FDA Calendar: Cardiome, Momenta, Discovery Labs, Introgen

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Shares of Discovery Labs (DSCO) have been drifting lower in recent trading and last closed at $1.72, which is a nice entry point for a long position for speculative biotech investors. Since meeting with the FDA in mid-June, the Company has trended lower on investor disappointment that the Company would delay its response to the most recent approvable ruling for Surfaxin until September. However, the Company still expects a Class I review (60 days), which could result in approval for Surfaxin by late November or early December without the need for additional time-consuming and expensive clinical trials as the outstanding issues appear to be minor with the FDA.

Summer is typically a slow time for biotech trading and provides a good time to accumulate shares ahead of potential Surfaxin approval before the end of the year, which could result in a two-bagger trade from current levels.

Cardiome Pharma (CRME) has been on a tear as of late thanks to positive clinical trial results for the oral version of its anti-arrhythmia (atrial fibrillation or a-fib) drug vernakalant. The intravenous [IV] form of the drug (Kynapid) is still awaiting a ruling by the FDA, which is now over six months past the expected decision date. I think the stock is a near-term buy on likely approval for the IV form of the drug, Kynapid, as the FDA now has more supporting data to review from the recently reported clinical trails of the oral formulation. Although the timing is uncertain, Cardiome should get a nice bump of at least 25% on FDA approval and may even reach the $1 billion market cap level with a 40% gain from current levels.

The Company is also in partnership discussions for the oral form of the drug, and analysts expect a partnership announcement or even a buyout by the end of summer. Analysts also predict peak sales potential of $500M for the oral form and $300M for the IV form of vernakalant, which could result in a buyout at around 3X peak sales potential or over $20 per share.

Introgen Therapeutics (INGN) submitted a biological license application [BLA] on June 30 and requested priority review (i.e. six months versus standard 10 months) for its experimental ADVEXIN p53 therapy to treat recurrent, refractory head and neck cancer. The stock is a sell as illustrated by a steadily declining stock price, low market cap, and heavy short interest – even as the stock languishes near $1 per share.

The Company is basing its BLA filing on a limited number of patients that benefit from ADVEXIN based on a favorable “biomarker profile” that was characterized after the fact in a Phase 3 trial. The FDA will likely reject the BLA filing after its 60-day review period, but even if the BLA is accepted for review it has no chance of approval based on the current data (or lack thereof) in my opinion as the company is big on hype but short on data.

Momenta Pharma (MNTA) is a long-term buy as a pure-play on the future of complex bio-generic drugs. The Company is expected to address the FDA’s concerns over M-Enoxaparin during 3Q08, which was rejected last November as a generic form of the injectable blood thinner Lovenox. M-Enoxaparin is being developed in conjunction with Novartis (NVS) as part of its Sandoz generic drug division, which specializes in high-margin complex biologicals as well as standard off-patent forms of drugs.

Momenta has surged nearly four-fold since the rejection late last year on word that the FDA is not requiring additional clinical trials for the generic form of Lovenox, with US sales of $750M in 2007 for Sanofi-Aventis (SNY). Momenta also recently filed a patent challenge to produce a generic form of the multiple sclerosis drug Copaxone, which is made by Teva Pharma (TEVA). Although the Copaxone generic seems to have little chance of making its way to the market any time soon, clarity on M-Enoxaparin during this quarter should benefit Momenta. Ultimately, the Company will probably be acquired by Novartis and become part of its Sandoz division, specializing in the high-margin business of complex bio-generics.

With a market cap of $589M, shares of Momenta still have upside potential over a billion dollar market cap on any positive news and clarity for M-Enoxaparin; although the easy money has already been made in the stock from sub-$5 levels to flirting with $20 as of Wednesday.

Disclosure: None