JAPAN

Dennis King: “More bang for your donation . . . Nissan will match your donation if made here.”

BIG TROUBLE

It was announced last week that “Tobias” will be added to the list of hurricane names in 2016. At first, of course – addicted to attention of any kind – I was thrilled. But what if it’s the big one? Like Andrew, in 1992. First Andrew, now Tobias? This can’t be good.*

*Meteorologist Bryan Norcross notes that it would be a late-season storm, and so unlikely to amount to much. Still, I worry.

GURU UPDATES

Let me know which ones I’ve forgotten:

ALXAUp about 40% since suggested here at $1.00 four months ago. Guru expects its drug to be approved next year, and the stock then to be above $3. “However,” he writes, “they have cash only to last to 3Q 2011, so will have to do a very dilutive financing. Cash burn somewhat accelerated in the most recent quarter. Their inability to anticipate correctly the FDA requirements was a substantial setback – adding almost a year and a half to the potential approval time and eating a lot of capital. I made a mistake by analyzing this purely on a ‘does it work? is it safe?’ basis. Important lesson going forward that those two questions clearly are insufficient to make a final conclusion. You may want to sell it now and buy it back cheaper when they do their financing.”

I’m not so good at selling and buying back. There’s the risk of forgetting to buy back, or of simply outsmarting yourself if, say, some good development comes out of left field. If it does go significantly lower – and if I can find any more cash I can truly afford to lose – I may buy more . . . all the while remembering that Guru is not infallible.

CBRXAlso up about 40% since suggested here last month at $2.55. Guru writes, “Data should be published this month. File for approval a month or two after that. Should get a six-month review, so fully approved by the end of the year. They’ll be able to charge two to three times more than analysts are expecting.” He sees the stock between 8 and 15 a year from now. Repeat after me: Guru is not infallible. Only with money you can truly afford to lose.

CRMEUp 5% since suggested here in November at $4.60. Guru calls this one “problematic.” “They are now saying they don’t know when they will restart the IV phase III trial – were saying resolved in Dec-Jan. Not sure when the FDA meeting is. They are also saying that their partner for IV, Astellas, may be willing to relinquish this indication to oral partner Merck. There was recently a change in the label in Europe to reflect the one patient who died and stopped the US IV Phase III trial. Still, I believe it will succeed and get approved. Can’t tell when. Management guidance is highly unreliable.”

As you know by now, I find it less painful to lose money on something than to sell and see it rise. It’s an expensive psychological quirk, but it’s who I am – as I discovered after I sold the Friendly’s Ice Cream stock I had held forever, only to see it acquired a day later at triple the price. This was 32 years ago, and I still have trouble breathing when I think about it.

DCTHUp 30% since suggested here at $5.37 15 months ago, but way down from the $16 it hit when I should have insisted you sell at least half (and was an idiot not to have sold at least half myself). Guru: “I’m shocked they got a refuse-to-file letter. Still, the product works and addresses a significant unmet need. They say they will refile at the end of September. They also say they expect a CE Mark (license) in Europe mid 2011, but I can’t take their guidance with much credibility. Assuming I’m not missing yet more information, should be worth at least 12 on approval in 2012.” Caveat, caveat, caveat.

EMISUp 10% from where it was when suggested here at $1.25 last August. Guru: “They just let go their awful CEO, which is good news. Osteoarthritis data in 2Q and osteoporosis in 3Q. Hard to see how osteoporosis doesn’t succeed. Should be between 5 and 10 depending on the osteoporosis data – potentially much higher.” Caveat, caveat, caveat.

KERXDown 24% since suggested here at $5.25 in November. Guru: “Phase III colorectal data out by the end of the year. Looks like it works.” He sees the stock going to 12. Caveat, caveat, caveat.

