On the Radar: Keep an eye on these biotech stocks (Page 3)

GTx (Market Perform)

With a focus on urology and oncology, GTx has pioneered the use of a selective estrogen receptor modulator (SERM) for prostate cancer prevention and for bone loss associated with standard prostate cancer treatment known as androgen deprivation therapy or ADT. Both programs for Acapodene (SERM) are currently in or have completed Phase III trials. For the prostate cancer prevention trial (PIN), which we view to be the more interesting commercial opportunity, we believe the failed, well powered interim analysis reflects negatively on the efficacy for the drug in this setting, and reduces the likelihood of its eventual success. Acapodene for ADT has an upcoming PDUFA date of October 30. Although positive top-line results from the ADT trial were announced, we believe regulatory and commercial risks remain due to debatable risk / benefit profile (similar numbers of fractures prevented versus additional venous thromboembolic events). We believe the recent finding of QTc prolongation with Acapodene could further complicate approval. We estimate probability weighted 2013 U.S. Acapodene sales of $39.5M for PIN and $24.1M for ADT, based on a 40 percent probability of success for ADT and 25 percent for PIN. - Howard Liang

Poniard Pharmaceuticals (Outperform)

Poniard is a late-stage company with picoplatin nearing completion of a Phase III trial for small cell lung cancer (SCLC). Picoplatin as a member of the platinum class is likely an active anti-cancer agent and the key is finding a path to market. While clearly a binary event, we believe that this trial has a favorable chance of success as picoplatin is being compared to supportive care and another drug (topotecan) has shown the feasibility of demonstrating survival benefit in this setting. We expect top-line data from the SPEAR Phase III trial in 4Q09 with a possibility for a full data presentation at the EORTC/NCI/AACR meeting on November 15-19th. PARD expects to initiate filing of the NDA by YE09 after SPEAR readout. Outside SCLC, we see potential upside in colorectal cancer (CRC) for picoplatin. With the ongoing Phase II data currently showing less neuropathy and comparable efficacy as oxaliplatin-based regimen, we believe that picoplatin may have an opportunity in the big CRC market with additional survival data from a randomized Phase II CRC trial coming before YE:09. We estimate probability weighted U.S. picoplatin sales of $13M in 2010, growing to $195M in 2012. Regarding Partnering & Acquisition potential, PARD has indicated strong interest in picoplatin and that there have been partnering discussions with several large pharma and biotech companies and a positive SPEAR outcome would serve as a catalyst for partnership. - Howard Liang