Zogenix-Inc.-logoZogenix Inc. (web site) is a pharmaceutical company which develops and commercializes medications for central nervous system disorders and pain. Zogenix has commercialized Zohydro, an extended-release hydrocodone for the treatment of moderate to severe chronic pain. The company is currently developing Relday, which is in Phase I clinical trials to treat schizophrenia and bipolar disorder in adults and teenagers 13 years of age and older. The company was founded in 2006, is headquartered in San Diego, and has approximately 110 employees.

Current Market Cap: ~ $210 million

Share Structure

Zogenix ownership summary








Shares short:

Zogenix shares held short


Source: Nasdaq.com


Why Zogenix Shares Were Beat Down in 2014

Zogenix shares were hit hard in 2014, closing the year down 73% from the high of $5.19 made in February. While shares were making this precipitous drop, revenue for the nine months ended September 30, 2014 was $25.6 million, an 11% increase from the $23.1 million in sales during the first 9 months of 2013. In Q3 the company also trimmed losses from .10/share to .09/share.

Despite these positives, shares were under pressure from dilution with approximately 40 million new shares hitting the market in 2014. More significantly, both the FDA and Zogenix received a torrent of negative publicity over the FDA’s approval of, and the company’s commercialization of Zohydro ER.

Zohydro ER is an extended-release form of hydrocodone used for around-the-clock treatment of severe pain. Like any narcotic, Zohydro can be addictive and has the potential for misuse by substance abusers.  Even before the drug was launched in March, a group called “Fed UP!” (a coalition to end the opioid epidemic) sent this letter to FDA commissioner Margaret Hamburg imploring her to re-write policies regarding FDA approval of all narcotics and that “the very last thing the country needs is another dangerous, high-dose opioid.”

With 2014 being an election year, some politicians couldn’t help themselves in what I believe was an attempt to win a few votes with the “Act to Ban Zohydro” in March. The lead on this bill was Sen. Joe Manchin (D-W.Va.). His daughter is the CEO of competing drug company Mylan Inc. which was also a major contributor to his campaign. This is a severe conflict of interest if ever there was one.

The media picked up on the Zohydro story with gusto, with multiple outlets parroting false claims such as:

  • Zohydro will kill people as soon as it is released (nobody has died)
  • Zohydro is 10 times stronger than Vicodin (it is the same strength)
  • It only takes 1 or 2 tablets to kill a patient (untrue)
  • Children who take 1 pill will die (unlikely, and how will a child have access?)
  • This is the worst decision by the FDA, a disaster and tragedy for this country (it was the right decision)
  • Zohydro is more powerful than anything on the market (it is actually the least powerful opioid in its class, when compared to oxycodone or morphine)

Zogenix tried to correct the misinformation spread by the media and politicians in Let’s Get the Facts Straight About Zohydro in May, as did the FDA in this update, but much of the damage to shares had already been done.  Never letting facts get in the way of improving their ratings, media outlets continued to perpetuate false claims about Zohydro and shares continued to slide to a low of $1.07 made two weeks ago.

Personally, I trust the judgment of noted pain management specialist Dr. Lawrence Robbins who wrote Zohydro Debate: Drug Hysteria or True Concernand FDA Commissioner Margaret Hamburg who discusses the safety and efficacy of Zohydro in this video over a politician with a clear conflict of interest and the media’s perpetuation of  falsehoods to boost ratings.

The “Act to Ban Zohydro” is one of over 10,600 bills and resolutions currently before Congress and of those, only about 5% will become law. The web site GovTrack.us  gives the Zohydro ban a 0% chance of being enacted.  GoveTrack.us is one of the world’s most visited government transparency websites and their embeddable widgets are deployed on more than 80 official websites of Members of Congress.

However, due to the unwarranted controversy and continued misinformation surrounding Zohydro ER, Zogenix shares were sold and shorted throughout 2014.  Shares are just now coming off their lows while at the same time 25 million shares are held short.

At MicrocapResearch.com, we like this setup when combined with near-term events in January that we believe will lead to an appreciable recovery.


