Saturday, December 26, 2009

High Flyers: NBIX, HNSN, MNTA

Neurocrine (NBIX) Gains on Two Drug Trials; Hansen Medical (HNSN) Legal Deadline Ends Today; Momenta Pharmaceuticals (MNTA) Rises on Possible FDA Approval.


NBIX: December Proving a Good Month for Two Drugs

HNSN: Class Action Deadline Today; Stock Climbs on Winning another Suit

MNTA: End of a Deal and Pending FDA Approval Pushes Stock Higher

Gaining 5.02% this morning is Neurocrine Biosciences Inc., (NBIX)http://www.neurocrine.com currently trading in the $2.40 range. NBIX has a 3-Month average daily trading volume of 167,178. NBIX is chasing a 52-week high of $4.25 and at this price is a near-term (3 Mo) ‘Watch Closely’ stock for me. There is money to be made in the approximate $2.05 disparity. The question is when to get in and at what price.

NBIX has a 3-Month floor of $2.25 with ‘strong support’ at $3 and spikes early in the period to $4. On December 17, NBIX had approximately 39,206,876 shares outstanding and in a private placement, sold 4,784,689 primary shares of its common stock to affiliates of Venrock at a price of $2.09 per share, raising aggregate gross proceeds to Neurocrine of approximately $10 million. Neurocrine expects the financing to close on or about December 22, 2009, subject to customary closing conditions. This sort of dilution is common with pharma companies and was only 31 cents off its current value. Drug companies need money for operating expenses.

In a purely positive light, NBIX had two drugs this month advance in their clinical trials and if the advancements continue, the share price will only go up: ‘Watch Closely’. On Monday of this week, NBIX said its vesicular monoamine transporter 2 (VMAT2) inhibitor, NBI-98854,will be advanced in clinical development. “The results of this first clinical trial in our VMAT2 inhibitor are exactly what we were seeking,” said Chris O'Brien, CMO of NBIX. “We will now move into a multiple repeated dose Phase I study and begin preparation for Phase II proof of concept trial to be initiated later in 2010.”

NBIX also announced this month its top-line efficacy and safety results from the Tulip PETAL Study (703 Study), its fifth Phase II clinical trial using its proprietary, orally-active nonpeptide Gonadotropin-Releasing Hormone receptor antagonist, elagolix, in patients with endometriosis. ‘Watch Closely’.

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NBIX 1-Year NBIX 3-Month


Gaining 7.13% this morning is Hansen Medical Inc., (HNSN) http://www.hansenmedical.com currently trading in the 2.84 range. HNSN is a very heavily traded SmallCap with a 3-Month average daily trading volume of 496,523 shares. HNSN is approximately 60+% off its 52-week high of $8.52 and there could be substantial value percentages made on this stock, but the Company has been so littered with good news and bad news that even at this price, it is a short-term (6 Mo) ‘Watch Closely’ for me. HNSN has a 3-Month floor of $2.60 (after its 3-Month decline from the $3.60 range) and I do believe by shear investor aggregation, will find support at $3 to begin a climb back to that $3.60 range. As with NBIX, the question is when to get in and at what price.

HNSN has been sued and has itself sued and its legal activity has kept some buyers on the sideline until it all settles down. Who wants to buy a company swimming in lawsuits? Well someone does, research houses Brean Murray upgraded the stock this month from ‘Hold’ to ‘Buy’ citing its cheap price.

A class action lawsuit against HNSN has its participation deadline today. That’s where stock picked up its value this morning: That part is over. The Complaint alleges that throughout a defined period of time, HNSN made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, throughout the period, HNSN improperly recognized revenue associated with the sale of its Sensei Robotic Catheter systems and as a result, HNSN stock traded at artificially inflated prices reaching a high of $19.57 per share on May 13, 2008.

In good legal news: HNSN settled a lawsuit with Luna Technologies and the resulting ‘Settlement Agreement’ between the two will resolve all pending claims and lawsuits stemming from Luna's bankruptcy filing in the Western District of Virginia. As part of the deal, Luna will issue to HNSN a $5 million secured promissory note secured by a security agreement and Patent and Trademark Security Agreement.

As a final note, on November 16, HNSN reported Q3 losses of $11.9 million, or 32 cents per share, compared with a loss of $12.9 million, or 51 cents per share a year earlier. Per-share results in the most recent quarter were based on about 12 million additional shares of common stock. Revenue fell to $4.6 million from $9.6 million. ‘Watch Closely’.

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HNSN 3-Month MNTA 3-Month

Gaining 5.14% this morning is Momenta Pharmaceuticals Inc., (MNTA) http://www.momentapharma.com currently trading in the $11.23 range. MNTA is also a very heavily traded SmallCap with a 3-Month average daily trading volume of 547,095 shares. MNTA has a 52-week high of $12.56. MNTA has a 3-Month floor at $9.50 with very strong support at $10 and spikes into the $11 range. In a nutshell, MNTA is not throwing good money after bad. MNTA had a deal with Drug Giant Novartis to collaborate on 4 different drugs. MNTA dropped one in development, then last Friday, dropped another. There are still two drugs in testing and that part of the deal holds.

MNTA is a near-term ‘Watch Closely’ stock for me; and I’m leaning close toward a ‘Buy’ as it awaits marketing approval for its version of the anti-clotting drug Lovenox. According to the Company, that could come any day before the end of the year. When MNTA does announce approval the stock will jump; that day. The brave investor, with their own risk/reward in mind, might get in on this at this price and be glad of it. For myself, however, I’ve seen the FDA throw a wrench in the wheels at the last moment and send a stock into a tailspin.

On November 11, Oppenheimer analyst Bret Holley agreed that the approval ruling will come soon, and he thinks the FDA will approve MNTAs version, along with a competing generic made by Teva Pharmaceutical. Mr. Holley raised his rating on the stock to "Outperform" from "Perform," and set a price target of $15 per share.

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