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Your Daily Pharma Scoop: Omeros Up On Update, Synergy Sales, President’s Healthcare Plans

Analysis focus: OMER

Omeros (NASDAQ:OMER) is moving towards a rolling BLA submission for OMS721. On this good news, and despite tepid Q1 results, investors are becoming increasingly bullish the stock, as seen by its sudden 23% spike on the news of the BLA submission.

OMS721 is in trials for HSCT-TMA. This indication has roughly 2000-2500 patients per year in the US. 721 is also in trials for IgAN, which we have discussed extensively in our articles. Despite competition, which details we presented in these columns earlier, theres a strong case to be made for the drug to be a billion dollar blockbuster for Omeros. For a company with a market cap of less than $1bn at present, this is a major opportunity.

However, the stock had remained depressed for a long time based on uncertainties surrounding Omidria sales. That uncertainty has now been resolved with Omidria now receiving a two-year extension on its pricing package, and this should help the market focus on Omeros pipeline, where the real value lies.

With multiple breakthrough therapy designations, fast track designations and now a clear path towards BLA submission, this may the last time we will see this stock at these low prices.

OMS721 has accelerated approval for this indication, and the FDA has asked for further characterization of patients treated with OMS721, additional information on the historical control population and an analysis plan to assess biomarker data. With accelerated approval, none of these will delay the launch of the drug. While the company will continue with confirmatory studies prior to full approval, we really do not expect these to impact the drugs progress.

Omeros also has a long tailed pipeline after OMS721. The company has access to about $145mn in cash as of now, and Omidria sales are also adding to that amount now that the pass-through status issue has been resolved. Overall, we continue to remain bullish OMER and have conservatively valued OMER at $35 based on three indications of OMS721 and Omidria.

Stocks in News: Analysis of SGYP

Synergy Pharma down 10% premarket on soft Trulance sales in Q1

Discussion: Synergy Pharma (NASDAQ:SGYP), with its best in class Trulance drug approved in CIC and IBS-C, has not managed to take off as well as it should, and we have once again the numbers to prove it. Trulance sales stood at $8.6mn, down 8.5% sequentially, however, up 16.9% sequentially if you recognize deferred sales of $2.1mn from the previous quarter. The company has been facing a so-called shareholder activism for about a month or so now; although what that will lead to, if anything, is anybodys guess. One must also consider that Ironwood, SGYPs competitor, also had a bad quarter, missing on both revenue and EPS.

Trump drug pricing plan

Discussion: President Donald Trump provided few concrete specifics in his much-anticipated speech on drug pricing plans of the new administration, somehting that had been a major part of his campaign rhetoric. But there were some interesting aspects, like the ending of the 180-day exclusivity for new generics. This will alone help stave some of the generic competition for branded drugs because generic companies will have less incentive now to race to the finishing line. On the other hand, his plan asks the FDA to accelerate approval process for generics and biosimilars. However, the market is somewhat relieved that despite the strong rhetoric on drug pricing, nothing concrete and direct has been done in that regard.

In other news

Agenus (NYSE:AGN) is down after it entered an at-the-market sales deal covering up to 20M shares.

Novartis (NYSE:NVS) Gilenya has been approved in the pediatric population for patients with relapsing multiple sclerosis who are at least 10 years old. Previously, it was approved in the U.S. for patients at least 18 years of age.

AstraZenecas (NYSE:AZN) asthma med Fasenra (benralizumab) in patients with moderate-to-severe chronic obstructive pulmonary disease (COPD) failed to demonstrate a statistically valid decrease in exacerbations, the primary endpoint. There is another ongoing phase 3 trial, and the company will assess the future of the drug after receiving results from that study.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

SeekingAlpha

Your Daily Pharma Scoop: IRWD Division, Jazz sNDA, Siga Adcomm

Analysis focus: IRWD

Ironwood Pharma (NASDAQ:IRWD) is going to split into two separate companies, both publicly traded, with one focusing on commercialization and the other on R&D. This move will happen in the first half of 2019 and be tax free to current shareholders.

