Trading this week

I shorted ABIO at $5.30 and $5.60 this morning, for an average SP of $5.45. I am hoping to cover under $4.80.

I added ARNA $4.00 July calls at .30 in my options account.

I am watching ALXA for a possible addition to my LT taxable trading account.

Monday moment:
I accidentally typed Sell instead of Buy into my Iphone earlier and sold some of my $VVUS shares at 11.63, not a happy camper. Still have a position, but am looking to buy back those shares on further possible market correction this week.

My IRA Holdings, Part One: BIOD

My IRA currently has three stock positions: BIOD, AVNR, and IPHAF. The rest of the account is cash, tho I'm looking to add 1-2 new positions once market direction becomes clear. This post will focus on Biodel, which I'm holding in anticipation of the October decision date by the FDA to approve their drug Viaject.

BIOD

Biodel is a biopharmaceutical company focused on the development of diabetes specific drugs. Biodel is developing novel forms of insulin and other peptide hormones for use in treating diabetes and its complications, including hyperglycemia, hypoglycemia, cardiovascular complications and weight control. They have five chemical compounds in their current pipeline. Biodel has just under 24 million O/S shares, and with such a low float can motor quickly up or down on news.

Insider selling has been heavy and frequent the last year, with a single purchase this May at 5.59. In March of this year, the founder stepped down as chairman and CEO to act as Chief Scientific Officer, and they named a heavy hitter, former Glaxo CEO Dr. Charles Sanders, as chairman of the board, with Dr. Errol De Souza acting as CEO.

Biodel submitted a New Drug Application (NDA) for their most advanced chemical compound, Viaject, a rapid acting injectable insulin for meal time use by Type 1 or Type 2 diabetics, to the FDA on December 30th, 2009, causing the stock to motor above $5 in PM trading. Existing injectable insulin formulations from Novo Nordisk, Sanofi Aventis and Eli Lilly, allow for maximal absorbtion of insulin within an hour after injection. VIAject reaches maximal absorption in 15 minutes.

The Viaject NDA included data from two Phase 3 clinical trials comparing VIAject to Ely lilly's injectable insulin Humalog in patients with Type 1 and Type 2 diabetes. It also inlcuded from the long-term, 18-month safety extension trials for patients who completed the Phase 3 clinical trials.

From the PR for the December 30th Viaject PR:
"VIAject® is Biodel’s proprietary formulation of recombinant human insulin that is designed to be absorbed into the blood faster than currently marketed rapid-acting insulin analogs. It is Biodel’s most advanced product candidate and has been tested in more than 884 patients who participated in Phase 1, 2 and 3 clinical trials of the drug in the United States, Germany and India. Biodel is seeking approval to market VIAject® in the United States as a 100 IU/cc, pH7 (neutral) injectable liquid, in 10 ml vials and 3 ml pen cartridges. The NDA includes results from pharmacokinetic, pharmacodynamic and standardized meal studies, two pivotal 6-month Phase 3 clinical trials of VIAject® in patients with Type 1 and Type 2 diabetes, as well as interim results from the long-term, 18-month safety extension trials for patients who completed the pivotal Phase 3 clinical trials. The data from these studies consistently document the safety and efficacy of VIAject®."

Biodel shares fell off a cliff in Fall, 2008 after two issues arose as a result of the Phase 3 trials:
1. Phase 3 clinical trial results from India were reported as markedly different from the German and American trial sites:
"A statistically significant (p<0.01) interaction associated with data from India was observed and efficacy results from India are, therefore, not comparable to the results from the United States and Germany. Due to this interaction, the efficacy data from India are not included in the preliminary analyses. These data are not comparable to the rest of the data for several reasons including: (a) markedly increased HbA1c levels both prior to and after study drug initiation, (b) medically improbable doubling of intra-subject variability in HbA1c results both prior to and after study drug initiation and (c) markedly reduced reporting of any hypoglycemic events. These data anomalies were observed in both the VIAject(TM) and RHI treatment groups and are under investigation. Biodel believes including the data from India is not valid for determining non-inferiority." Two possible causes for the discrepancy may have been heterogeneity of data from patients in India for the Type I diabetes study, and also that trial blood samples in India may have been exposed to prolonged periods of extreme heat.