Why Zogenix Shares Will Recover- PDUFA January 30th 

Zogenix submitted a supplemental New Drug Application (sNDA) to the FDA for a new formulation of Zohydro, “Zohydro AD” (Abuse Deterrent). Zohydro AD is more difficult to abuse by injection or nasal insufflation and the FDA’s decision is expected on January 30th. Having already refused to cave in to pressure from a politician who received large campaign contributions from a competitor (and whose daughter is the CEO of that same competitor), the odds of the FDA approving the same drug in a safer formulation that’s harder to abuse appear excellent.

Zogenix - ReldayIn addition to the likely approval of Zohydro AD on January 30th by the FDA, Zogenix will be initiating the next phase of studies for Relday, a once/month subcutaneous injection for persons suffering from schizophrenia in Q1 of this year.

Phase I trials of Relday were positive and if approved, Relday will be the first subcutaneous antipsychotic product that allows for once-monthly dosing. Non-compliance by patients taking antipsychotics is common and well documented. A once-monthly subcutaneous dose would have obvious advantages for both clinicians and their patients. This is truly a potential blockbuster drug in the Zogenix pipeline- note that sales of the antipsychotic drug Abilify alone were some $5.4 billion in 2011-2012.

Also in development is Brabafen for the treatment a catastrophic form of epilepsy (Dravet Syndrome) for which there is currently no cure. Treatment options are “extremely limited” according to this Dravet Syndrome Foundation Scientific Advisory Board publication. Brabafen had dramatic results in a Belgian study where 70% of patients taking the drug were seizure-free for at least 1 year. Phase 3 clinical trials are expected to begin in Q2.

Technically Speaking…

Shares are now approaching a resistance level around $1.50 that they failed to break for months as shown on the weekly chart below.

Zogenix weekly chart - resistance levels

We believe shares will break above resistance due to forward events and recent activity in the stock. On December 30th, shares crossed the 100 day moving average on heavy volume, prompting us to make this tweet to notify subscribers we entered the stock at $1.30.  Zogenix is one of many high-potential, “best microcaps” we’ve identified, and the volume in crossing the 100 dma is convincing, as was the New Year’s Eve follow-thru on lower, but still respectable volume.

Zogenix 100 dma breakout


Finally, the odds of a golden crossover look good in Q1…and possibly in the next 2-3 weeks.
The 200 dma will continue a rapid decent for the next month while the 50 dma should begin to slope up given last week’s rise off the bottom. Something to watch for!

Zogenix golden cross


The Bottom Line

  • Shares of Zogenix have been oversold and over-shorted, due in large part to media misinformation re: Zohydro ER that fueled investor fear
  • With year-end tax loss selling over, the January 30th PDUFA date for Zohydro AD, the Q1 pharmacokinetics study of Relday, and sizable short interest in the stock, we believe shares of Zogenix are on the verge of an appreciable move to the upside in January
  • Risk of near term share dilution appears mitigated by the company’s $50 million cash balance reported at the end of Q3 combined with the December 31st filing of a credit facility of up to $20 million

Traders may wish to hold off for a break above $1.50-$1.55 resistance- which we believe will take place soon.

We recommend the use of stop-loss orders to preserve capital in all trades.

Supplemental: Zogenix December 2014 Investor Presentation

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Disclosure: The publishers of MicrocapResearch.com are long ZGNX.  We have not been paid by any company or third party for this article.

See Disclaimer.

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MicrocapResearch.com emailed and tweeted a trading alert on Sorrento Therapeutics (NasdaqCM: SRNE) at market open on 12/24 at $8.60. We believe Sorrento Therapeutics has serious potential to make strong gains in 2015 for reasons discussed in this article. 

 Company Overview

Sorrento Therapeutics logoFounded in 2006, Sorrento Therapeutics (web site) is based in San Diego, California and focuses on the discovery, development, and commercialization of proprietary pharmaceuticals internationally for the treatment of several forms of cancer and auto-immune diseases as well as intractable pain in end-stage disease. Sorrento’s lead product, Cynviloq, is currently approved and marketed in various countries, including South Korea, for metastatic breast cancer (MBC), non-small cell lung cancer (NSCLC), and ovarian cancer under the trade name Genexol-PM. Cynviloq has also completed Phase I or III trials for MBC, and Phase I or II trials in NSCLC, Ovarian, Bladder, and Pancreatic cancers.  Resiniferatoxin, a non-opiate, ultra potent drug for intractable pain in end-stage disease is also under development. Sorrento Therapeutics is also developing antibody drug conjugates and recombinant intravenous immunoglobulin (rIVIG) for the treatment of certain auto-immune diseases, as well as immunodeficiencies.

