On the Radar: November's stocks to watch (Page 3)

Pharmasset (VRUS) Rated buy

Pharmasset is developing multiple oral nucleoside and nucleotide polymerase inhibitors for the treatment of hepatitis C. While most investors have focused their attention on protease inhibitors in development (like VRTX's Phase III telaprevir), we believe that nuc polymerase inhibitors will also play a significant role in future therapy. Pharmasset's lead drug RG7128, partnered with Roche, is in Phase IIb studies that should yield a positive safety update any day. In addition, Roche is advancing studies looking at the all oral combination of RG7128 with protease inhibitor RG7227 (without the standard of care). Pharmasset's next drug, PSI-7851, will be starting Phase II studies in early Q1/10 with data expected around mid-year. In addition, Pharmasset's third drug, PSI-938 is expected to enter Phase I early next year with antiviral data expected in Q3. With progress on three drugs and the potential for a new partnership, we expect VRUS shares to trade higher in the coming months. - Adam Cutler

Protalix BioTherapeutics (PLX) Rated buy

Protalix announced positive topline data from its pivotal trial of Gaucher's disease drug Uplyso, an enzyme therapy that could compete directly with Genzyme's Cerezyme, the current gold standard Gaucher's treatment. We think that Uplyso could capture 15 percent or more of the $1.2B Gaucher's market due to comparable drug profile, competitive pricing and an ongoing Cerezyme shortage due to manufacturing disruptions. Due in part to this Cerezyme shortage, Protalix has initiated an FDA sanctioned Uplyso expanded access program (EAP) that we believe will help seed the Gaucher's market for Uplyso. We think Protalix will file the Uplyso NDA in Q4/09, partner the drug in the US and EU for rich terms around the beginning of 2010, receive US approval in mid-2010 under priority review, and see EU approval in H2/10. We think Cerezyme will lose major market share due to the shortage and resulting damaged Gaucher's community relationships. We also think the Uplyso data gives good proof of concept to PLX's plant-based protein expression platform, which could be the basis of additional clinical programs and partnerships for follow-on biologic drugs and biosimilars. - Ritu Baral

On the Radar: November's stocks to watch (Page 3)
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