After the bell on Thursday we got a handful of earnings reports and a couple U.S Food and Drug Administration (FDA) approvals among the small-cap biotech names I often cover in these posts, so let's look at some of the highlights.
Synergy Pharmaceuticals Inc. (SGYP) posted very solid third-quarter results that beat both top- and bottom-line consensus. Its key drug Trulance continues to ramp up impressively since it first hit the market this March. Scripts more than doubled from the second quarter. The drug should be approved for irritable bowel syndrome with constipation (IBS-C) in January, expanding its potential market by a third. Greater access to insurer programs and Medicare formularies to begin 2018 should boost Trulance's sale trajectory further. A buyout in 2018 is certainly on potential end game for this name.
Omeros Corp. (OMER) also reported numbers that easily beat both top- and bottom-line expectations. Sales of its drug Omidria triggered a more than 90% year-over-year increase in revenues. OMS721, which has blockbuster potential and is in trials for five indications, continues to progress nicely. In the quarter, the FDA granted OMS721 orphan drug designation in IgA nephropathy, which should enter Phase 3 development soon.
The turnaround at BioDelivery Sciences International Inc. (BDSI) continues to gain traction. Third-quarter results came in slightly better than expected. The company has done a wonderful job marketing Belbuca since it received that now wholly owned drug back from previous distribution partner Endo International plc (ENDO) at the end of 2016 as that firm dissolved its pain management practice. Sales of Belbuca were the key reason revenues more than tripled this third quarter from the same period a year ago. Scripts grew 15% sequentially this quarter as well.
Heron Therapeutics Inc. (HRTX) had its compound Cinvanti approved by the FDA for the prevention of acute and delayed nausea and vomiting associated with chemotherapy in adult patients. The reaction in the after-hours market was muted as approval was expected and the company is expected to do a secondary offering to raise more financing on the news. I still like Heron from a longer-term perspective and will be adding on any dip a secondary announcement triggers.
Last but certainly not least, the hepatitis B vaccine Heplisav-B finally was approved by the FDA. The approval ends a five-year saga for Dynavax Technologies Corp. (DVAX) getting this biologic over the finish line. The vaccine is clearly superior to the current standard both in protection rates and compliance. Heplisav-B easily could see $500 million or better in peak sales just in the United States.
The stock will be up today and will have roughly quintupled off its lows in the first quarter of this year. However, I think the shares can get past $30 provided the company signs a large distribution and marketing deal around Heplisav-B with a drug giant with a significant footprint in vaccines such as Merck & Co. (MRK) and if Dynavax's oncology asset SD-101 continues to show encouraging results when mid-stage data is released in the first quarter of next year.
This commentary originally appeared on Real Money Pro on Nov. 10. Click here to learn about this dynamic market information service for active traders.
