Selvaraju is also very bullish on Synergy Pharmaceuticals Inc (NASDAQ:SGYP), which has recently demonstrated and reported very favorable phase 3 data on its lead candidate plecanatide for chronic constipation. “We think that there’s a possibility that the company could provide evidence that plecanatide is meaningfully better than Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) drug, Linzess (linaclotide), which was approved at the end of August and has already been launched here in the U.S.” Actually, Selvaraju likes both companies, but Ironwood is valued at about $1.4 billion currently. Synergy’s plecanatide is in the same class of drug as Linzess, and it has gone through four positive phase 3 trials. “It [Linzess] was launched in mid-December with Ironwood’s marketing partner Forest Laboratories, which booked $19 million of Linzess sales in just the last two weeks of December alone,” he says. “So even if you assume that a significant proportion of that number was due to channel stuffing and stocking, we could still legitimately expect this to be a $100 million+ generator in 2013, and we certainly expect it to eventually become a blockbuster drug.” He believes that Synergy’s product plecanatide could be a better drug than Linzess. Moreover, Synergy owns all of plecanatide, whereas Ironwood owns only 40% of Linzess. “For that reason, we don’t believe that Synergy deserves to trade at such a significant discount down at a $390 million market cap.” He values Synergy at around $1 billion.
This was my third conversation with Selvaraju, and he is always enthusiastic and eager to talk about his favorite ideas. Speaking with Ram is always the highlight of my week, because he loves to find undervalued names that could become grand slam homeruns. He points to three micro-cap ideas, Galena Biopharma, Neuralstem and Lpath, all of which have special technology platforms that could be developed into revolutionary therapies. He likes Galena because it’s focus is breast cancer, a quite large disease indication, and it’s doing it with a vaccine, not an antibody. The idea is to prevent recurrence of the disease. Although he’s disappointed in the slower pace of development, he likes Lpath because it’s the only company that is developing antibodies against bioactive lipids. Its lead product candidate, Isonep (sonepcizumab) in phase 2, is addressing a massive unmet need in wet age-related macular degeneration (AMD), and it is partnered with Pfizer, one of the world’s giants in drug development and sales. Finally, Neuralstem has a two-pronged platform with small molecules and stem cells addressing spinal paralysis, stroke, depression and other central nervous system diseases. The company’s lead stem cell program with NSI-566 (human spinal cord stem cells), has shown that its cell therapy approach can restore damaged spinal cords in rats, which regain motor and sensory function. It is now being tested in humans.
To read the entire interview with Ram Selvaraju, visit The Life Sciences Report.
The article Big Growth Stories in Biotech originally appeared on Fool.com and is written by Mike Volkin.
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