2. The second issue was pain at the injection site for patients receiving Viaject. 24 patients actually dropped from the study as a reuslt of the pain. At the time, Biodel commented that "Injection site pain may be related to the four-times greater volume of VIAject used to achieve an equivalent dose of RHI (Humulin)," noted the company in the release. The concentration of VIAject in the trials was 25 IU/ml, while the concentration of Humulin was 100 IU/ml. Since then, Biodel has developed a liquid 100 IU/ml formulation of VIAject that may reduce the incidence of injection-site pain because it would lower the injection volumes.

Second Quarter 2010 Financial Results:
* Biodel reported a net loss for the quarter ended March 31, 2010 of $10.4 million, or $0.44 per share, compared to a net loss of $11.6 million, or $0.49 per share, for the second quarter of fiscal year 2009.
* Research and development expenses were $7.0 million for the three months ended March 31, 2010, compared to $8.4 million for the same period in the prior year. The decrease in research and development expenses was primarily attributed to reductions in clinical expenses as patients completed the Phase 3 extension trials for VIAject® in February 2010 and reduced manufacturing expenses due to purchasing of a reduced quantity of recombinant human insulin.
* General and administrative expenses totaled $3.4 million for the three months ended March 31, 2010, compared to $3.4 million for the same period in the prior year. General and administrative expenses for the quarter ended March 31, 2010 included one-time professional fee expenses associated with the appointment of our new chief executive officer, implementation of our 2010 stock incentive plan and employment agreements. The expenses for the quarter ended March 31, 2009 included a non-recurring (or one-time) severance charge for our former general counsel.
* Expenses for the quarter ended March 31, 2009 and 2010 include $1.4 million and $1.3 million, respectively, in stock-based compensation expense related to options granted to employees and non-employees.
* Biodel did not recognize any revenue during the quarter ended March 31, 2009 or 2010.
* At March 31, 2010, Biodel had cash and cash equivalents of $32.7 million and 23.9 million shares outstanding.

Summary:
This allows the millions of diabetics to have a faster, more effective mechanism of insulin that retains the safety features of current injectable insulins. I think the pain at injection site has been addressed with a 100 ml formulation, but it's possible the FDA will ask for more data around this, or because of the Indian data issue. If they don't, I think BIOD becomes an attractive buyout candidate for one of the big bios already selling insulin.

I have traded this a couple of times, and have owned shares in my IRA since 4.16. If the current market shakeout today causes a dip back into the low 4s or high 3s, I'll be doubling my position. I'll be out before the approval date, and in the event of a Complete Response Letter (CRL) will add it back to my watch list for another eventual buy back.

How I Manage My Investments

I'm one of those neat freaky, everything in it's place kind of people. My investments are no different. I have three accounts total which have three different purposes: an IRA, a taxable account for options trading, and a taxable account for stock trading. I keep my position total in each account relatively small- I only hold 3-6 different equities in any one portfolio. I consider cash to be it's own position, and try to maintain a 10-20% cash in each of my accounts at all times. You never know when opportunity will knock.

My IRA:
In my IRA, I hold 3-6 stocks that are LT plays, meaning I do not expect to sell them for at least 3-6 months. As a biopharmaceutical investor, most of my holds have catalysts dates coming up, be it a clinical trial data release, a possible FDA approval of a drug or device, or a presentation at a major medical conference.

My TAXABLE ACCOUNTS:
Options
This account makes up 10% of my total taxable investment dollars. Many people will trade options and stocks from a single account. I utilize two accounts because I find it helps to keep the information organized and easily digestible when I separate the two trading instruments. I also find it keeps me from getting trigger happy and using more money than I might have planned when buying calls and puts. I think options are an amazing trading tool, but not one I'm betting the whole house on, in part because of my own level of comfort and experience with them. In my experience, I've found I have to be very aware of volatility, open interest, volume, and the options history of a particular symbol to trade options comfortably. Similar to my IRA, I hold between 3-6 positions at any one time.

Stocks
I trade stocks both short and long. My taxable account is 3-6 positions (ya get it, really I'm that kind of organizational nerd) and half of them are always long term, meaning 3-6 month holds. With the rest of the portfolio, I place shorter term trades. I find John Welsh to be very inspirational in terms of keeping my short term trades focused and limited in scope. I've set the goal for myself to do no more than 1 short term trade daily, but frankly I'd rather do no more than 1-2 weekly. Between mamahood and work, I've got remember to stay balanced.

