanofi's lucrative diabetes franchise. Even so, the shares are near an all-time high, and investors who've owned these shares for a few years aren't exactly hurting.

Even so, one of the pillars of the bear thesis is that Sanofi hasn't done enough to position itself in some of the more attractive markets within branded pharmaceuticals. Sanofi's deal with Regeneron for its anti-PCSK9 antibody was a pretty good deal for Regeneron, and Genzyme's rare disease drugs contribute less than 10% of the total revenue base.

Most specifically, though, Sanofi is weak in arguably the hottest area in pharma: oncology. Given recent pipeline failures and weak positioning in immunotherapies, it's worth asking if Sanofi may turn to M&A to appease investors worried that Sanofi's fortresses in diabetes and vaccines and emerging opportunities in cholesterol and multiple sclerosis aren't enough.

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Does Sanofi Need to Turn to M&A to Bulk Up Its Oncology Assets?

Investopedia: Amgen Sweetens The Bid And Secures Onyx

As it turns out, Amgen (Nasdaq:AMGN) didn't have to stretch too far to seal the deal for oncology biotech company Onyx Pharmaceuticals (Nasdaq:ONXX). While Amgen's initial bid of $120 per Onyx share set off a nearly two-month auction process, in the end it took only an extra $5 per share to complete the deal as there was apparently only passing interest from other Big Pharma players to pay up for Onyx's portfolio of oncology drugs. All in all, while it's a worthwhile deal that helps patch over some near-term growth concerns for Amgen, it's unlikely to be a transformative deal.

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Seeking Alpha: Should Traders Try To Play The Odds With Cyclacel?

To be very clear from the get-go, I'm not bullish on the long-term prospects for Cyclacel (CYCC), nor those of its lead drug sapacitabine. I think the odds favor a negative outcome for the company's Phase III trial (SEAMLESS), and I think the remainder of the pipeline is unlikely to generate much investor enthusiasm in the absence of a licensing agreement.

That said, I'm surprised that Cyclacel trades where it does. By my math, Cycalcel trades with implied odds of sapacitabine success of less than 12%. While that may ultimately prove prescient, it seems out of line with the implied odds that other controversial oncology companies like Aeterna Zentaris (AEZS), Northwest Biotherapeutics (NWBO), ImmunoCellular (IMUC), Dendreon (DNDN) and Vical (VICL) have enjoyed at various points in their developmental histories.

This leads me to wonder if Cyclacel will run up into the interim analysis (estimated to occur in 2014) of the Phase III study. This is not a stock that I'd buy with the intention of holding for any extended period of time, but even just 15% to 20% assumed odds of success would suggest a target of around $4 to $5.40.

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Should Traders Try To Play The Odds With Cyclacel?

Investopedia: Pfizer Looking A Little Tired

At some point this bull market in all things health care will fade out, and I wonder if Pfizer (NYSE:PFE) shares will maintain this sort of valuation when that occurs. With the spin-off of Zoetis (NYSE:ZTS), years of restructuring, and a reorganization that will create “innovative” and “value” cores, I have to think that Pfizer management has pulled every trick out of its bag aside from a full break-up of the company. What's more, while there are some worthwhile products in the pipeline, I think the company is looking at pretty sluggish long-term growth as those new products will struggle to offset the loss of exclusivity on other lucrative drugs.

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Investopedia: Celgene Only Getting Started, But The Street's Already Looking Ahead

Celgene (Nasdaq:CELG) has been consistently profitable for a while, which is rare enough in the biotech space. What stands out to me with Celgene, though, is that the company has largely been riding just one drug in recent years (Revlimid) and the contributions of newer compounds should offer some very lucrative revenue growth over the next five to ten years. Although the multi-year bull market in biotech has stripped away most of the value from the sector, Celgene is operationally still a very interesting company to watch.

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Investopedia: Amgen Puts Onyx Pharmaceuticals In Play

Funny how an unsolicited bid will suddenly alert Wall Street to the value of a strong biotech.

While Onyx Pharmaceuticals (Nasdaq:ONXX) was generally a pretty well-regarded biotech, the news over the weekend that Amgen (Nasdaq:AMNG) had made a bid, and that management was now soliciting higher offers, has sent the shares rocketing up in pre-market trade. Given its solid collection of oncology/hematology assets, it won't be surprising if Onyx draws a crowd to its bargaining table before declaring a winner.

Good Reporting Triggers A New Era
Financial Post's Barry Critchley offered quite the scoop late Friday when he reported seeing a letter wherein Amgen made a formal bid for Onyx in the amount of $8.7 billion or $120/share. Onyx ultimately acknowledged the bid, but declared it insufficient and that the company was now going to begin an active sales process. To that end, it's worth noting that Onyx's press release acknowledging Amgen's bid made it clear that the company has received other indications of interest.

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Investopedia: Amgen Chased By The Bubble

There are two relatively heated debates that bear directly on Amgen (Nasdaq:AMGN) and its stock. First, is Amgen still really a biotech, or is it really more of a Big Pharma company? Second, is there a biotech/pharma bubble (and if so, how will valuations fare post-popping)? Investors' perspectives on these two issues likely have a lot to do with whether they see value in these shares, for while Amgen is certainly a well-run company looking to become an increasingly balanced advanced drug developer, the valuation is somewhat demanding unless the pipeline really delivers.

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Seeking Alpha: Pfizer Needs To Reload

I was a fan of Pfizer (PFE) early in 2012, and the stock delivered good returns as it beat the S&P 500. At this new, higher, price level it is a little harder to have quite the same affection for the company. I do have respect for how the company has streamlined - cutting costs, selling the nutrition business to Nestle, and preparing for the spin-off of Zoetis. I also think there are some worthwhile drugs both in the pipeline and early launch phases. All that said, it's hard to be as excited about the stock's value today, and I wonder if it's time for another large-scale move to better position the company for long-term growth.

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Pfizer Needs To Reload

Seeking Alpha: AstraZeneca Suspends The Buyback: Let The M&A Speculation Commence

With new CEO Pascal Soriot just getting comfy in the CEO chair at AstraZeneca (AZN), he lost little time in making a mark on the company. On Monday, the large (but struggling) but British drug company announced that it would suspend its buyback pending a "review of the company's strategy". While it certainly makes sense that the new CEO may just as soon keep $2 billion on hand (the company has completed $2.3 billion of an approved $4.5 billion buyback) for the time being, there are widespread assumptions that this is prelude to a larger deal.

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AstraZeneca Suspends The Buyback: Let The M&A Speculation Commence

Seeking Alpha: Here We Go Again With AEterna Zentaris ... Again

Maybe H.P. Lovecraft was really a prophet of biotech when he wrote "That is not dead which can eternal lie," as it clearly seems like there are certain biotechs that come back again and again… and again. While the failure of AEterna Zentaris' (AEZS) drug perifosine in colorectal cancer led to a major drop in the share price and the end of a variety of silly rumors regarding the company's prospects of being taken over by a Big Pharma company, it looks like the company has once again attracted some hope and optimism.

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Here We Go Again With AEterna Zentaris ... Again

Seeking Alpha: DONE-Dreon?

With yet another disappointment in the bag, maybe the Dendreon (DNDN) bulls can take a break with the "success is just around the corner" stories. Every controversial story has its supporters, but supporting Dendreon has come at a high cost as the price has continued to break down on successive disappointments with the cancer vaccine Provenge.

I hope that with second quarter results in hand and a significant restructuring on the way, the argument will at last shift from whether Provenge is a great drug (it's not) to whether it's a salvageable business (it might be).

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DONE-Dreon?