NBIXUp 157% since suggested here at $2.60 a year ago. Guru: “Meeting with the FDA this month to finalize the data for phase III Elagolix for endometriosis. For sure this will work. Results in late 2012. Some phase IIs out this year that should work, but stock is probably range-bound between 7 and 9.” For now.

If you haven’t already sold enough to be “playing with house money” on this one, as suggested in months past, it could be a good idea. But I’m enthusiastically holding the rest.

NPSPUp 18% since suggested here at $6.65 in November. Guru: “Phase III Gattex was very solid. For sure gets approval. Six-month time frame – could get extended. FDA is taking its time reviewing things this year. Approved in 2012. Solid market. Phase III hypoparathyroid trial out later this year. Can’t see how this won’t work. One-year target = 12.”

This might be as good a point as any in the narrative to note . . . I understand essentially none of this stuff. So I’m not betting on Gattex (or any of the others); I’m betting that my Guru will be right more often than he is wrong. And I’m placing these bets only with money I can truly afford to lose because there’s always the chance the whole drug sector could get clobbered somehow, let alone any one of these individual speculations.

OSIRDown 14% since suggested here at $7.35 in November. Guru: “The slow road to china. FINALLY met with the FDA in late February. Reportedly told they needed to submit some additional demographic data on the uncontrolled trial in pediatric graft versus host plus submit a plan for a ‘confirmatory’ trial and then can then officially file their BLA (Biologics License Application). ‘Mid year’ is the guidance. (They have a 93,000-page BLA and they don’t have an instantaneous answer to ANY demographic data question?) Physiologically, I and the investigators I have talked to believe this is doing something significant for the patients. They have filed a response in Canada. Canada has reportedly 120 days to make a decision, which could be ‘yes,’ ‘no’ . . . or MORE questions. Again, the clinical data says ‘it works.’ Still enrolling Crohn’s disease – should work. One year target = 15-25.” Caveat, caveat, caveat.

SUPGDown 7% since suggested here at $2.75 in November. Guru: “Profitable. Big play will be at ASCO (cancer meeting) in June. Data in elderly acute myelogenous leukemia. Trial failed to show its primary endpoint – survival – but the partner companies, Eisai and JNJ, have said they will file for approval anyway, so data must look pretty good. Could make a run towards 4. Only obvious negative is that their main drug, Dacogen, will have its primary competitor, Vidaza, go generic in April. However, people don’t tend to switch drugs to generic ‘equivalent’ in cancer unless it is a photocopy and Vidaza is not a photocopy of Dacogen. So probably not a hit to revenue.”

VVUSDown 13% since suggested here at $7.25 in November. Guru: “This one is a problem. The FDA just changed the label for Topiramate for women with epilepsy to say it significantly increases cleft lips. The FDA has requested the VVUS look at the data in prevention of migraines to see if it does the same. This would be an onerous study to do, but is probably doable. A year delay in refiling? VVUS says they expect to refile ‘by the end of the year.’ This issue really came out of nowhere, as the panel indicated such a study should be done as a giant registry, post approval. It’s really the only way to know. I would use VVUS as a ‘source of funds’ and revisit this when this issue of cleft lip gets resolved. There are lots of other stocks to focus on.”

Of course, if it gets resolved favorably, and by the time we realize it, it might be too late to “revisit.” See my Friendly’s Ice Cream story, above. But note that – my own psychological defect notwithstanding – it’s okay if you occasionally miss something that does well after you sell. I keep telling myself that, to no avail.

YMIUp 50% since suggested here at $1.65 in December. Guru: “Looking strong. They have the competitor to INCY. INCY causes a certain degree of anemia. NOT a good thing in myeloproliferative patients. [Well, duh! – A.T.] YMI has data that shows theirs doesn’t cause much anemia and actually improves anemia a lot in some patients. They were on the road last week reassuring investors that data at ASCO (in June) will confirm that the anemia benefit is real and sustained. So people are starting to line up around YMI as the long-term winner. Target is 4-5 by June.”

 

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