Novavax (NVAX) is nearing a pivotal PH3 data read-out -> updated - P3 failed to meet its endpoints

Novavax's lead vaccine candidate is for the indication of RSV Flu in older adults. This program is at a Phase 3 stage in clinical development. A data read-out is anticipated in 3Q16. I am expecting a positive result here which will be transformational for this small biotech company. A positive Phase 3 result here will help validate NVAX's vaccine platform technology from which its other vaccine candidates are also built, de-risking the stock..
 
My price target for NVAX is $13 - $16 which presents around 150% upside.

Below is my valuation model with assumptions. It only considers NVAX's lead vaccine candidate, RSV F for older adults.

For my model, I have chosen a conservative vaccine sales price of $80 which less than similar vaccines like Pneumovax and Prevnar which sell for around $100 and $200. Using a market penetration rate of 40% and an 80% likelihood of clinical success and then discounting 50% I calculate peak sales at over $600M. Applying an x8 Price to Sales ratio gives NVAX a Market Cap of $5.0B which is well above its current $1.8B valuation. Note my model only considers NVAX's lead indication. 

I see NVAX as a very attractive investment idea.
The company has a promising vaccine platform that has been used to produce several different vaccine candidates. These candidates have produced positive clinical data and have received FDA Fast Track designations .
NVAX's vaccine candidates are for the following indications; RSV Flu (elderly, maternal, & pediatric), seasonal influenza, RSF/seasonal Flu combo, Ebola, Avian flu (H7N9), and MERS.

NVAX’s most lucrative vaccine candidate is for the RSV indication. Currently there are no FDA approved vaccine's for this indication making this space an area of unmet need. RSV Flu is a common respiratory disease, according to the company, severe cases put a large burden on the healthcare system with over 200k hospital admissions and causing 16k deaths. The total cost burden on major markets NVAX estimates at approximately $88B.

NVAX is leading the race to provide a treatment for this RSV Flu indication. Other companies addressing this indication are GSK and Medimmune with candidates at the Phase2 clinical stage. NVAX's vaccine is the first to demonstrate efficacy in this indication. In  Phase2 testing, their vaccine's immunization efficacy was measured at 41% with p=0.041. These results compare very favorably to approved vaccine Prevnar which showed a lower immunization efficacy of 31% with p=0.008.

NVAX has benefited from funding support from organizations like BARDA and the Gates Foundation. They are now in a strong financial position with over $430M in cash. These reserves will be adequate to advance their various vaccine candidates well into the future.

I estimate NVAX's vast pipeline of vaccines may eventually yield well over $1B in peak sales. Its current low Market Cap of $1.8B lies well below its true potential and now offers investors a very attractive entry point.

Disclosure - NVAX is a core holding of my Marketocracy fund. I do not short stocks 

ResApp Health (RAP.AX) - Not at its peak after a 1500% rise over the past 9 months

ResApp is a small Australian company developing an exciting iPhone App to detect respiratory disease.
This App aims to compete against today's respiratory disease diagnostic tools such as the stethoscope, imaging (x-ray/CT scan), blood and or sputum test.

I ran a Times Revenue Multiple valuation model for this stock using their research data and got a share price target of  $0.85 - $0.66. This presents an attractive over 150% upside from today's price.

Clinical results to date suggest this App has a very high chance of winning FDA approval. This App was able to correctly detect lower respiratory tract involvement in 97% of cases initially missed by experienced clinicians using a stethoscope. The App was also able to differentiate between viral and bacterial pneumonia with around 90% accuracy.

MD take-up of this new diagnostic tool will likely be modest since doctors have used the stethoscope for a very long time. However the uptake in the telehealth market will likely be very high. For my modeling I have given 10% market penetration by MDs and 80% by telehealth markets. 
Coming catalysts include an imminent telehealth partnership announcement, an initiation this quarter of a pivotal clinical study, and a FDA decision in Q4'16.
The risks with this investment include the potential for a similar App competitor to emerge.

Below are information slides from ResApp's last investor presentation:

This is ResApp's 12-month share price chart -

This investment should only be considered by risk adverse investors. Considering the already staggering share price increase large price retractions are possible.
My pricing model says there is still significant upside potential here.


Disclosure - I have no position in this stock but may initiate a long position in the coming weeks

Dipexium Pharmaceuticals (DPRX) - High likelihood of clinical success with big upside

Disclosure - I have no position but may initiate one before PH3 results

My CorMedix (CRMD) valuation model shows up to 160% upside

I have no position in CRMD but may open a long position.

Acadia Pharmaceuticals wins FDA approval and sets its drug price

The FDA has approved Nuplazid, Acadia atypical anti-psychotic drug for treating Parkinson's Disease Psychosis. Nuplazid is set for commercial launch in the US this June with a price tag of $1,950 per month.

In light of these recent developments I have updated my Acadia valuation. My new price target for ACAD is $48-$63 per share which presents over 100% upside.

I used the Times Revenue Multiple Valuation method.
Below is my model with assumptions:

I wrote about ACAD and its drug candidate back in April 2015.

I continue to view ACAD as an excellent long-term investment opportunity.



Disclosure - ACAD is a core holding of my Marketocracy Fund. I do not short stocks.

My Neuren Pharma valuation model after their negative PH2 TBI results

This is Neuren's PH2 TBI results Press Release



Disclosure – NEU.AX is a very small AU/NZ biopharma company that carries substantial risk. While its potential returns may be high its losses may also be high.
I am long NEU.AX.
I do not short stocks.

Neuren Pharmaceuticals (NEU.AX) - Awaiting TBI Phase 2 results

Clinical results are now imminent for Neuren's Phase2 trial in TBI (Traumatic Brain Injury - moderate to severe). Positive results in this indication would significantly boost Neuren's market value. This indication has a large 1 million US & EU potential patient population and its without an FDA approved disruptive drug.

Below is my Valuation Model with assumptions. It shows NEU.AX undervalued by as much as 200%.

Last year, I wrote about Neuren's drug here.


This next slide is from Neuren's latest investor presentation:

The status of Neuren's second TBI trial (mild or concussion) has become uncertain. This latest investor presentation does not provide a program timeline update, results were expected in 2Q16. The presentation states enrollment is proving difficult and the trial is under review.

Disclosure – NEU.AX is a very small AU/NZ biopharma company that carries substantial risk. While its potential returns may be high its losses may also be high.
I am long NEU.AX.
I do not short stocks.