Healthcare Business

4 Pharmaceutical Stocks With Big Catalysts Pending in 2016

This is going to be a big year in biotech, with a host of drugs set to undergo U.S. Food and Drug Administration (FDA) scrutiny. While picking up an exposure in anticipation of the agency’s decision is a risky strategy, it can also be a rewarding one. This said, here are four companies with promising candidates that all have dates with the FDA this year.

Jazz Pharmaceuticals

In September, Jazz Pharmaceuticals PLC (NASDAQ: JAZZ) announced the FDA had accepted the submission of an New Drug Application (NDA) for defibrotide, its lead clinical candidate with a sinusoidal obstruction syndrome — also called hepatic veno-occlusive disease — indication. The condition involves obstructions in veins in the liver and comes about as a result of stem cell associated bone marrow transplants.

It’s pretty serious, with over 30% of sufferers dying from the disease, and it has no current cure. Nobody really knows why defibrotide works to alleviate the disease, but clinical trials suggest it does, and if the FDA supports the data bias, it could open up a big revenue stream for Jazz. The FDA decision date is set for March 31, 2016.

Clovis Oncology

This one might seem a bit odd given the current furor surrounding Clovis Oncology Inc. (NASDAQ: CLVS), but there is a case here. For those not aware, Clovis recently announced some serious issues with the data it presented as part of an NDA submission for rociletinib, its lung cancer candidate. Instead of response rates of higher than 50% as initially reported, extended data sets only show rates of around 30%. The company lost more than 65% of its market cap as a result, and the FDA delayed its decision date by three months, now set for June 28.

While the delay is a setback, it does not guarantee that the FDA will decline the drug. While 30% is not as good as 50%, drugs have been approved with even lower rates. Even if the FDA does decline the drug, Clovis has another promising secondary candidate, rucaparib, in Phase 3, also scheduled for an NDA submission this year. According to the official file, primary outcome data is due this month, though trial filings can sometimes be off. If successful, rucaparib will compete with Roche’s Lynparza in the $2 billion ovarian cancer space.

With $355 million in cash on its books, and at its current $2-billion-dollar discount to early November prices, Clovis looks cheap, and it can quickly recover during 2016 if at least one of its Phase 3 programs succeeds.

INSYS Therapeutics

On April 1, 2016, the FDA will report its decision on INSYS Therapeutics Inc.’s (NASDAQ: INSY) chemotherapy symptoms candidate, Dronabinol. The drug is already widely used to treat nausea and address appetite problems in AIDS sufferers, but in pill form. For a variety of reasons, such as difficulty swallowing or personal preference, some patients will not accept pill form, and INSYS is targeting these patients with its liquid version. Annual sales of the most widely used version of this drug are around $190 million in the United States, and throughout 2016 (assuming approval), INSYS will be working to take a larger portion of these revenues.

Gilead Sciences

This industry behemoth has a pretty diverse product portfolio, so one approval is unlikely to be a game changer, but there’s still plenty of upside potential if the FDA approves F/TAF, its HIV antiretroviral. There is a big demand for fresh HIV drugs at the moment, as patients often become resistant to currently available options, and this presents Gilead Sciences Inc. (NASDAQ: GILD) with an opportunity. Analysts predict the HIV drug market will hit $16 billion in sales during 2022. If Gilead can get F/TAF approved, it will be a big step toward taking an even bigger share of this huge market.