Sorrento also notes in their Q3 filing:
“Through September 30, 2014, we have identified and further developed a number of potential drug product candidates across various therapeutic areas, and intend to select several lead product candidates to further advance into preclinical development activities in 2014 and 2015.”


Share Structure

Shares Outstanding: 36.1 million as of the 12/22/2014 Schedule 13D, which includes the shares from a $40 million investment by Dr. Patrick Soon-Shiong for a 20% stake in the company.

Market Cap: ~ $345 million

Public Float: 18-20 million, depending on source

(click to enlarge)

Sorrento Therapeutics ownership summary

 Sources: SEC filings, Nasdaq.com, and Fidelity Investments

New Joint Venture and Key Investor Bring Strong Upside Potential in 2015

In the last 10 days,  Sorrento Therapeutics made three major announcements regarding their direction in 2015:

  1. The 12/15/2014 announcement of “The Immunotherapy Antibody” joint venture with privately held NantWorks Inc. and its founder, physician scientist, and biotechnology entrepreneur Dr. Patrick Soon-Shiong. Dr. Soon-Shiong has provided 20 million in “initial” funding and now owns 20% of Sorrento Therapeutics at a purchase price of $5.80/share. The JV will accelerate development of multiple immuno-oncology monoclonal antibodies (mAbs) for the treatment of cancer
  2. The 12/19/2014 announcement of collaboration with privately held Conkwest Inc. (web site) to develop “Next Generation Cancer Immunotherapy”
  3. The 12/24/2014 announcement  of a $48 million investment by Dr. Soon-Shiong in Conkwest Inc.
    Sorrento Therapeutics is also purchasing $2 million in class A common stock in Conkwest Inc. as part of the transaction

Who is Dr. Patrick Soon-Shiong?

For starters, he:Dr. Soon-Shiong Sorrento Therapeutics

  • Founded Abraxis BioScience and developed Abraxane, a blockbuster drug approved for use in liver, lung, pancreatic, and breast cancers. Dr. Soon-Shiong sold Abraxis BioScience to Celgene for $2.9 billion in 2010
  • Founded American Pharmaceutical Partners which he sold to Fresenius SE for $5.6 billion in 2008
  • Has a net worth estimated at $13 billion (Forbes), is the wealthiest American in the healthcare industry, and the wealthiest man in Los Angeles
  • Is a pioneer in genomics and immunotherapy drug research, drugs that stimulate our immune systems to work harder or smarter to attack cancer cells

Dr. Soon-Shiong in November of this year, San Diego News

Dr. Soon-Shiong “Disrupting Cancer”.  60 Minutes, December 7, 2014 

The market for new immunotherapy treatments for cancer was estimated at $35 billion annually by Citigroup last year. Obviously, the “Immunotherapy Antibody Joint Venture” announced between Sorrento Therapeutics and Dr. Soon-Shiong’s NantWorks Inc. and the Sorrento-Nantomics-Conkwest collaboration is aimed squarely at this segment.

Dr. Soon-Shiong stated:

“Immunotherapy is one of the most powerful next-generation platforms added to our war against cancer. Integration of Nantomics advanced proteomics platform with the power of Sorrento’s fully human antibody libraries and Conkwest’s natural killer cell-lines is expected to enable an approach to attack tumors and their micro-metastases in a manner never before addressed.”


Strong Balance Sheet

Sorrento Therapeutics reported current assets of $45.8 million vs. current liabilities of $8.7 million as of the September 30th Q3 filing.

  • Q3 cash balance of $44.3 million has been increased with the additional$40 million in funding by Dr. Soon-Shiong just announced
  • Dr. Soon-Shiong’s investment in Sorrento Therapeutics has been called “initial joint funding” and an “initial joint venture”- strongly suggesting there’s more to come
  • The potential for a massively dilutive financing at poor terms for current shareholders seems remote given Dr. Soon-Shiong’s personal wealth and investment in the company

Analyst Mean Price Target of $17/share Likely to Increase 

Sorrento Therapeutics is rapidly growing from a microcap into a small cap company. There are currently 4 analysts following Sorrento, all with buy recommendations.