Profits and Taxes
If you make money, and hopefully you will, you need to be prepared to pay taxes on it. Our investment income raised our tax bracket last year (absolutely no fun) and we had to be ready with a check for the IRS. Because I am self employed in my non stock career, I pay estimated quarterly taxes anyway, and include any share of taxes that will be due on my stock gains.

At the end of each month, I take a percentage of any gains out of my trading account and transfer it to a savings account specifically for estimated quarterly tax payments. I find this less painful to do in increments than once a quarter. I also take a percentage of any gains and move it into a LT savings account. I love the stock market, but I love diversification of my investments and liquidity more.

The Great Weight Loss Drug Race

“The National Institutes of Health reported in 2007 that about 65% of U.S. adults are overweight or obese. A 2009 publication in Health Affairs estimated the annual medical burden of obesity in the U.S. to be $147 billion in 2008.”

If you’re living in the US and are at all aware of your surroundings, you’d know the weight loss market is a multibillion dollar machine that is only getting started. The financial implication of obesity and overweight americans trickles down in the form of disability costs, lost workers, and skyrocketing medical costs.

Cue pharmaceutical companies. We’ve had difficultyies getting a safe, effective weight loss medication on the market in the US for years. If you’re not old enough to remember Fen-Phen and similar drugs of the 1970s, the major concern was thepotentially fatal pulmonary hypertension and heart valve problems associated with use, which eventually led to their withdrawal from the market and billion dollar legal costs and damages in response to patients treated with the medicines.

There are currently three pharmaceutical companies in very close competition for FDA approval of a weight loss drug: Vivus Pharmaceuticals (VVUS), Arena Pharmaceuticals (ARNA), and Orexigen(OREX). Two of the companies, Vivus and Arena, have PDUFA dates in October, 2010. The two companies awaiting word in October each use one of the two chemical compounds in Phen-Fen as the basis for their present day drug, albeit theoretically safer and more clinically advanced weight loss formulations. The third pharmaceutical company, Orexigen, combines sustained release versions of popular antidepressant Wellbutrin and naltrexone, used for alcohol and opiate dependence.

More about the contenders:
Vivus Pharmaceuticals
The VVUS weight loss drug Qnexa has an FDA panel date of July 15th, 2010 and a PDUFA date of October 28th, 2010.“Qnexa contains drugs that are already FDA approved: it’s a low-dose combination of topiramate, an antiseizure medication that enhances feelings of fullness, and phentermine, the “Phen” part of Fen-Phen, which was not linked to heart valve defects.” Topamax is already prescribed for it’s off label use as a weight control drug. Qnexa is also being tested for Type 2 diabetes and sleep apnea. Additionally, Vivus also reported very good Phase 3 results from a new generation erectile dysfunction drug, making it an attractive buyout candidate, in my opinion. Once the FDA releases their panel notes in July and votes one way or another regarding approval on Qnexa at the panel itself, I think we'll see significant movement one way or another with the stock.

Qnexa has shown by far the greatest results for weight loss. In September, 2009, Vivus released Phase 3 results from the Qnexa clinical trials, Equip and Conquer:

Vivus, Inc. announced positive results from two final, phase 3 pivotal 56-week studies, EQUIP (OB-302) and CONQUER (OB-303), evaluating the safety and efficacy of Qnexa, an investigational drug, in more than 3,750 patients across 93 sites. The EQUIP and CONQUER studies met all primary endpoints by demonstrating statistically significant weight loss with all three doses of Qnexa, as compared to placebo. Patients taking Qnexa also achieved significant improvements in cardiovascular and metabolic risk factors including blood pressure, lipid levels, and type 2 diabetes. Highlights from the EQUIP and CONQUER studies include: Average weight loss of 14.7% (37 lbs) was achieved by patients treated with Qnexa for 56 weeks in the EQUIP study; Significant improvements in cardiovascular, metabolic and inflammatory risk factors among patients treated with Qnexa; FDA efficacy benchmarks for weight loss agents exceeded at all three doses of Qnexa tested in the clinical program; Completion rates up to 69% were significantly higher than placebo at all three doses of Qnexa, indicating favorable tolerability; and Favorable benefit/risk safety profile for Qnexa. The EQUIP study included 1,267 morbidly obese patients (1,050 females and 217 males) across 93 centers in the United States. The average baseline BMI of the study population was 42.1 kg/m(2) and baseline weight was 256 pounds. Patients had a 4-week dose titration period followed by 52 weeks of treatment.


