Jumping into a stock ahead of a major binary event can be high risk, but it can also be highly rewarding in the biotechnology space. Few binary events are as volatile as FDA decisions, or PDUFA dates, but among those on offer, these are probably the most highly traded in the space.
The problem is, it's tough to identify a PDUFA that serves up a relatively low risk trade.
While the FDA has a complete new drug application (NDA) on which to base its decision, retail market traders and investors only have access to information about the drug, some science and the trials that underpin the application itself. Things like manufacturing and distribution are elements of an application that retail investors have very little access to but that often serve to trip up applications at later stages.
There is not much we can do about that, of course.
What we can do is look for applications that look strong on all aspects to which we have access and take a position in the hope that nothing unexpected turns up post-submission.
One company that has a PDUFA date very near term and that fits this bill is Antares Pharma Inc (NASDAQ:ATRS).
Antares is a New Jersey-based biotechnology company that has a little over 100 employees and has spent the last five years developing what amounts to a strong intellectual property portfolio of injectable technology. However, at its current market capitalization, just shy of $700 million, the company remains somewhat under the radar in the space.
This could all be about to change this month.
On October 20, 2017, there is a PDUFA date set for a drug/device combination called Xyosted. The product is a testosterone autoinjector designed to overcome the variety of issues that currently plague the testosterone administration space.
In order to understand the product, it's first important to understand a little bit about testosterone itself.
Testosterone, as administered currently, is mixed with something called enanthate. Enanthate ensures that the testosterone isn't released too quickly into the bloodstream post-administration and, in turn, allows for relatively infrequent administration of the active compound. However, with the addition of enanthate to the mix, the compound being administered becomes relatively viscous. This makes it painful to administer intramuscularly which, in turn, requires injection by health professional as opposed to self injection.
There are also topical versions (gels, etc.) but these have proven to be far less effective than injectables and there is also a high risk of transference (i.e., the drug being inadvertently administered to children or family members that live in close quarters to the patient).
So, Antares has developed an autoinjector that it hoped would allow for self-administration of testosterone enanthate but not only self-administration – self-administration with very little pain and a maintenance of the slow release activity that affords an individual relatively infrequent dosing.
And based on the phase 3 data that underpins the application that is currently with the FDA and is up for review on October 20, the company has been able to do just that.
As per said data, more than 92% of patients exhibited testosterone within the target levels at 12 weeks subsequent to administration and the mean testosterone level across the period was on par with, or higher than, the current healthcare professional administered intramuscular injection formulation.
Further, and perhaps most importantly, no patients reported any significant injection site pain, meaning adherence to the dosing regimen was pretty much 100%. Additionally, there were no major safety problems associated with self-administration.
To put all this another way, Xyosted overcomes practically every problem associated with current administration without forgoing any quality in terms of efficacy.
If the FDA green lights this asset in the US, Xyosted should quickly be able to pick up considerable market share. Injectable administration is increasing versus topical administration and there are about 500,000 monthly prescriptions of testosterone in the US right now, of which 300,000 are injectable.
It's not going to take premium pricing for Xyosted to start generating revenues at multiples of the company's current market capitalization, if it can get past the FDA in a week or so.
As mentioned, this is a company that, so far, remains under the radar – primarily because none of its valuable intellectual property (i.e. its autoinjectors) has been applied to a major unmet need in the medical space in the US.
Xyosted is set to change that, meaning the company should start to draw far more attention subsequent to an approval than it has to date.
As mentioned, PDUFA comes in on October 20.
Disclosure: The author has no positions in any of the stocks mentioned