Optifinancial Newsletter - Insights worth sharing!
Last week’s recap:
BioVie: Fell from $18 a share to $16.5 this week after consolidating back from the news of acquiring an Alzheimer drug. We think this acquisition was wise for the company's future and should help them increase revenue substantially if both of each of their Alzheimer and liver ascites receive drugs receive approval within the next 2 years. We think in the best case scenario, that they could reach $76 a share.
General Motors: Fell from $60 a share to $58.80, they saw a high of $63.09 this week before returning after the federal chair Jerome Powell spoke about hiking interest rates in 2023. We think they are strategically placed and durable for this technological future.
ChemoCentryx $13.20 - FDA approval of their blockbuster drug is set for July 7th. This could send shares flying to previous highs of $60 a share. After a mixed vote on continuation for an FDA approval, this one is priced in for a no-approval and an extension of studies. A public FDA meeting shot shares down from $55 to $10 in a matter of days on a split vote. We think this has a chance to receive approval and wanted to bring it up to you for an opportunity.
1. ChemoCentryx $13.20 : CCXI
This company develops oral therapies (pills) that block receptors in the body known as chemokines. The chemokine system drives inflammation and in some cases can cause the body to decay in chain reactions. Some diseases that the chemokine system is integral in are cancer, liver diseases and the kidneys. They also can help treat a list of diseases as well. This company’s science is about attaching their drug to the chemokine receptors and allowing the body to either 1) Destroy the targeted cells such as cancer tumor cells, or 2) in the case of liver and kidney disease, reduce inflammation. They design their drug to combat specific problems. We are interested in this company as they have shown extremely large price fluctuations and could be worth multiple billions upon their first approval of their Avocapan because of the proof of concept for this idea of blocking chemokine receptors and combinations to treat diseases has wide implications. They can treat multiple diseases and should give investors confidence that their drug can treat many more diseases. The FDA approval is specifically for a orphan disease that there are not designed treatments for, which is ANCA-associated vasculitis (Can cause kidney failure upon kidney inflammation flare ups). Current standard of treatment is to give a patient some rituximab and load them up with steroids which is not acceptable for long term and only temporarily can treat the disease. Avocapan aims to be a way to avert from destructive and harsh drugs while reducing the ailments of the chronic disease.The market for this disease is expected to be about 500 million annually in the upcoming year.
Some things to think about as the FDA approval is set to be on or before July 7th 2021:
Chemocentryx rocketed downward from $55 a share to $10 a share after split vote on their drug after the public committee review. We think this is an excellent opportunity for a beaten down company to buy in at.
1.The Committee vote split 9-9 on the first question, whether the efficacy data support approval of avacopan for the treatment of adult patients with AAV.
2.On the second question, the Committee voted 10-8 that the safety profile of avacopan is adequate to support approval of avacopan for the treatment of adult patients with AAV
3.In the third and final question, the Committee voted 10-8 that the benefit-risk profile is adequate to support approval of avacopan at the proposed dose of 30 mg twice daily for the treatment of adult patients with AAV
This shows that the FDA is nearly split (shown from the votes above) on the current drug Avocapan. This split can lead to a lower share price in the company’s drug as there is much more uncertainty about the approval decision. We do think it is possible for the drug to be approved, and we are sure Chemocentryx is working closely with the FDA to get them exactly what they need to see before making a final decision. We think it is likely that this company could receive a CRL on this drug for an extension study.
If approved in a surprise approval, we could see this rocket up to previous highs of $55-$60 quickly because of the future capabilities that this drug and science could provide to medical treatments.
Forecast Price Targets:
1 Week: $13.50 - We think this stock will stay in range and potentially trend upward as approval nears.
1 month: $40 - We think after an FDA approval scenario, we will see it jumped significantly. The probability is low and uncertainty is high, but with a split vote, this could go either way. If a CRL (complete response letter) is given the company will have to go back and do another study to satisfy the requirements needed.
Final Thoughts on CCXI: We think this company is a high risk, high reward biotech play that may be something to look at holding. We think this company will receive a surprise approval as they have an FDA orphan drug designation which can help treat patients. The topline results show efficacy and if the FDA approved it, patients would access to more opportunities.
This stock is a short term buy in our opinion, If a CRL is announced, then we think it is worth buying at lower levels and holding longer term, we think their science is sound and it just takes a bit more research to prove out this technology
Disclosure: We do hold CCXI at the time of publication.
Thanks for reading!
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.