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(Medical-NewsWire.com, September 25, 2012 ) New York, NY -- Bullish analyst coverage initiated last week has thrust AEterna Zentaris (AEZS) into the spotlight of hot stocks to watch while the awarding of the Phase II portion of a US Army grant to Cytosorbents Corp (CTSO) for its blood purification technology drawin increased interest to that company as well.
VFC's Stock House, an information and research outlet that brings ideas and opens discussions to a broad spectrum of investors, discusses both subjects in Tuesday reports available at the following locations:
AEZS: http://vfcsstockhouse.com/blog/article/-aeterna-in-the-spotlight-following-bullish-analyst-coverage
CTSO: http://vfcsstockhouse.com/blog/article/-cytosorbents-building-blocks-for-the-future
AEterna Zentaris was already a hot stock to watch based on an early-September move higher, but shares really caught fire late last week after Roth Capital Partners initiated coverage on the company with a rating of 'Buy' and a price target of $1.75, which values AEZS shares at more than double that of last Friday's close and more than triple the share price of just a few weeks ago. As previously discussed, AEZS took a dive earlier this year after the high-profile failure of AEterna's Perifsone - then partnered with Keryx Biopharmaceuticals (KERX) - in a Phase III trials testing its effectiveness in fighting metastatic colorectal cancer made headlines.
Although AEterna had numerous pipeline products still making their way through trials, including another Perfisone Phase III trial in multiple myeloma (MM), investors bailed en masse and shares hovered at fifty cents for the better part of the year. A few weeks ago shares began to rebound again for essentially the same reasons as to why Roth Capital initiated bullish coverage of the company - the developing pipeline that is moving into the later stages of development.
In addition to the Phase III Perifisone, AEterna is also preparing to advance AEZS-130 to market. AEZS-130 is a diagnostic test for Adult Growth Hormone Deficiency (AGHD), has already proven successful in Phase III trials and is slated for an NDA filing with the FDA in early 2013. Should the product be approved, it would be the first orally-administered diagnostic test and has the potential to dominate the majority of its market, according to an Oppenheimer report this summer that tagged AEZS with a rating of 'perform.' AEZS-130 has already received an Orphan Drug Designation in the United States and the company has also filed for a Fast Track Designation and rolling-NDA for the product. Additionally, the company announced in August that the first patient had been treated in a Phase IIa trial for AEZS-130 in patients with cancer cachexia, adding potential beyond just the pending NDA.
Another late-stage pipeline product, AEZS-108, has already proven successful in multiple Phase II trials and is being prepared for a Phase III trial in the treatment of endometrial cancer. Additional earlier-stage trials are also being planned for this product, providing the company with a fairly deep pipeline of potential which has attracted the attention of analysts, such as Roth Capital.
Volume was huge following the initiated coverage during this past Friday's trading session when shares pushed the one dollar mark, but tapered off at this week's open. Shares were down by nearly eight percent on Monday, but such action is routine in this speculative sector as the day/swing/momentum traders often like to take quick profits during speculative price spikes in order to go looking for another fast mover. While the average retail investor would also be wise to take some profit off the table when opportune price spikes allow one to do so, some may take the Roth Capital price target as a bullish enough sign to hang in there for the mid to long term as some of these near term catalysts play out.
What may benefit investors who took a stab at picking up half-dollar shares earlier this year after the Perifisone failure is that much of the market likely viewed AEZS as purely a Perifisone play, based on the fact that it was the most advanced pipeline product, had the moste immediate potential to rake in significant revenue and was the most high-profile product in the pipeline, in part due to the interest from Keryx shareholders, too. When the colorectal trial failed, many ultimately discarded Perifisone as a failed product, but as the analysts have recently outlined, Perifisone is far from dead and the AEterna has a number of 'Plan Bs' in the works, too.
With a number of developments expected unfold under the next couple of quarters, including interim Perifisone MM results, launch of a Phase III AEZS-108 trial and the NDA for AEZS-130, there's reason to believe that AEZS could once again reclaim the dollar mark. Based on the Roth Capital price target issued last week, the potential is also there for an even further rise.
Worth a look, although each investor should bear in mind the inherent risk of the sector and conduct his or her own DD.
Earlier this summer Cytosorbents Corp (CTSO) announced the official launch of CytoSorb in Europe.
CytoSorb had been approved last year in Europe for the treatment of conditions where high cytokines are present and the company has been taking a methodical and patient approach towards full commercialization in order to keep expenditures under control. In conjunction with the launch, CytoSorb also appointed Dr. Christian Steiner, MD, to its European sales subsidiary as Vice President of Sales and Marketing and Managing Director of CytoSorbents Europe GmbH. The official launch was an highly-anticipated event by investors who believe that CytoSorb could become the new standard of care for severe sepsis and other indications of high ctyokines once momentum into the intensive care market builds.
Although additional trials will have to be conducted before an approval in the US is considered by the FDA, data from a European trial were convincing enough for the European medical regulators that CytoSorb was approved before the full trial was completed. As a result CTSO shares tripled in price from the range of fifteen cents to nearly fifty.
Many are still unconvinced, however, with a US approval not in the immediate future. These investors, in addition to many others, will be watching closely over the next few quarters to see if Cytosorbents can transform what could be considered a breakthrough device for the treatment of sepsis into a revenue-generating sales platform for the company. According to the latest quarterly report filed by the company in August, the initial test phase of direct product sales to hospitals generated revenue of just under $50,000, but that was without an established sales force in place. That's where Dr. Steiner and the European subsidiary come into effect - to build that force.
As the company grows its commercial success, its blood-purification technology has also received validation from various government agencies. In August the company announced that it had been awarded nearly four millions dollars from the United States Defense Advanced Research Projects Agency (DARPA) Dialysis-Like Therapeutics (DLT) program to treat sepsis. The award was pending satisfactory achievement of key milestones, according to information contained within the associated press release.
Late last year Cytosorbents also received a Phase I SBIR (Small Business Innovation Research) grant by the US Army Medical Research and Materiel Command titled, "Investigation of CytoSorb Cytokine and Myoglobin Removal in the Treatment of Trauma." The grant was worth $100,000, with an available option to bring in another $50,000. The awarding of this grant was noted as a prerequisite for the Phase II and III levels, which could bring the total numbers received by Cytosorbents to over a million dollars.
On Monday of this week it was noted that Cytosorbents was awarded the Phase II portion of this grant, which had been submitted for following the completion of the Phase I portion (the planning phase, according to Monday's press release). The Phase II portion is worth up to a million dollars and will include animal studies, while Phase III - if also awarded - would include human studies.
If successful, the US Army grant and associated studies would provide the company with an "in" for further funding and sales. The US Air Force has already expressed interest in the technology following the Army's lead - also according to Monday's release - and other services could follow suit. Data from any associated studies would also be used to bolster the company's case in receiving additional approvals for its technology around the globe, including in the United States.
Cytosorbents shares were up by four percent on the news Monday, but the real short to mid term catalyst for the stock would be noticeably increasing sales numbers from the controlled roll-out in Europe. The grants, awards and additional studies are providing the building blocks for a potentially robust future, but with a sales force now established in Europe, the primary focus of investors will be sales and revenue. The more patient investor, however, will look at these other developments as another reason to accumulate for a potential mid to long term payoff.
Still a nice speculative story to watch, and one that has rewarded investors with at least triples in share price on numerous occasions before.
Disclosure: Long CTSO.
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