Here’s a look at two of the biggest movers in biotech as we move into the second half of the week, and what’s driving the action in both.
We’re going to kick things off with Concert Pharmaceuticals, Inc. (NASDAQ:CNCE). This one’s a bit of a strange one, and one that we think offers a real opportunity to pick up an exposure to the company on a market overreaction to something that’s not particularly important.
Some reading might already be familiar with Concert. It’s had a pretty good year so far, and has been the subject of a spate of headlines across the financial media. For those new to the company, it’s a development stage biotechnology play that works with a business model rooted in making already approved drugs better. It takes (generally) blockbuster drugs, and uses a proprietary technology to replace the hydrogen atoms in the drug in question with what’s called deuterium. Deuterium is pretty similar to hydrogen, so the mechanism of action of the new drug (the one that contains deuterium) is no different. There is a change, however – it makes the impact of the drug last longer. So, the idea is that it can improve the dosing regimen of drugs thatmight be burdensome for patients who are taking the already approved drug.
The latest win with this approach came when the company sold a development stage asset called CTP-656 to Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). It’s a reformulation of the latter’s cystic fibrosis asset Kalydeco, which is a hugely popular drug in the treatment group, but has a twice daily dosing necessity. In early trials, Concert showed its version was as good as Kalydeco, and managed to do so with a single daily dose. Vertex recognized the threat this posed to its Kalydeco sales, and tried to buy Concert outright. Concert rebuffed, but ended up selling right to the drug for $160 million upfront and a further $90 million payment if the drug gets a regulatory green light.
So, what’s the latest news?
Well, the company just announced that there’s going to be a slight delay on the initiation of a phase IIa trial investigating a drug called CTP-543, which the company is trying to get approved in an alopecia indication. The delay comes (reportedly) on the back of a late emerging clinical tablet appearance issue, and that’s pretty much all the information the company has let out right now. The trial was going to kick of this quarter, and it’s now looking like we’re going to see a second half initiation. Top line is delayed too, of course, and the company expects we’ll see it during the first quarter of next year.
We don’t think this is a real issue (as in, it’s resolvable, and there’s going to be a quarter or two delay at the outside), but markets have traded down on the news to the tune of 5%.
So, moving on, let’s look at Tenax Therapeutics, Inc. (NASDAQ:TENX).
This one’s a speculation driven move. The company is a critical care development specialist, and it’s got lead asset called Levosimendan, which it’s investigating as a potential therapy for a condition called low cardiac output syndrome (LCOS).
The drug was being looked at as part of a study that wrapped up (and read out) earlier this year, and unfortunately for Tenax and its shareholders, the study failed to hit its primary endpoints (and so technically classed as a failed study). While it missed its primary, however, the drug hit on a couple of key secondary endpoints, nd this served to offer some degree of reprieve from a forward looking perspective. Not a great deal of reprieve, mind, Tenax is trading at a close to 80% discount on its pre-trial data release market capitalization, but some hope at least.
So, the latest news is that management is looking at some strategic alternatives that, and to quote, might include but not limited to a merger, a business combination, a strategic investment into the company, or a purchase, license or other acquisition of assets. The CEO has pulled out and resigned from the board, and it’s looking increasingly like the company is going to sell itself to a high bidder near term. If this is the case, shareholders will likely receive a premium (albeit a small one) on their holdings, and it’s this potential that is in charge of markets right now.
Tenax is trading at a close to 25% premium after hours on the Wednesday open.