Price Target Summary
Mean Target: 17.00
Median Target: 14.50
High Target: 30.00
Low Target: 9.00
No. of Brokers: 4

Source: Yahoo Finance
Zacks Small Cap Research increased their price target on Sorrento Therapeutics to $18/share on December 15.  The price targets in the table above were made prior to the materially significant news of the last 10 days and I expect them to be revised upward as well.

Zacks (see release) points out the following positives from the Sorrento/Natworks JV:

Sorrento Therapeutics positives -Zacks

Expect a Jump in Institutional Participation

Sorrento Therapeutics had a healthy 39% institutional ownership as of 9/30/14 (see table above) and I expect that level is increasing now. With a relatively small float of 18-20 million shares, this could easily keep momentum to the upside…but due to the smallish float investors should expect and be prepared for volatility. There doesn’t appear to be a meaningful short position in the stock at present.


The 1 month chart for Sorrento Therapeutics is a thing of beauty. Following the high volume breakout earlier this month, there were a few days of lower volume sideways trading. Then, during the holiday-shortened 12/24 trading day, shares gained another 11.5% on heavier volume. It’s noteworthy that the initial move in Sorrento shares was made during the biggest weekly decline in two years for the broader market.

Momentum and money flow show an uptick on 12/24 and could be signaling the start of another leg up.

Stock chart for Sorrento Therapeutics 12-26-2014

There is some resistance at around $11 on the 12 month chart.

resistance level Sorrento Therapeutics chart 2

The Bottom Line

I believe Sorrento Therapeutics is a strong buy here and a gain of 50% from current prices over the next 6 months is a reasonable, if not conservative expectation. Short term/active traders may want to see a breakout above $11 resistance before jumping in. 


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Disclosure: I am long SRNE. I have not been paid by any company or third party for this article.

Disclaimer: Opinions expressed are my own and should not be considered investment advice nor an invitation to buy or sell shares of any company mentioned on this site. Investors should perform their own due diligence and consult with a Registered Investment Advisor prior to making any investment decision. See sidebar for full disclaimer.

Rockwell Medical


The publishers of MicrocapResearch.com have taken long positions in Sorrento Therapeutics, (SRNE)NasdaqCM (web site) at $8.60

Share price:[s_static_display codes=”SRNE”]

  • We believe the move over the last week is just the beginning of a much larger move in 2015.
  •  Our report on Sorrento Therapeutics will be published on 12/26/2014. 



Most of all, we want to thank you for subscribing during our early launch period.

We look forward to sharing great small and microcap stocks with our subscribers in 2015 and beyond.


Trade alert



Rockwell Medical


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Copyright © 2014 by MicrocapResearch.com. All rights reserved.

First Paralyzed Human To Have Received Neuro-Spinal Scaffold Implant Says “I’m Going To Walk Again”

Author: John Harrell

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  • Rare interview of a patient during a clinical trial.
  • Gradual, but significant progress is occurring.
  • Jordan Fallis’ attitude, courage and determination makes everyone want to root for him.

Back on October 15th, InVivo Therapeutics (OTCQB:NVIV) announced that their long awaited clinical trial involving humans was underway, as the first patient in the world to receive a Neuro-Spinal Scaffold implant for traumatic spinal cord injury had undergone successful implant surgery. The objective of the pilot study is to evaluate the safety and feasibility of the Neuro-Spinal Scaffold as well as to gather preliminary evidence of effectiveness. The ultimate goals for the scaffold implant are outlined here on page 10 of the company’s recent November 19th presentation. Some of these goals for those suffering from paralysis include recovery of muscle control, movement, strength, a decrease in neuropathic pain and most importantly in my opinion, recovery of bowel/bladder control. Assuming that the scaffold implant leads to a reversal of paralysis and even partially accomplishes any of the above named goals, some of those suffering from this horrific condition may literally be jumping for joy.

