franklinqq's Blog : DYAX—Will It be the Next 10x Myth?

I think it is a dilemma for people whom invested in SPPI to make a love-hate comment of it: you can’t imagine how much people loved SPPI when it went up all the way from $0.9 level to $10, but I guess it would be as much as people hate it when its ZEVALIN got FDA approval and SPPI took a nose dive to $4. The “SPPI Big Show” has come to a close, but there is another one ready to start its gorgeous prelude.

If you take a look of the chart, you will notice that the “DYAX Big Show” already kicked off last week with a sudden jump for $3.20 to $4, and it even broke the 52 weeks high in after hours trading on 11/19. So will it be another 10X myth in the stock market of 2009?

Compared to SPPI, I would like to say DYAX has more qualification for 10X potential:

* DX-88 has orphan drug designation in the U.S. and E.U., as well as Fast Track designation in the U.S. for the treatment of acute attacks of hereditary angioedema (HAE).

HAE is an acute inflammatory condition characterized by episodes of severe, often painful swelling affecting the extremities (hands, feet, face, etc.), the gastrointestinal tract, the genitalia, and in potentially life-threatening cases, the larynx.

The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the development and manufacturing of such drugs.
There is no marketed therapy for acute attacks of HAE in the United States, and only one in some European countries. This product is human plasma-derived C1-INH, which replaces the missing or dysfunctional protein. However, it is isolated from human plasma and carries the potential risk of blood-borne pathogens. It is also a non-specific inhibitor of kallikrein, which is thought to be the most relevant target in HAE.

Although the sky-high price and profit margin of Orphan drugs are always target of criticism, as an investor, I concern more on the potential market and profit prospect of DX-88。

*This March, DYAX received complete response from FDA in which didn’t required any additional clinical trials for approval of DX-88 but Risk Evaluation and Mitigation Strategy (REMS) and additional information with respect to the chemistry,
manufacturing and controls (CMC) section of the BLA. Dyax believes those were fully addressed in its reply, submitted June 1, 2009.


In June, DYAX announced the FDA accepted for review of complete response submission and assigned Dyax’s BLA a new Prescription Drug User Fee Act (PDUFA) action date of December 1, 2009.

This situation is almost the same as SPPI’ s. The only difference is that DYAX has orphan drug and fast track designation which make it a plus for DX-88’s approval.

*There is always positive reaction in the market for real good drugs and technologies. The indicators include not only the movement of stock price, but also reaction of institutional investors whom have deeper view in the industry. DYAX is 55% owned by institutional investors, and we can see the percentage has been increasing since last year. The recent deal was a 5,500,000 common shares for $20,500,000 offering in Oct. The reason I emphasized on institutional investors is that they are not only an evaluation indicator but also a “price engine” for a stock as we already saw on SPPI.

*Although DYAX’s stock price already has a big gain since March，it is only at 2007&2008 level. Based on the signals of volumes and price change and market interests, I believe that the big jump on 11/19 would just be the prelude of a big show.

So will DYAX be the next 10x myth of 2009? The answer will be uncovered tomorrow.

ATTENTION: For the risk-averse consideration and personal investment strategy, the author himself seldom and don’t advise anybody to bet on FDA approval and earning report data of any stocks. Please do your own research before making any trading decision.

References:

1,10Q: http://investor.dyax.com/phoenix.zhtml?c=122200&p=irol-SECText&TEXT=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD9yZXBvPXRlbmsmaXBhZ2U9NjU3ODY5NyZhdHRhY2g9T04mc1hCUkw9MQ%3d%3d
2, FDA Decision Date and Other Info:
http://www.reuters.com/finance/stocks/keyDevelopments?symbol=DYAX.O&pn=2

3, DYAX Pipeline: http://www.dyax.com/clinical/index.html

4, DX-88 Info: http://www.dyax.com/clinical/hereditaryang.html

*Disclaimer: The author of this article is not a licensed analyst and the purpose of this article is for information sharing and discussion only, not recommendation for any stock buying and selling activities. Please do your own research before making any trading decision.