Week’s opening stock roundup: gainers include Novocure, Steadymed; but Corvus, NewLink rocked

markusspiske / Pixabay



Here to start your trading week are the major movers from last week and where they stand this morning:

Novocure (Nasdaq: NVCR) led advancing issues, soaring $3.25, or 40% over the week, to $11.35. The big upward move came after the Jersey, Channel Island-based company announced positive test results from its experimental cancer treatment.

The cancer research and treatment company has been experimenting with proprietary cancer therapies that utilize electrical fields. Novocure said that results from its Phase 3 pivotal EF-14 trial showed a consistent and maintained improvement in overall survival at two-to-five year marks. The trial added Novocure’s Optune treatment to standard temozolomide chemotherapy to treat newly diagnosed Glioblastoma, a common form of brain cancer.

The announcement, first reported by CNBC, was originally made during an annual meeting of the American Association for Cancer Research on April 2. Thankfully, the data from these clinical trials suggest that Optune holds the potential to have a transformative impact on the way that numerous types of cancers are treated.

Steve’s Take:

What’s so significant for Novocure at this juncture is that data from the EF-14 trial showed that adding Optune to the standard-of-care chemotherapy treatment led to improvements in overall survival rates at two, three, four, and five years. That’s quite a timeframe for efficacy.

In total, the Optune device increased the overall survival rate in newly diagnosed glioblastoma patients from 15 months to 21 months, a statistically significant gain. More specifically, patients who used Optune and chemotherapy demonstrated a two-year survival rate of 43%.

That compares quite favorably to the 30% rate observed in the group that only received chemotherapy. The five-year survival data also favored the Optune/chemotherapy combination, leading to a statistically significant 13% survival rate compared to a 5% rate for chemotherapy alone.

Dr. Roger Stupp, EF-14’s principal investigator, offered up a lot of positive commentary for Optune in the press release, according to Motley Fool.

He said, “I believe this trial establishes an entirely different approach to cancer treatment with minimal toxicity which may be well suited for combination with conventional treatments for many other cancer types.”

While Novocure has consistently posted triple-digit top-line growth over the last few quarters, its stock has been a pitiful long-term performer. In fact, it has trailed the medical device industry in general as measured by the iShares US Medical Devices ETF (NYSEMKT:IHI) since its October 2015 IPO.

Importantly, however, the data from all of these clinical trials suggest that Optune holds the potential to shift the approach to the way that numerous types of cancers are treated. Given that tens of thousands of patients die from ovarian, pancreatic, solid tumor, and brain cancer each year in the US alone, the potential growth runway for Optune continues to look huge. For perspective, only 1,091 patients worldwide were actively using Optune as of the end of 2016, the Fool notes.

The strong data from the EF-14 trial should serve to convince providers, patients, and insurers to use and cover Optune. That would allow the company’s scorching top-line growth rate to continue. Moreover, the data from the Panova, Stellar, and Innovate trials suggest that Novocure’s plans to expand Optune’s labeling to other types of cancer could also pan out. If true, then it is possible that last week’s big jump could be just the beginning of a long and strong profit party.

Shares are up 3 cents at $11.38 Monday morning (April 10, 2017).

—–

Elsewhere, SteadyMed Ltd. (Nasdaq: STDY) shot up $1.20, or 21%, to $7.00. Its partner Cardiome Pharma Corp. updated that SteadyMed announced the successful completion of a clinical study of Trevyent.

Cardiome licensed the commercial rights to Trevyent from SteadyMed for multiple international markets in 2015. Rehovot, Israel-based SteadyMed’s clinical validation study enrolled 60 healthy adult volunteers in an in-clinic setting designed to examine the performance of the PatchPump used by Trevyent. Each trial subject was provided one PatchPump device containing a placebo formulation and each otherwise carried on with their normal daily and nighttime routines over a 48 hour period.

The goals of the study were to evaluate the safety and performance functions of the PatchPump delivery system as well as the tolerability of the on-body application of the product. According to SteadyMed, the results “indicate that the PatchPump devices performed as intended in all categories of evaluation,” including dose accuracy and precision.

Steve’s Take:

Talk about a stock that’s flying high recently. The week prior, SteadyMed surged $1.55, or 36%, to $5.80 after the company announced that the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) ruled in its favor in the Inter Partes Review (IPR) proceeding against US Patent No. 8,497,393 (the ‘393 patent) owned by United Therapeutics.

In its ruling, the PTAB found all 22 claims in the ‘393 patent unpatentable and cancelled them, rendering the patent invalid. That’s a shutout by my math.

The IPR was instituted by the PTAB in April 2016 after SteadyMed challenged the ‘393 patent’s validity. The ‘393 patent claims a product made by a process to further purify prostacyclin derivatives, such as treprostinil. Treprostinil is the active pharmaceutical ingredient used in United Therapeutics’ Remodulin and SteadyMed’s lead drug candidate, Trevyent.

So there are two consecutive weeks of fantastic news that should propel further gains in the stock’s upward trajectory. This morning (April 10, 2017), the price is off 7 cents at $6.93.