Ironwoods linzess, which was approved 6 years ago in irritable bowel syndrome with constipation and for treatment of chronic idiopathic constipation. Recently, as we know, Synergy Pharmas (NASDAQ:SGYP) Trulance got approved by the FDA for the same indications. Now, according to some sources, Trulance is a safer drug than Linzess. However, Trulance has not been able to take off as well as investors had assumed, although it has put a dent in the prospects of Linzess.

Linzess is marketed by Allergan (NYSE:AGN), which has considerable marketing prowess. Now, this bid to separate IRWD into two divisions probably owes itself to one reason – that after 6 years of approval, IRWD has still not been able to become profitable. As the announcement of this news says, the commercial division of IRWD, which is focused on Linzess, ..is expected to be profitable in 2019. That means, if you reduce the R&D expenses from the total cash burn of the company, then it could become profitable on Linzess revenues. At least, that seems to be the idea.

The other division will do R&D on cyclic guanosine monophosphate pharmacology to advance a pipeline of treatments for rare and serious diseases led by mid-stage candidates praliciguat and olinciguat. This will be the division that will look for future treatments to bring to market as Linzess completes its market cycle.

For SGYP investors, what is interesting to note here is that this move seems aimed to make Linzess profitable for at least a part of the company. That is to say, the old Ironwood has to shed the more cash burning part of it – the R&D section – to make this happen.

This could mean, either, that Trulance is really taking over some of Linzess traditional market, and/or the market itself is not sustaining enough for Linzess to make enough money to cover Ironwoods entire cash requirements, although IRWD has managed to reduce OpEx drastically.

The first idea is a good thing for Synergy investors; the second is a sobering conclusion of how just getting a product approved but without proper money and marketing management can still ruin the future prospects of a company.

In related news, IRWD released earnings results for Q1 and missed both by EPS and by revenue, despite seeing a 32% increase in revenue Y/Y.

Stocks in News: Analysis of JAZZ, SIGA

Jazz Pharma submits U.S. marketing application for expanded use of Xyrem

Discussion: Jazz Pharmas (NASDAQ:JAZZ) Xyrem was first approved in 2002 to treat cataplexy in narcolepsy and for EDS in narcolepsy. This expanded use sNDA will increase the scope of Xyrem to include pediatric patients. The market isnt much because Age of onset for narcolepsy typically occurs in the second decade of life; however, diagnosis can occur 1016 years later on average.

FDA Ad Com backs SIGA’s smallpox treatment

Discussion: Naturally occuring smallpox was eradicated in 1980, but SIGA technologies (NASDAQ:SIGA) TPOXX (tecovirimat) is an antiviral oral treatment targeting smallpox when used as a biological weapon, for which no medicine exists as of now. Vaccination is risky and not efficient for people with low exposure risks, especially for an eradicated disease. However, the market for this new drug candidate will be for defense purposes. PDUFA is August 8.

In other news

Karyopharm (NASDAQ:KPTI), which was highlighted in yesterdays scoop, has now come up with a $125mn stock offering, taking the stock down 3%.

Mallinckrodts (NYSE:MNK) stannsoporfin has an adcomm on Thursday for elevated blood bilirubin in neonates (at least 35 weeks’ gestational age) with indicators of hemolysis (rupture of red blood cells) who are at risk of developing severe hyperbilirubinemia (excess bilirubin in the blood). This is a small market.

Medtronics (NYSE:MDT) Deep Brain Stimulation therapy has been approved by the FDA as adjunctive therapy for adult patients with partial onset seizues in drug resistant epilepsy.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

SeekingAlpha

Inflation, Lower Earnings, Or Both: How To Be Ready

Fears of a trade war have subsided, but recent economic releases may be showing it’s too late to avoid some of the pain.

Signs of inflation have already been creeping higher and price pressures for manufacturers might foreshadow a surge in consumer prices that could force the Fed to increase rates faster than expected.

The problem is that it may be a no-win situation for businesses and their investors. Passing costs on to consumers could slow sales and subsequent rate hikes could slow the economy. However, not passing costs on to consumers could decimate earnings.

There are only a few sectors and industries that could escape this lose-lose scenario.

These Two Problems Could Be Bigger Than A Trade War
While we may avoid a full-blown trade war, the prospect of one may have already caused an increase in prices. The Producer Price Index (PPI) measure of input costs has risen in six of the past eight months and import prices have recently jumped the most in six years.

