Kyprolis Approval Could Drive ONXX Higher, DECISION Trial Results Also A Key Event
(Thomson Reuters ONE) -
Among the next significant events in pharma and biotech is the FDA decision on
Kyprolis (carfilzomib), Onyx Pharmaceuticals' (NASDAQ:ONXX) next-generation
treatment for multiple myeloma. On July 27th, the FDA will determine whether
Kyprolis will be commercialized this year on current data, or have to wait for
full Phase III results. Many speculate that ONXX could be the next mid-cap
biotech to be acquired, and an approval of Kyprolis, the company's lead value
driver, may drive that outcome in the coming quarters. On June 20th, an FDA
Panel unanimously recommended approval of Kyprolis, and the stock has risen
approximately 50% since that decision. The issue is that Kyprolis has only
completed a Phase IIb trial, and the primary study supporting approval was a
single-arm trial (no control group). Pfizer's (NYSE:PFE) Xalkori (crizotinib)
was approved in August of last year under similar circumstances for the
treatment of metastatic non-small cell lung cancer. After two successful single-
arm trials involving 225 patients, the FDA approved the drug, albeit requiring
continued studies to determine clinical benefit.
The FDA has actively discouraged drug developers from attempting to gain
approval on Phase II trials with no control group, even in areas where there is
an unmet medical need like cancer. That said, Kyprolis' mechanism is well known
as it works the same way as Johnson & Johnson's (NYSE:JNJ) billion-dollar
therapy for multiple myeloma, Velcade. Importantly, Kyprolis is more targeted
than Velcade, and has been shown to be significantly less toxic and more
effective vs. Velcade. Hence the FDA Panel's overwhelming recommendation for
approval on the early clinical trial data. While the stock has run significantly
since the panel's recommendation, shares of ONXX are still likely to climb on
approval. Three key reasons that the shares have more room to run are:
1) Most, if not all, analysts are still modeling in a Kyprolis approval in
2014, not 2012 so financial estimates will rise upon approval.
2) An approval is a de-risking event, and therefore, the stock price should
increase given the certainty that follows approval
3) The certainty gained on approval will not be lost on potential acquirers of
the business, such as Bayer AG or most other major pharmaceutical companies.
Therefore, the chance of a take-out rises.
Kyprolis is estimated to have peak annual sales of up to $2 billion worldwide,
suggesting that this compound could drive a valuation on its own of $6 billion.
Adding in about $1 billion in value for the company's commercial treatment,
Nexavar, plus over $600 million in cash and equivalents, one could see ONXX
being acquired for up to twice its current valuation. In addition to the
potential Kyprolis approval, upcoming data from the DECISION trial, which
pursues Nexavar as a treatment for thyroid cancer, should be a key event for
Onyx. Clinical data supporting Nexavar in thyroid cancer is strong and results
of this trial, expected soon, are likely to be favorable.
On the downside, if ONXX sells off because the FDA does not approve carfilzomib
this year, the stock is likely to present a buying opportunity. A large Phase
III placebo-controlled trial supporting a new drug application (NDA) for
Kyprolis is ongoing and will report out next year. If the FDA does not approve
the drug early, the company will be on track to submit another NDA in late 2013
or early 2014. For long-term investors that are looking to speculate on FDA
events and acquisitions in healthcare, a position in ONXX here makes sense, with
dry powder to add to the position if Kyprolis is not approved by the FDA in
July.
See the original story here.
About PropThink
PropThink is an intelligence service that delivers long and short trading ideas
to investors in the healthcare and life sciences sectors. Our focus is on
identifying and analyzing technically-complicated companies and equities that
are grossly over or under-valued. We offer daily market coverage, weekly feature
stories, and a newsletter to investors who subscribe on PropThink.com. To learn
more visit us at http://www.propthink.com.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: PropThink via Thomson Reuters ONE
[HUG#1628320]
Unternehmensinformation / Kurzprofil:
Datum: 20.07.2012 - 14:17 Uhr
Sprache: Deutsch
News-ID 167272
Anzahl Zeichen: 5093
contact information:
Town:
New York
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 225 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Kyprolis Approval Could Drive ONXX Higher, DECISION Trial Results Also A Key Event"
steht unter der journalistisch-redaktionellen Verantwortung von
PropThink (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
