Five high-value biotech stocks to watch (Page 3)

1. Poniard (PARD Market Outperform): We had predicted that the Phase III SPEAR trial of picoplatin in SCLC would be successful; we were wrong. Picoplatin showed some clinical activity (HR 0.82) and came close to meeting statistical significance, but with a p value of 0.089, the trial was considered a failure. The company has since restructured, and is trying to assess its options, which translates into mainly trying to sell themselves to a pharmaco with the pockets and patience to continue development of picoplatin.

2. GTx (GTXI Market Underperform): We did better on this one, since unfortunately for investors and patients, our view that "the most likely outcome will be an approvable letter, with the requirement for additional data, or even an outright rejection" for the company's lead program Toremifene 80mg was confirmed. In addition, the company has since faced additional difficulties, with the Toremifene 20mg Phase III trial also failing, as we had been predicting in our coverage of GTXI.

3. OncoGenex (OGXI Market Outperform): In our September 2009 piece, we had predicted that OGXI would be successful in finding a partner or an acquirer interested in lead program OGX-011, a second generation antisense compound for the treatment of prostate and lung cancers. The company was able to deliver on its guidance for a YE 2009 partnership for OGX-011, partnering the program with Teva (TEVA Not Rated). However, the market reacted negatively to what we believe was a good deal with a good-albeit unorthodox-partner, and we actually highlight OncoGenex again this year in our "value in biotech" piece.

4. MannKind (MNKD Market Outperform): We were proven wrong in our prediction that Afrezza, the company's inhalable insulin, would be partnered and approved by the FDA, since the company was not able to find a partner for the drug/device combination and the FDA issued a complete response letter to the Afrezza NDA in March 2010. However, and aware that the vast majority of investors do not believe in this story, we continue to take the contrarian view that despite the delays and hiccups along the way, Afrezza will be partnered and approved. Despite the obvious difficulties inherent in convincing partners, regulators and ultimately physicians about an inhalable insulin's efficacy and safety, we continue to believe that the market is wrongly placing Afrezza in the same "bucket" as Pfizer's (PFE Not Rated) Exubera, and we continue to predict that Afrezza will surprise many people, and will be partnered and approved in the next six months.

5. Rigel (RIGL Market Outperform): Very similarly to our OGXI prediction, we had expected Rigel to surprise the skeptics and find a partner for lead program R788, an oral agent for the treatment of Rheumatoid Arthritis. Again, similarly to what happened to OGXI, the company was able to secure a worldwide partnership for R788 with Astra Zeneca (AZN Not Rated), with what we view as very good terms, but the market also reacted negatively here, and we will highlight Rigel again in our value-focused piece this year.