That could be due in part to manufacturers rushing to order inputs ahead of tariffs, inadvertently driving up prices at suppliers.

One measure flashing red is delivery time, which indicates how long it takes vendors to get input products to manufacturers. The measure jumped to its highest point on record since 1968 and is giving input suppliers power to increase prices.

Annual increases in producer costs have been above 3% since 2016, but businesses have been reluctant to pass these increases on to consumers. The Consumer Price Index (CPI) increased 2.35% in March, its highest rate in a year, and year-over-year growth could surge on comparison with last year’s summer drop in cellular pricing.

This is all setting up a move to inflation, lower earnings, or both — and the prospect of either looks like it is already weighing on business activity.

Six-month business activity outlook measured by the New York Fed plunged to 18.8 from 44.1 last month, its weakest since February 2016, and the Philly Fed measure of the same survey is also at its lowest since July 2017.

The most likely scenario is that we get a combination of higher prices and slowed earnings growth as businesses try to share the costs with consumers. A problem here is that not only does it decrease profit margin, but it also forces the Fed to stay vigilant on inflation, raising rates and potentially slowing overall economic growth.

Some notable economists have already been predicting the dual threat of rising prices and slower growth. Last year, Former Fed Chair Alan Greenspan told Bloomberg, “Stagflation is about to emerge. We are moving into a different phase of the economy, to a stagflation not seen since the 1970s.”

3 Groups For Safety And Pricing Power
I doubt we see the extremes of stagflation that have happened in the past but even if the worst is avoided, the trend is clearly to an environment of higher prices and subdued economic growth. Ahead of this environment, investors may want to reposition in sectors and industries with stronger pricing power that can share their costs with consumers.

Companies producing commodities have already started rallying on higher metals and energy prices. Prices for real assets like precious and industrial metals, oil and gas, and real estate are linked to inflation, though higher interest rates could weigh on property prices.

Cabot Oil & Gas (NYSE: COG) has a strong position in the Marcellus Shale, a low-cost region for natural gas production that puts the company’s break-even around $2.00 per mcf against spot prices around $2.80 per mcf. The company owns the rights to an additional 3,000 drilling locations within its undeveloped footprint which gives it the potential to increase output easily.

Cabot has been divesting non-core assets to become a pure-play natural gas producer. That’s left it with a very strong balance sheet with just $1.2 billion in debt and $480 million in cash. With operational cash flow of nearly $900 million a year, it’s been able to increase the dividend payout and re-authorize a share repurchase program.

Pharmaceuticals typically have strong pricing power and much of the rhetoric against the industry seems to have died out. An overhang of sales weakness in generics, public concern on pricing and heavy debt loads has kept the industry from benefiting from the broader market rally and some good deals can be found.

Allergan’s (NYSE: AGN) recent decision to back out of a bidding war for Shire (Nasdaq: SHPG) gives me new confidence in the company. While the acquisition could have given Allergan a diversified rare-disease portfolio of drugs, it would have meant a debt-binging acquisition and I’m always hesitant around the ‘winner’ of bidding wars.

Allergan has used the cash from its generics sale to Teva wisely with smaller acquisitions, share repurchases, and to pay down debt. The company now holds just $19.3 billion in net debt and generates almost $5 billion in free cash annually.

Allergan has one of the most diversified drug pipelines in the industry. Only two drugs, Botox and Restasis, account for more than 9% of sales. This helps to smooth revenue versus peers that must worry about sales growth when big blockbuster drugs come off patent.

Companies in the utilities sector could provide safety as price increases are often linked to increases in the CPI or other indexes. State regulated utilities have especially stable sales and benefit from no competition in their regulated markets.

The Southern Company (NYSE: SO) is quickly transforming itself from a mostly coal-generated utility to one powered by nuclear, natural gas, and other renewables. The company enjoys a state-regulated monopoly position in four states which together account for approximately 80% of earnings.

While regulatory approval on rates can slow earnings growth, it also means that capital spending and increased output is all but guaranteed to be profitable as long as the company maintains a return-on-investment hurdle for spending. Shares pay an attractive 5.1% yield and the company is investing heavily to increase earnings.

Risks To Consider: While some sectors would provide relative protection, levels of inflation and growth like those seen in the 1970s could decimate stocks and the bull market.

