Avanir and Exact Sciences Crash in Afterhours Trading

Exact Sciences (EXAS)  has crashed steadily since yesterday's close of 8.57.  It has slumped to the 6.90 range after yesterday announcing Positive Study News.  Unfortunately, this is just a study which will lead into a lengthy clinical trial that will cost money.  I think investors have been misled by this news and now they don't know what to do and are panicking.  Hey Stop Panicking.

Exact's stock is rated a buy and will soon return to the 9-10 range in a few months and could skyrocket to 13 with Positive Clinical Trial News.  There really is no quick buck when it comes to stock investing.  It happens, and it can happen, but more times than not, these things take time. 

On other news Avanir's Stock (AVNR) has declined sharply in afterhours saying they have not heard from the FDA and is anticipating news concerning their approval for psuedobulbar affect.  I am expecting a CRL from the FDA and no approval and this would be devastating to Avanir Shareholders.  But it could get approved.  It does have a fighting chance. 

In other news Vivus receives a CRL for Qnexa and the share price has gone up.  That one I really don't get but investors sometimes don't know what they are getting themselves into.  Sure if approved it would be monumental, but I don't see that happening anytime soon.  Vivus' shares are up 26.43% at 7.75.  Today it gained 1.62 points.  I don't see this ride ending well for investors but what do I know.  I am baffled at the stock market right now.

Wikinvest--Exact Sciences (EXAS)
Wikinvest--Avanir (AVNR)
Wikinvest--Vivus (VVUS)

Avanir Pharma: We Haven't Heard From FDA On Drug Decision

By Thomas Gryta

NEW YORK (Dow Jones)--Avanir Pharmaceuticals Inc. (AVNR) said it hasn't heard from the Food and Drug Administration on an expected decision on its AVP-923 drug Friday, and doesn't know why its stock suddenly dropped.

Shares of the Aliso Viejo, Calif., drug developer plummeted more than 50% to $1.31 shortly after 3 p.m. EDT, before recovering. The stock was trading above Thursday's $2.81 close Friday before the move. It recently traded down 14% to $2.43.

The company is expecting a decision from the FDA on its AVP-923 drug for pseudobulbar affect, which is marked by episodes of uncontrollable laughing or crying suffered by people with certain diseases. The decision deadline is Saturday, which means a decision could come Friday at some point.

A spokeswoman for Avanir said the company hasn't heard from the agency, hadn't seen any news, and wasn't aware of any reason for the stock to drop.

The news, when it comes, is expected to move the stock. Canaccord Genuity analyst Ritu Baral recently estimates a 75% chance of approval with a $9 price target, but notes that any serious delay or safety issues would be very negative for the stock.

A minor label-related delay could still give a boost to the stock, he said.

Exact Sciences (EXAS) Falls Sharply Despite Positive Test Results

Posted: Friday, October 29, 2010 11:22 AM EDT

Exact Sciences (NQSC: EXAS) opened at $7.39. So far today, the stock has hit a low of $7.18 and a high of $8.09. EXAS is now trading at $7.31, down $1.26 (-14.7%). Over the last 52 weeks the stock has ranged from a low of $2.32 to a high of $9.24. Last night EXAS announced that its experimental stool-based gene test was able to detect 85% of colon cancers and 64% of early, pre-cancers. The results will allow the company to commence with a phase III study of the test. However, shares of the stock are down big today, in what could be a case of "buy the rumor, sell the news." EXAS shares had risen over 80% since the beginning of September before today's session. Technical indicators for the stock are bullish and S&P does not currently have a STARS rating for EXAS. If you are looking for a hedged play on EXAS the stock seems like it could be a candidate for a January out-of-the-money bear-call credit spread above the 9 range.

Here are some really good articles concerning Avanir and Exact Science


Avanir: The Short and Long of AVP-923

BOSTON (TheStreet) -- Psst… Have you heard the latest short story on Avanir Pharmaceuticals(AVNR) and AVP-923, the company's experimental drug for pseudobulbar affect?

U.S. regulators are going to reject AVP-923 on Friday, the bears predict. Avanir has its supporters as well and I'll get to the bull story below. First, here is a summary of some short-sale research on Avanir sent to institutional investors this week:

Elliot Favus of Favus Institutional Research published a note Monday titled "9 Reasons to SELL Avanir Pharmaceuticals." Favus followed up Tuesday with an addendum note, "A Few More Reasons to Sell Avanir." Favus' thesis:

"Regardless of the FDA decision on AVP-923, we think shares of AVNR [Avanir] will come under pressure in the near future. We see 80% downside for AVNR shares if the FDA rejects AVP-923 this week. We expect a downside price of $0.40/share (AVNR cash/share) if AVP-923 is rejected and an upside price of $4/share on FDA approval (>100M fully-diluted AVNR shares outstanding)," Favus writes.

He adds, "At the current AVNR share price ($2.88), the implied probability of FDA approval is 70%, which we think is too high. Due to our concerns surrounding QT prolongation from quinidine, we think the probability of near-term FDA approval of AVP-923 is below 50%. The AVNR 2009 10K disclosed that clinical cardiac safety studies with low-dose AVP-923 showed mean QTc prolongation above the FDA threshold of concern (5 ms mean increase)."

