3 Biotech Stocks on Readers' Minds

It has been a few weeks since we responded to some questions from the Biotech Mailbag. Since I have received quite a few recently on some small biotech stocks I have covered frequently on these pages, I thought it was past time to go back to the mailbag for a column. Should I worry about the huge shelf offering Dynavax Technologies Corp. recently filed? I have gotten a half-dozen questions about Dynavax over the past week or so. The answer is no. Concerns about the July 28 Ad Comm panel and Aug. 10 Prescription Drug User Fee Act (PDUFA) date around the company's hepatitis B vaccine Heplisav-B are warranted, given that biologic's long-running saga with the Food and Drug Administration. However, this is just the company being prudent. If the vaccine is approved -- a two-thirds probability in my opinion -- Dynavax is going to need money to roll out Heplisav-B. A large secondary offering is one possibility, which is why the shelf was filed. A significant distribution and marketing deal with a larger concern with a large upfront payment is another. Provided Heplisav-B is approved, the stock is going to go up either way. Peak sales in the United States alone should be north of $500 million, which is slightly more than Dynavax's current market capitalization. What is happening with Synergy Pharmaceuticals Inc.? The stock of Synergy Pharmaceuticals basically has been range-bound between roughly $4 and $5 a share since the end of first quarter. Nothing has changed my optimistic long-term view of the company. Trulance has continued to show solid but lumpy growth on a week-to-week basis since it was launched earlier this year. The compound is approved for chronic idiopathic constipation and is priced the same as and is superior to market-leading Linzess is a couple key ways. Over time, I think Trulance will take considerable market share in this space, where Linzess does more than $150 million a quarter in sales. In addition, Trulance should be approved for irritable bowel syndrome with constipation (IBS-C) in the fall, which will add about 35% to its potential customer base. I think one just must stay patient on this name. Is BioDelivery Sciences International Inc.'s turnaround for real? It is early to tell with BioDelivery Sciences , but signs so far in 2017 are encouraging. The company did a good job transitioning its compound Belbuca back from previous distribution partner Endo International plc at the end of 2016. By the end of April, monthly scripts were basically where they were in December under Endo's marketing. BioDelivery has the advantage of keeping the whole revenue stream from Belbuca sales rather than just a small royalty stream now. This was a key reason that first-quarter results came in better than expected and the stock has moved from $2 a share to $3 since those numbers hit. BioDelivery just posted another victory around Belbuca last week, inking a deal with Perdue Pharma to distribute Belbuca in Canada. BioDelivery will pick up some small milestone and upfront payments and start to receive royalties from up north in coming quarters. We should get more confirmation that the turnaround is proceeding when the company reports second-quarter results in a month. So far, early signs point to an encouraging inflection year for the company and the stock.

3 Biotech Stocks on Readers' Minds

We answer questions about BioDelivery Sciences, Dynavax Technologies and Synergy Pharmaceuticals.

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