This
week, shares of Organogenesis Holdings Inc. (NASDAQ: ORGO) jumped over 600
percent to $82.35 at the close after the company announced positive Nasdaq
listing determination. Obviously, when a catalyst like this provides a positive
outcome for a firm, shares almost immediately appreciate, but in the case of Organogenesis,
part of the reason for the huge surge in price is that the stock has a very low
float and, of course, low floats tend to cause high demand on positive news.
ORGO shares had traded at a previous 52 week high of $13.45 where it averaged trading a mere 200 shares per day. Organogenesis is in the business of regenerative medicine and focused on the development, manufacture and commercialization of product solutions for the Advanced Wound Care, Surgical and Sports Medicine markets.
Another
stock in the healthcare business which somewhat follows the model set-forth by Organogenesis
of acquiring or incubating low-risk/high reward medical technologies is Q
BioMed (OTCMKTS: QBIO). However, unlike most
biotechnology firms which can burn cash for years as they pay for drug development
costs and clinical trials, QBIO took a short-cut and is already facing a key
FDA approval decision well ahead of schedule having acquired a non-opioid injectable drug indicated to relieve cancer
bone pain in patients with painful skeletal metastases.
Interestingly, Like Organogenesis, they also have a very small float and are
also facing an upcoming catalyst which they hope will provide a positive
outcome for their immediate future.
One look at the QBIO chart tells us that traders who are not particularly
risk-averse may be responsible for starting to gobble up shares and drive
demand of QBIO’s 9M share float. Prices have been rising steadily since the
beginning of the year and it would seem that FDA Catalyst traders are holding
on in hopes that they too will be rewarded when and if the FDA approves the
company to start manufacturing Strontium Chloride
Sr89 Injection USP in accordance with cGMP at a manufacturing facility in Texas.
According to a news
release issued in late August, Q BioMed
CEO Denis Corin told investors that his firm
had submitted a comprehensive filing required by the FDA and that this was the
final step in what has been a long process.
“Our U.S. based contract
manufacturing facility is uniquely equipped for the complex manufacturing of
this product,” said Corin. “And we will be ready to make the product available
on approval. We will be the only commercial manufacturer of this drug in the
U.S. and look forward to serving and growing the market for years to come.” Based on the timeline for these types of
decisions, it appears that news from the FDA is imminent. “It could happen any
day now,” said one insider at the firm with knowledge of the process.
If the FDA approves Q Biomed’s facility, that will be a transformative step for
the emerging young company as it will allow them to manufacture, market and serve
what analysts estimate to be a population of as many as 280,000 patients in the
U.S. and approximately 2 million more around the world. Oncologic bone pain
palliation is an area of increasing unmet need and QBIO is suddenly in position
to better serve those populations. In late November, the company announced that
they had acquired the brand name version of the cancer pain drug Metastron from GE
Healthcare along with the associated intellectual property (IP), the drug
brand, trademarks, and market authorization in 22 countries where Metastron is
registered and approved for sale, in addition to all sales and distribution
data.
QBioMed would now own a marketed, branded drug, and the revenue
streams, besides creating a barrier for other entrants. News of the acquisition
did not seem to go appreciated by Wall Street despite the fact that it
basically removed an overhang from their own generic Sr-89 program which was
likely facing delays and analysts who cover the firm believe that this is a
very positive development which would bring back the focus to revenue growth
through a marketed/branded drug, which QBioMed can market after successful
transfer of data, IP technical transfer and after completing the regulatory
requirements in different countries, the aim is to have those issues likely
resolved in 1H19. Shares of QBIO rose 11% on Wednesday and appear poised to run
higher if demand continues to wake up.
The entire biotechnology sector appears to be not only waking up, but in fact
firming up for a solid run in 2019 as recent clinical and FDA related catalysts
have pushed stocks like Axsome Therapeutics Inc (NASDAQ: AXSM), Constellation
Pharmaceuticals (NASDAQ: CNST), and Novavax (NASDAQ: NVAX) higher in the last
few sessions.
Axsome shares have been on an incredible run up this week after news that the
firm’s investigational anti-depression treatment had met Phase 2 clinical trial
expectations. The stock, which traded very thinly prior to the news, rallied by
161% as investors reacted to the company’s positive 2 results in what can only
be described as a monster rally.
Even shares of Amarin Corporation
(NASDAQ: AMRN) surged over 13% on Wednesday
after the CEO made some positive comments at the company’s
J.P. Morgan Healthcare conference presentation.
Investors know the entire sector is heating up
for another reason. Last year, the FDA approved a record number of drugs. In
fact, according to some reports,
2018 was a banner year with 59 new drugs approved,
including 19 first-in-class agents, 34 novel drugs for rare diseases, and a
record seven biosimilars. Those 59 drug approvals are the most in more than 10
years. In contrast, 46 new drugs were approved in 2017, and only 22 were
approved in 2016. Between 2009 and 2017, the FDA averaged about 33 novel drug
approvals per year.
This has speculators getting excited that the “Golden-Age” of biotech
may be getting ready to make a comeback. The late 1990s has been
thought of as a boom for the drug industry since in the four year period between
2006 and 2000, the FDA approved 183 new drugs. Will the new boom continue? It’s
unlikely that 59 will become the annual standard for the FDA. However, it is
hard to envision a return to the depressed decade of 2001 – 2010. So
speculators who like placing bets on clinical and FDA related catalysts will
take the early enthusiasm that the market is showing as a firm uptick and a
strong change of market sentiment.