Across both research notes, Favus cites Avanir's SEC filings and scientific presentations of AVP-923 data to raise doubts about the cardiac safety of AVP-923. The FDA initially rejected AVP-923 in part because of concerns that higher doses of quinidine (one of two active ingredients in AVP-923) caused prolongation of the Qt interval, a measure of the heart's electrical cycle that can lead to dangerous heart arrhythmias, even death.

Avanir responded by lowering the dose of quinidine. The company conducted studies demonstrating that the "new" Qt interval was within guidelines FDA considered safe. Favus, in his notes, disputes Avanir's claims and contends that the Qt interval for "low dose" AVP-923 still runs afoul of FDA safety guidelines.

Favus also points to the death imbalances in Avanir's clinical trial of AVP-923 as a potential red flag for FDA. Six patients treated with AVP-923 died compared to a single patient treated with placebo. Avanir says all seven deaths were caused by respiratory distress resulting from an underlying neurological disease -- amyotrophic lateral sclerosis, or Lou Gehrig's disease. Favus believes that analysis doesn't explain why more patients died after treatment with AVP-923.

"When we combine the prolonged QT data (even at low doses) with the imbalance in deaths in the STAR trial, we get concerned about the potential for AVP-923 FDA approval. We think this is the constellation of events that FDA is looking for on the subject of QT prolongation and its clinical consequences," Favus writes.

Now, for the Avanir bull story, represented by SummerStreet Research Partners, which like Favus, is an independent healthcare research shop catering to institutional investors.

Carol Werther, in an Oct. 15 note to clients, predicted FDA approval of AVP-923 on Oct. 30.

"At this time we believe it is clear there will not be an FDA advisory panel since AVP-923 does not include a new chemical entity (NCE). The reply to the AVP-923 CR letter was filed on April 30. AVNR filed a comprehensive five-part document to satisfy FDA concerns to find the minimal effective dose in this frail population and to better define the cardiac safety margin. The document contains two white papers written by experts in PBA [pseudobulbar affect] and cardiac safety."

You'd think that Werther and Favus would have serious disagreements about whether or not low-dose AVP-923 prolongs the Qt interval. In fact, the bull and bear agree on this point. Where the analysts disagree is that Werther, unlike Favus, believes FDA will still think AVP-923 safe enough for approval.

"We expect a label to treat the signs and symptoms of PBA with warnings not to use with drugs that increase QTc wave prolongation. Data from the advanced cardiac safety study (ACSS) indicates that AVP-923, even using a 10mg dose of quinidine, still prolongs the QTc (mean of 8.9 ms), just above the level the FDA considers no risk for Torsades de Pointes. (5 msec). Nevertheless, we do not think this will stop approval as many marketed drugs have similar profiles. AVNR submitted a risk map program to prevent abuse of AVP-923."

The official FDA approval decision date for AVP-923 is Saturday, Oct. 30. Avanir may receive the news the day before on Friday. If not, expect to hear from the company on Monday, Nov. 1.

Avanir shares closed Tuesday at $2.89.

--Written by Adam Feuerstein in Boston.

Exact Sciences' Shares Take a Hit Following Colorectal Cancer Dx Presentation
October 29, 2010
By Tony Fong

NEW YORK (GenomeWeb News) – Shares of Exact Sciences tumbled 20 percent on Friday, a day after the firm reported validation study results on its stool-based DNA colorectal cancer screening test.

The firm reported that the test had a sensitivity of 64 percent for pre-cancerous lesions and 85 percent for cancerous lesions and a specificity of 88 percent.

Though the results are still early-phase and further studies will be needed before the test, called Cologuard, can reach the market, Kevin Conroy, president and CEO of Exact Sciences, heralded the results and said that they suggest the test could offer a new screening strategy for colorectal cancer, which kills 50,000 people in the US each year and 150,000 patients in Europe each year.

"We think that … Cologuard has real potential as a colorectal cancer screening tool," Conroy said during a presentation on Thursday at a conference held by the American Association for Cancer Research in Philadelphia. "We also think that if you look at other products, there are no non-invasive products that can detect anywhere close to 60 percent of pre-cancer," the main indication that the study targeted.

Cologuard is not meant to replace colonoscopies, he stressed, but is being developed for use as an adjunct to colonoscopies.

Conroy also noted that the study was to validate Exact Sciences' underlying Quantitative Allele-specific Real-time Target and Signal, or Quarts, amplification assay technology which was used to develop Cologuard, as well as the markers contained in the test. It was the first major validation of the test, Conroy said.

Despite the results, which were generally regarded as positive, Exact Sciences' stock took a beating on the Nasdaq, trading down $1.71 to close at $6.86 in Friday trade — though that may have been due to a misunderstanding that the study was a clinical trial, an analyst said.

Since the start of September, Exact Sciences' share price has jumped about 80 percent leading up to yesterday as anticipation about the study results increased. While the stock has slid since the results were unveiled, Quintin Lai, an analyst at investment firm R.W. Baird, said that it may have been more the result of misguided expectations and confusion that it was a validation study and not a clinical trial.