Arena Pharmaceuticals
This company has a PDUFA date of October 22nd for Lorcaserin.
Lorcaserin is a novel single agent that represents the first in a new class of selective serotonin 2C receptor agonists. The serotonin 2C receptor is expressed in the brain, including the hypothalamus, an area involved in the control of appetite and metabolism. Stimulation of this receptor is strongly associated with feeding behavior and satiety. We have patents that cover lorcaserin in the U.S. and other jurisdictions, which in most cases are capable of continuing into 2023 without taking into account any patent term extensions or other exclusivity we might obtain.

“The Qnexa compound is more selective version of fenfluramine, better known as the “Fen” portion of the infamous blockbuster weight-loss drug combo Fen-Phen, which was pulled from the market. Lorcaserin is designed to avoid one of the serotonin receptors fenfluramine targeted- an activity that Arena believes was responsible for the heart valve defects Fen-Phen users experienced.”

After two Phase 3 trials, called Bloom and Blossom, Lorcaserin appears to have marginally met efficacy guidelines for the FDA governing weight loss criteria. Highlights from the trials:
* About two-thirds of patients achieved at least 5% weight loss and over one-third achieved at least 10% weight loss;
* On average, patients lost 17 to 18 pounds or about 8% of their weight;
* Secondary endpoints, including body composition, lipids, cardiovascular risk factors and glycemic parameters improved compared to placebo;
* Heart rate and blood pressure went down;
* Lorcaserin did not increase the risk of cardiac valvulopathy;
* Lorcaserin improved quality of life, and there was no signal for depression or suicidal ideation;
* The only adverse event that exceeded the placebo rate by 5% was generally mild or moderate, transient headache.

While Lorccaserin came in at breakeven in terms of weight loss efficacy, it’s safety profile is impressive, and doctors may err on the side of safety when prescribing to overweight/obese patients if Lorcaserin is approved. And the FDA may approve a safe, non controversial weight loss drug.

Orexigen Pharmaceuticals
Orexigen is developing two obesity drugs, Contrave and Empatic Contrave has completed Phase 3 trials, while Empatic is currently undergoing Phase 2 trials. Contrave submitted a new drug application (NDA_ to the FDA in March. In April, it revised Contrave clinical trial findings, showing the drug to be less effective than originally thought:
Reuters reported that Orexigen Therapeutics, Inc. said that fewer patients achieved key weight loss goals when taking its experimental obesity drug than originally reported. The Company said only 50.5% of patients who took the drug, Contrave, lost 5% or more of their body weight after 56 weeks, compared with a previously reported figure of 56.3%. Only 28.3% of patients lost 10% or more of body weight, compared with a previous figure of 32.9%. Contrave combines the antidepressant Wellbutrin, known generically as bupropion, and naltrexone, which is used to treat alcoholism. The Company recently filed for approval of the drug with the U.S. Food and Drug Administration. It is waiting to hear whether the agency deems the application complete and ready for review. The revision to the data is unlikely to affect the drug's timeline for approval.

Contrave, like Qnexa, is a combination of two drugs already on the market, bupropion
and naltrexone. Bupropion was approved for marketing in the United States in 1985 for depression and in 1997 for smoking cessation. Functionally, bupropion is thought to increase the level of dopamine activity at specific receptors in the brain, which appears to lead to a reduction in appetite and increase in energy metabolism. Orexigen’s developed a sustained-release formulation of the two active ingredients, Bupropion and Naltrexone.

Important Dates:
July 21st- FDA weight loss drug panel. Thus far, only Vivus has confirmed it will have it's drug Qnexa reviewed. It' not impossible that either or both Arena's Lorcaserin or Orexigen's Contrave could be added to the panel as well.
October 21st- Arena's Lorcaserin PDUFA date
October 28th- Vivus's Qnexa PDUFA date

Full Disclosure:
I already own VVUS June options and stock shares. I lovelovelove this company long term. That said, I'll be scaling back risk before the July meeting in case the FDA raises safety concerns, as I do with any panel or approval date.