Neurocrine adds 10%; NPS up on 'Soros factor'; Vivus higher; Genitope slides 4%

By Ronda Fears

Memphis, Aug. 17 - Neurocrine Biosciences, Inc. took a leap Thursday as players anticipate and position for news forthcoming later this month on its sleeping pill Indiplon, namely whether any further testing will be required by the Food and Drug Administration to get a higher dosage approved.

The San Diego-based biotech has been battered since May when the FDA only said it would approve a lower dosage of Indiplon whereas analysts saw the higher dosage as making the drug a lucrative competitor in the sleeping pill market. The drug was licensed from DOV Pharmaceuticals, Inc. The FDA setback, which the company is still trying to address, has led to Neurocrine laying off a good portion o fits sales force, Pfizer, Inc. pulling out of the marketing arrangement, and a slide in the stock from the mid-$50s to a low of $8.57 earlier this month.

Trading themes in general for Thursday were volatility, according to one trader, and "discrete" short covering, as another put it. The latter also mentioned that options expire Friday and that could be a factor in the Neurocrine trade Thursday.

Neurocrine shares (Nasdaq: NBIX) on Thursday gained 95 cents, or 9.99%, to $10.46.

DOV Pharma shares (Nasdaq: DOVP) also were sharply higher Thursday, gaining 15 cents, or 16.13%, to $1.08. The Somerset, N.J.-based biotech also has suffered from disappointing results for its lower back pain drug Bicifadine, sending the stock to a new 52-week low of 84 cents last week.

Also impacting those trades is that Neurocrine and DOV Pharma will find out sometime later this month whether they need additional trials for Indiplon to be approved at higher dosages.

"News will be announced on the date of the FDA meeting. That's it," one sellside trader said of the Neurocrine trade, adding that he expects the FDA to require further trials.

"So the smart money is driving the price up now, but will dump before meeting results are made public. Once the crappy results are announced, they will leave everybody else holding. I'd say play it for what it's worth, but don't get suckered long term."

A buyside source, however, saw Thursday's spike in Neurocrine as an example of "trading in desperation" that suggests there is positive sentiment on the upcoming FDA news.

"It's like somebody wants to be in - in a big way - and soon," the buysider in Boston said.

"Who knows why. It's just a very interesting day in what can be a huge long-term gainer. Since the volume is so large, the buying is looking rather desperate."

Some 4.26 million Neurocrine shares traded Thursday versus the norm of 3.25 million shares.

NPS Pharma spikes 14.5%

With no news on the tape to boost NPS Pharmaceuticals, Inc., traders attributed a sharp gain in the stock Thursday to what they call the "Soros factor," referring to a quarterly report earlier this week by noted investor George Soros showing new or bigger stakes in several biotechs against reduced holdings in technology bellwethers.

"It appears that the demand for the stock [NPS Pharma] has increased," said a sellside trader.

"It could be the Soros factor again. NPS has been moving up all week, for the most part, but it was a big spike today."

NPS shares (Nasdaq: NPSP) gained 54 cents on the day, or 14.59%, to $4.24.

Fund Management LLC reported at the Securities and Exchange Commission earlier this week that its holdings as of June 30 included 3.3 million shares in NPS Pharma, 783,000 shares in GTC Biotherapeutics, Inc., over 700,000 shares in Celgene Corp., 343,000 shares in Hana Biosciences, Inc., 280,000 shares in Human Genome Sciences, Inc., 285,000 shares in Idenix Pharmaceuticals, Inc. and an increase to 413,000 shares from 257,000 shares in Nektar Therapeutics since March 31.

Salt Lake City-based NPS Pharma has Preos for osteoporosis and other drugs in various stages of development for gastrointestinal disorders, and central nervous system disorders.

None of the other Soros biotech holdings saw gains similar to NPS Pharma. In fact, Hana Biosciences and Celgene were lower on the day.

Total value of the Soros fund's disclosed holdings dropped about 22% to $2.1 billion on June 30 from $2.7 billion on March 31. By comparison, the Dow Jones Industrial Average was nearly unchanged in second quarter while the Nasdaq Composite dropped about 7%.

Vivus adds another 3%

In the wake of an update on its obesity drug trials, Vivus, Inc. gained for the fourth consecutive day on strong buying interest, traders said.

"There really is a lot of interest in Qnexa - quite a bit of questions from many analysts. It seems to be going quite well so far," a sellside market source remarked.

Vivus held a conference call Wednesday for investors with management and Kishore Gadde, principle investigator for the Qnexa phase 2 trial, and Thomas Najarian, inventor of Qnexa.

"Since Dr. Najarian successfully treated over 6,000 patients using the Qnexa formula the likelihood of a failed phase 3 trial is virtually eliminated," said the sellsider, who sat in on the call.

"Besides treating obesity Qnexa patients also experienced reduction in cholesterol, reduction in blood pressure, improvement in insulin sensitivity, reduction/discontinuation of multiple diabetic, antilipidemic, and antihypertensive medications.

"Honestly, it simply can't get much better than this," the sellsider continued.

"The obesity market is growing by leaps and bounds. Qnexa's phase 2 trial results simply crushed the competition. Qnexa will likely become a multi-billion dollar success in record time."

According to Vivus, analysts estimate the potential obesity market ranges from $5 billion to $10 billion annually.

Genitope call fails to inspire

Genitope Corp. held a conference call Thursday to discuss the previously provided Kaplan-Meier curve and additional related interim data from the phase 3 clinical trial of MyVax, but analysts - both on the buyside and sellside - said the call did little to shed any new light onto the MyVax trial data. Thus, traders said the event sparked a modest sell-off.

Redwood City, Calif.-based Genitope has MyVax - a personalized, patient-specific immunotherapy that is based on the genetic makeup of a patient's tumor, and is designed to activate a patient's immune system to identify and attack cancer cells.

Genitope shares (Nasdaq: GTOP) lost 10 cents on the day, or 3.89%, to close at $2.47.

"On July 28th the independent board comes out and states that Genitope should continue testing - that is all it said. The stock, which was $5.70 the prior day, goes to $2.82 the next for a drop of 53%. That said, to me, that further testing was not a good sign," said one trader.

"This morning's conference call refutes that. The call today indicates that the drug is working and producing very good results. The result today - down a dime - should have been a rise back to $5 bucks on the news. The market is a little nutty and irrational."

Another thought the call was very positive.

"It appears the drug is working based on the long progression free results," the trader said.

"Patient investors stand to make a huge return between now and late next year."

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