Action To Take: Position in companies within utilities, pharmaceuticals and energy with stronger pricing power and relatively stable sales against the trend to higher producer prices and a sluggish economy.

Editor’s Note: Since 1926, one collection of stocks has accounted for HALF of the S&P’s return — through every market environment imaginable. If you don’t have this group in your own portfolio, you could be missing out on the single best place to put your money this year and next. Learn which stocks can…

Hot Internet Stocks To Watch For 2016

These five stocks had the most social chatter and the lowest investor confidence this week, according to Stockal. Stockal tracks analyst ratings, news, and social sentiment to paint a picture a stock's overall sentiment. 

1. GoPro Inc (NASDAQ: GPRO)

Stockal's confidence meter, which measures the Street's near-term confidence in the stock, stands at 56% for GoPro. Recently, Oppenheimer reiterated their neutral rating for the stock, saying that shares had "established their near-term bottom following the impact of a weak product cycle in 2015 and ensuring channel inventory issues."

Hot Internet Stocks To Watch For 2016: Syngenta AG(SYT)

Syngenta AG, an agribusiness company, engages in the discovery, development, manufacture, and marketing of a range of products designed to enhance crop yields and food quality worldwide. The company operates in three segments: Crop Protection, Seeds, and Business Development. The Crop Protection segment offers herbicides for corn, cereals, soybean, and rice; fungicides for corn, cereals, fruits, grapes, rice, soybean, and vegetables; insecticides for fruits, vegetables, and field crops; seed care for corn, soybean, cereals, and cotton; and professional products, such as products for public health, and turf and ornamentals. This segment markets its products through independent distributors and dealers, agricultural consultants, and growers. The Seeds segment develops, produces, and markets seeds and plants based on advanced genetics and related technologies. This segment provides approximately 200 product lines and approximately 6,800 varieties of proprietary genetics, incl uding vegetables, flowers, corn, soybean, sugar beet, and sunflower primarily under the NK, Golden Harvest, Garst, HILLESHG, S&G, Rogers, Zeraim Gedera, and Fischer brand names. The Business Development segment engages in the development of enzymes and traits to enhance agronomic, nutritional, and biofuel properties of plants. The company was founded in 1999 and is headquartered in Basel, Switzerland.

Advisors’ Opinion:

  • [By Vanina Egea]

    The battle on the field continues. Monsanto (MON) and Syngenta (SYT) are expected to enter the seed business with a strong bid. Both companies stand at the top of the agricultural inputs industry, and continue to look for ways to improve performance. Let us see what some gurus think about their future prospects, and if they see them fit for a long term investment.

Hot Internet Stocks To Watch For 2016: Harmony Gold Mining Company Limited(HMY)

 

Harmony Gold Mining Company Limited engages in the exploration and mining of gold in South Africa and Papua New Guinea. The company also explores for copper, silver, uranium, and molybdenum deposits. It has nine underground operations located on the Witwatersrand Basin; an open-pit mine exploiting the Kraaipan Greenstone Belt; and various other surface operations in South Africa. The company also owns a 50% interest in the Hidden Valley, an open-pit gold and silver mine; the Wafi-Golpu project; and exploration tenements in Papua New Guinea. Harmony Gold Mining Company Limited was incorporated in 1950 and is based in Randfontein, South Africa.

Advisors’ Opinion:

  • [By Javier Hasse]

    Harmony Gold Mining Co. (ADR) (NYSE: HMY) rose 2.2 percent on Friday, even though gold prices dropped. However, the stock lost 3.7 percent in after-hours trading, in what also seemed like a correction of the surge seen during the day.

  • [By Lisa Levin]

    In trading on Thursday, basic materials shares fell by 0.73 percent. Meanwhile, top losers in the sector included Silver Wheaton Corp. (USA) (NYSE: SLW), down 5 percent, and Harmony Gold Mining Co. (ADR) (NYSE: HMY), down 5 percent.