"The Street was hoping to see perfection," he said.

In a research note published today, Lai increased the price target on Exact Sciences' shares from $9 to $13.

Study Results

In the study, the company and its collaborator, the Mayo Clinic, took three distinct pathways in their approach, using four DNA methylation markers, two DNA mutation markers, and a human blood protein marker.

"If any of these are positive, then the test result is positive, and the patient should go to colonoscopy," Conroy said.

The study consisted of a specificity study, a training set, and a test set. In total, 1,178 stool samples were processed and analyzed.

The specificity study was to determine whether any biases were introduced by age, gender, ethnicity, and geography. "And what we learned [is] that it was only age-related methylation bias that occurred," Conroy said. An algorithm was developed to "mute" the bias.

In the training set, the test achieved 89 percent sensitivity and 64 percent pre-cancer sensitivity and 89 percent specificity. In the test set, it achieved 78 percent cancer sensitivity and 64 percent pre-cancer sensitivity and 85 percent specificity.

In his presentation, Conroy said the test set was the first performed outside of Exact Sciences, "so clearly we have some improvement to do with the protocols and training of outside labs."

Also, in a pilot study carried out with three markers, Cologuard achieved 85 percent cancer sensitivity, 55 percent pre-cancer sensitivity, and 90 percent specificity.

A difference between the pilot study and the training and test sets, Conroy said, was that Exact Sciences used multiplex assays in the pilot study that had not been optimized yet for the training and test sets. As the company continues optimizing those assays, it will lead to improvements in sensitivity, he added.

Taken all together, Cologuard achieved the results presented at the conference yesterday: the ability to detect 64 percent of colorectal pre-cancers, 85 percent of cancers, and a false positive rate of 12 percent.

One potential shortcoming of the test, so far at least, is that it was not especially sensitive at detecting late-stage cancer — 69 percent sensitivity for Stage 4 colorectal cancer. Conroy said that Exact Sciences hopes to improve that, but added that the goal as it pursues US Food and Drug Administration approval, with a 2012 target for a submission, would not be to target Stage 4 cancer, since at that point the cancer is already likely to be showing symptoms.

Plans for Improvement

Moving ahead, he identified several areas that the company will home in on as it further develops Cologuard, including the improvement of quality control processes and assay reproducibility.

Also, it needs to improve DNA capture efficiency and its mutation assays. During his presentation, Conroy said that the KRAS mutation assay worked, but the story for the BRAF assay was different. "It didn't contribute at all," Conroy said.

Graham Lidgard, Chief Scientific Officer for Exact Sciences, said during the presentation that a BRAF assay was developed for a specific mutation as part of the study. "As we were running the assays, the signal was higher than expected, and we're still investigating the cause," he said.

Another area of improvement will be hemoglobin detection. Exact Sciences is developing a new fecal immunochemical test "and we are going to work very hard to make sure that that increases cancer detection sensitivity," Conroy said. Hemoglobin tests detect cancers, but not pre-cancers, he said.

As it moves Cologuard toward possible FDA clearance, Exact Sciences is working with the agency as well as the Centers for Medicare and Medicaid Services to ensure proper study design. The goal is to run one study that would satisfy both FDA and CMS, Conroy said.

"Presently the agencies have a lot of questions about this product, and we're working very hard to answer those questions," he said.

The firm is now preparing for a clinical trial and is reviewing potential sites to determine which ones will get the highest enrollment and the best results, he said.

If Cologuard does eventually receive FDA clearance, getting the test to be run in large numbers by laboratories would mostly involve building out manufacturing capability, Lidgard said.

"This is the first platform that has all the components that can be commercialized for this type of test," he said, adding that although stool-based colorectal cancer tests "have been shown to be relevant over the past 10 years," they could not be practically implemented in clinical labs. "This is the first set of technologies [and] assays that can be run in the clinical lab," he said.

Commercialization of the test is still a few years away, but R.W. Baird's Lai said that the study generated "a lot of buzz" at the AACR conference and for good reason. While the study results were not perfect, he said the results were positive and at the very least, it showed that "you can sort markers that are cancer and non-cancer" and that Exact Sciences has a system that can potentially be used by different laboratories, he told GenomeWeb Daily News.

In his research note, Lai wrote that Exact Sciences "has set a new bar for non-invasive colorectal cancer testing … We think it takes a 'good' first step to get to a 'great' final product, and we think [the company's] preclinical results and further refinements bode well for the 2011 clinical trial."

He noted that the Mayo Clinic's David Ahlquist, lead investigator on the validation study, feels that Cologuard could "provide excellent programmatic sensitivity over a three-year screening interval."

Lai anticipates the test to be launched in 2013 and achieve 18 percent market penetration by 2019, generating about $830 million in revenue for Exact Sciences. By then, he estimates the colorectal cancer test market will reach $4 billion to $5 billion in the US.

Cologuard, he said, has the potential "to meaningfully improve compliance, as the test is more convenient than colonoscopies and fecal-occult blood tests."

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