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by Pharmboy
Pharma and Biotechs are on the down side for the month, and as I noted many months ago Pfizer and Lilly are going to take it on the chin with the lost revenues from their blockbusters going generic. As noted by the graph below, in my Pfizer article and in this article, big pharma needs to fill its coffers with smaller, more nimble companies that may not make blockbusters, but have the capability of adding to the bottom line. Hence SNY attempts to buy Genzyme, Pfizer making a deal with PLX for Gaucher's disease, etc. Over the past months, I have noted several companies that have the potential to make good targets for big and mid-tier pharma companies (CRIS, TSRX, ARIA, IMGN, etc).
Figure 1. PPH starting to dip below the 20d MA on heavy volume.
I tried a swing trade on Pharmacyclics a week or so ago, but was stopped out on the 5d MA. I thought an investigation into its pipeline (below) would be worthwhile to see if they are worth investing in for a longer term investment. Pharmacyclics Inc. (PCYC) is a clinical-stage biopharmaceutical company focused on developing and commercializing small-molecule drugs for the treatment of cancer and immune mediated diseases. Many of their compounds were licensed from Celera.
Figure 2. Pharmacyclics stock price over 6 mo.
Figure 3. Pharmacyclics Pipeline.
Let's dive into the targets:
Btk – was discovered in 1993 and is named for Dr. Ogden Bruton. Btk is a type of kinase enzyme implicated in the primary immunodeficiency disease X-linked agammaglobulinemia (Bruton's agammaglobulinemia or XLA). Btk's exact mechanism(s) are complicated, but the enzyme does play a crucial role in B-cell maturation as well as mast cell activation through the high-affinity IgE receptor. Patients with XLA have normal pre-B cell populations in their bone marrow but these cells fail to mature and enter the circulation. By inhibiting Btk, which is a downstream component of the BCR signaling cascade (ok, this is a bit much, but if interested, click on the link), the Btk enzyme cannot aide in the development and activation of B-cells. For instance, clinical studies with rituximab, a regulatory approved CD20 specific monoclonal antibody, have shown that B-cell depletion is efficacious in autoimmune diseases such as rheumatoid arthritis. Rituximab is also approved for the treatment of nonHodgkin’s lymphoma (NHL). By targeting the downs stream pathway of CD20 with a pill versus an infused monoclonal antibody, gives a huge advantage on dosing strategies. The real question for PCYC is….does this target work? In animals (mice, dogs), the data are compelling. PCYC currently has their Btk inhibitors in mantal cell lymphoma, chronic lymphocytic leukemia, non-Hodgkin's lymphoma and seasonal allergic rhinitis. Time will tell for this target, but it is one to watch very closely.
Figure 4. Btk signaling in the cell.
- PCI-32765: an oral 1st-in-human Bruton's tyrosine kinase (Btk) inhibitor targeting oncology applications.
- PCI-45292: a second oral Btk inhibitor in IND-enabling studies, targeting “chronic” autoimmune and allergic indications.
Factor VII – The main role of factor VII is to initiate the process of coagulation in conjunction with tissue factor (TF). Tissue factor is found on the outside of blood vessels – normally not exposed to the bloodstream. Upon vessel injury, tissue factor is exposed to the blood and circulating factor VII. Once bound to TF, FVII is activated to FVIIa by different proteases, among which are thrombin (factor IIa), factor Xa, IXa, XIIa, and the FVIIa-TF complex itself. The most important substrates for FVIIa-TF are Factor X and Factor IX.
- PCI-27483: a subcutaneously administered 1st-in-human Factor VIIa inhibitor targeting oncology (pancreatic cancer) and anti-coagulation applications.
Figure 5. Coagulation cascade.
HDAC – this inhibition pathway as been discussed briefly in my CRIS and NVS writeups. HDAC is a promising target that has many companies investigating it for immunomodulatory and cancer indications.
- PCI-24781: an oral best-in-class Histone Deacetylase (HDAC) inhibitor targeting oncology applications.
I am going to take a small stake in the company, as the insiders own 20%, and there is a heavy short interest in the stock as of Oct 15 (3.6M shares; average trade volume is 350K). Any positive news will shoot this stock up to the $8-10 range, and the ASCO Meeting is in June, so data should be out before that for several of its clinical trials. Join us in
where we will initiate our bull call spread on the company stock.