Top 5 India Companies To Invest In Right Now: Gol Linhas Aereas Inteligentes S.A.(GOL)

 

GOL Linhas A茅reas Inteligentes S.A., through its subsidiaries, provides regular and non-regular air transportation services for passengers, cargoes, and mailbags in South America and the Caribbean. The company operates in two segments, Flight Transportation and Smiles Loyalty Program. As of December 31, 2014, it operated a fleet of 144 aircraft, which included 96 aircraft under operating leases, 45 aircraft under finance leases, and 3 aircraft owned by the company. It also develops and manages its own or third partys customer loyalty program, as well as sells redemption rights of awards related to the loyalty program. GOL Linhas A茅reas Inteligentes S.A. has a strategic partnership with Air France-KLM. The company was founded in 2001 and is based in S茫o Paulo, Brazil.

Advisors’ Opinion:

  • [By Lisa Levin]

    Regional Airlines: The industry dropped 1.9 percent by 11:00 am. The worst performer in this industry was Gol Linhas Aereas Inteligentes SA (ADR) (NYSE: GOL), which declined 5.8 percent.

  • [By Monica Gerson]

    Gol Linhas Aereas Inteligentes SA (ADR) (NYSE: GOL) is expected to post a quarterly loss at $0.73 per share on revenue of $705.31 million.

    Caretrust REIT Inc (NASDAQ: CTRE) is estimated to post its quarterly earnings at $0.26 per share on revenue of $22.21 million.

Hot Internet Stocks To Watch For 2016: Formula Systems (1985) Ltd.(FORTY)

 

Formula Systems (1985) Ltd. provides a range of information technology (IT) solutions and services, and develops and markets proprietary software solutions. It offers software solutions and services, such as outsourcing and developing customized software; computer systems management infrastructures, Web world content management, database and data warehouse mining, application integration, database and systems, data management, and software development tools; computer and telecommunication infrastructure solutions; and professional training courses and advanced professional studies. The company also sells personal computers, portable computers, Intel servers, peripheral equipment, operating systems, servers, and workstations; provides computer and peripheral equipment maintenance services, lab, and helpdesk services; and sells and markets cloud based solutions. In addition, it offers Sapiens ALIS, an L&P software solution for i ndividual, group, and worksite insurance products; Sapiens Retirement Services for record-keeping management; Sapiens Closed Books, a solution to administer policies and claims relating to closed books of business; and Sapiens TOPAZ to handle L&P activities and regulations. Further, the company provides Sapiens IDIT for general insurance carriers; Sapiens Insight for business demands at the insurer level and regulatory needs at the state level; Sapiens Reinsurance that enables property and casualty/general insurance carriers and brokers to handle reinsurance activities on a single platform; and Sapiens DECISION, a business decision management solution. Additionally, it supplies professionals in the areas of accounting and finance, administrative, customer service, clinical, scientific and healthcare, engineering, manufacturing and operations, human resources, IT technology, LI/MFG, and marketing and sales. The company was founded in 1985 and is headquartered in Or Yehuda, Is rael.

Advisors’ Opinion:

  • [By Lisa Levin]

    On Friday, technology shares rose by 0.26 percent. Meanwhile, top gainers in the sector included Applied Materials, Inc. (NASDAQ: AMAT), up 9 percent, and Formula Systems (1985) Ltd. (ADR) (NASDAQ: FORTY) up 19 percent.

Hot Internet Stocks To Watch For 2016: Novo Nordisk A/S(NVO)

 

Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments, Diabetes Care and Biopharmaceuticals. The Diabetes Care segment covers insulins, GLP-1 analog, obesity, and oral antidiabetic drugs, as well as other protein related products comprising glucagon, protein related delivery systems, and needles. The Biopharmaceuticals segment offers products in the areas of haemophilia care, growth hormone therapy, and hormone replacement therapy. The company markets and distributes its products through its subsidiaries, distributors, and independent agents. Novo Nordisk A/S has a collaboration agreement with the Langer Laboratory for the development of next-generation drug delivery devices; and collaboration and licensing agreement with Ablynx nv to discover and develop novel multi-specific Nanobody drug candidates. The compa ny was founded in 1925 and is headquartered in Bagsvaerd, Denmark.

Advisors’ Opinion:

  • [By Charles Carlson, CEO and Portfolio Manager, Horizon Investment Services]

    For investors looking for growth but also income, I especially like three health-care related stocksFresenius Medical (FMS), Novo Nordisk (NVO), and Smith & Nephew (SNN).