——

But Corvus Pharmaceuticals Inc. (Nasdaq: CRVS) plunged $11.23, or 54%, to $9.54 in the wake of the company’s release of interim results from an ongoing Phase 1/1b study of its CPI-444 immuno-oncology therapy.

The Burlingame, CA-based company said that treatment with CPI-444 both as a single agent and in combination with Genentech’s atezolizumab was well-tolerated and resulted in anti-tumor activity in patients suffering from certain advanced solid tumors. Among the specific types of cancer covered under the study were breast cancer, non-small cell lung cancer, melanoma, and renal cell cancer.

Yet investors clearly seemed to want something more, and the stock gave back all of the extensive gains it had earned over the past month and then some. The Corvus experience demonstrates just how volatile biopharmaceutical investments can be, especially with clinical innovations.

Steve’s Take:

I agree with Cantor Fitzgerald that the Corvus selloff is understandable, but has been way overdone. The brokerage maintains an Overweight rating and $25 price target.

“While we understand where the disappointment stems from, we think the reaction in the share price is perhaps not fully reflective of what was presented at the AACR meeting (American Association for Cancer Research). We think additional data releases from ASCO (American Society of Clinical Oncology) could help to refocus investor interest,” analyst Mara Goldstein said.

Shares ran up nearly 50% earlier this year, believed to be due to increased interest in Adenosine A2A receptor as a potential checkpoint therapy, and specifically, how it pertains to CPI-444.

“We don’t think the CPI-444 data are bad, just perhaps below where expectations were trending ahead of the meeting,” Goldstein added.

Bezinga notes that in the interim data on 96 patients, the objective response rate (ORR) was 38%; 56% of patients were resistant to treatment with PD-LI antibodies and had ORRs of 30% for monotherapy and 46% for combination.

“We yield that investors are going to need to some convincing from this point. The data generated in cohorts that are intended for accelerated registration look interesting to us, and we think that additional data from ASCO on these cohorts could help reset expectations,” Goldstein said.

Projecting out to the longer term for Corvus, while any stock can see a spike in price, it takes a real winner to consistently outperform the market. Yahoo Finance points out that the company has beaten out the industry at large over the past 12 weeks by a margin of 39.6% to 1.2% while it has also outperformed when looking at the past year, putting up a gain of 42.5%. Clearly, Corvus has been riding a hot streak. Given these factors, investors shouldn’t be surprised to note that Zacks has given a Rank #1 (Strong Buy) and a Momentum Score of ‘A’.

Given the thrashing Corvus just took despite a lot of justifiable upward momentum, a rebound seems likely. Sure enough, shares are trading up 5% this morning (April 10, 2017) at $10.02.

—–

And NewLink Genetics Corp. (Nasdaq: NLNK) skidded $7.91, or 33%, to $16.19 after the biopharmaceutical company released interim results from its Phase 2 study of experimental melanoma treatment indoximod. NewLink said that objective response rates came in between 50% and 60% in the study of 60 patients, with disease control rates of 70% to 80%.

Yet although Chief Medical Officer Nicholas Vehanian said that the data “further underscore the potential for indoximod in combination with other agents,” characterizing the rates as “highly encouraging,” investors seemed unimpressed and concerned that failing to produce even stronger performance might leave Ames, IA-based NewLink vulnerable to competition.

(Inhibitors of idoleamine 2,3-dioxygenase (IDO) in combination with checkpoint inhibitors show promise in the treatment of patients with advanced or metastatic melanoma. MedPage Today)

Steve’s Take:

Once again, welcome to biopharma. Investors got a closer look at interim data from a Phase 2 trial evaluating NewLink’s IDO-inhibitor indoximod, and despite arguably competitive response rates, investors were disappointed.

In its trial, indoximod was used alongside Merck & Co. checkpoint inhibitor Keytruda in 60 patients diagnosed with advanced melanoma. The objective response rate to the combination was 52%, and the disease control rate was 73%. For reference, the disease control rate includes patients determined to have a complete response, a partial response, or stable disease.

These were solid rates, says Motley Fool, but investors appear worried that they might not match up as competitively to Incyte’s competing IDO-inhibitor, epacadostat. In smaller Phase 1 trials involving 19 patients, the ORR for epacadostat plus Keytruda was 58%. Indoximod development is continuing as planned, and earlier this year, management reported that its spending on indoximod’s R&D will increase substantially as trials expand to include more patients and cancer indications.

Investors should also see initial results for another IDO-inhibitor later this year. The company’s GDC-0919 attempts to inhibit IDO in a way that’s more similar to Incyte’s drug than indoximod, and collaboration partner Roche Holding is expected to report some Phase 1b data in the second half of 2017.

Overall, there’s a lot going on at this company, and while the data might not have been as robust as hoped to justify the uptick in development expenses, I agree with the Fool the spanking was more “sell the news” than anything representing a concrete, substantive misstep. And shares are up 5% this morning (April 10, 2017) at $17.01.

Steve Walker has no position in any stocks mentioned. MedContent Inc. has no position in any stocks mentioned. MondayMorning.com has a disclosure policy.