For the few that follow this company, most are aware that the scaffold implant in animals was an overwhelming success, as seen here in this video from last year. Of the 44 monkeys used in the study, all of them recovered from their spinal cord injuries and were free from paralysis. In 99.9% of all clinical trials, the public has no access whatsoever to those that are being studied for whatever condition they’re being treated for and obviously that’s why investing in biotech is very risky. The access factor for InVivo would have fallen into the above category had it not been for this local TV news report on November 11th, whereby the surgeon and patient were interviewed about the first-ever surgery.

Invivo therapeutics - Jordan Fallis- Patient No. 1It was disclosed that the first-ever human recipient of the Neuro-Spinal Scaffold implant was 25-year-old Jordan Fallis from Scottsdale, AZ. The interview found Fallis to be very hopeful about his chances for a recovery and his positive attitude certainly took the spotlight. A “Pray For Jordan Lee Fallis” Facebook page was created by his ex-girlfriend and a donation page was created by his mother on the “gofundme” site to help with medical costs, needs and care. In seeing a phone number listed on the “Pray For Jordan Lee Fallis” Facebook page, I reached out to the creator of the page and discovered it was Jordan’s ex-girlfriend. In letting her know that I wanted to reach out to Jordan for an interview and knowing I might also be an encouragement to him since we shared at least two things in common (lower back surgery and motocross), she sent a text to Jordan and alerted him that I would be calling. I waited three weeks before calling, as I wanted to give him some breathing room from the recent media attention and I also knew he was about to move from the hospital into a 1st-floor apartment across town.

When I called Jordan, I found him to be very receptive to my call, as we spent an hour and fifteen minutes on the phone. As was the case in his local TV interview three weeks earlier, he was extremely positive, hopeful and thrilled with his progress. I shared with him my passion for motocross racing as a teenager and the fact that I myself had undergone lower back surgery (L-4 and L-5) as a result of breaking two discs after landing on hard snow (I thought it was powder) from a jump while skiing at Whistler/Blackcomb some sixteen years ago. I told Jordan that people he didn’t even know were rallying around him, as they found his local TV appearance to be incredibly inspiring and uplifting, especially in seeing the positive attitude and courage he displayed after having a life changing event take place in just a split second. He couldn’t believe and was overwhelmed that someone even publicly stated that a new dirt bike was waiting for him upon his being able to walk again. He also expressed his gratitude for those that financially contributed to him through the “gofundme” site.

In talking about the accident, Jordan told me that he was a fairly well known BMX rider in the Phoenix area and that he loved doing tricks on his bike. He stated that he had executed many perfect backflips and that motocross riders in the area encouraged him to take up that sport. Jordan took their advice, got a dirt bike and immediately fell in love with the sport, transferring his skills from the BMX bicycle over to the dirt bike. He and his friends had built ramps and other formations for performing various tricks. When Jordan felt he was ready to execute his first-ever backflip on a dirt bike, he stated that he under-rotated after jumping off the ramp and landed on his head, with excruciating pain to follow.

Jordan stated that he was paralyzed from his belly button down and immediately agreed to the experimental scaffold implant that took place within 24 hours of the accident, the surgery lasting somewhere between 4 to 6 hours. Nearly a month later, he stated in the local TV interview (link above)I’ve already started getting feeling back lower and it’s coming through.

My interview of Jordan took place on December 2nd, three weeks after he spoke with the local TV station in Phoenix. With regard to his recovery, I found what he shared with me to be nothing short of remarkable.

His Progress

Jordan told me that he is thrilled with what the implanted scaffold into his spine is apparently accomplishing concerning his acute spinal cord injury. He says that he is experiencing gradual, but significant progress. The initial paralysis from the belly button down seems to have shifted lower to the area of his upper thighs down. Jordan said the worst thing at first was the inability to control bowel/bladder movements and having to deal with a catheter. He now says that the catheter has been removed, as sensation has returned to the point whereby he’s beginning to feel pressure and thus can sit on a commode and either urinate or defecate on his own. As of the date I interviewed him, he said that he hadn’t had to insert a rectal suppository for bowel stimulation in a week and that “some” feeling had returned to his penis. He also stated that two days before I called, he felt a cold sensation below the knee on his calf when it touched the porcelain surface of the bathtub while he was struggling to get in.

I purposely didn’t mention it earlier in our conversation for the sake of not wanting to elevate his hopes, but after hearing what he told me and feeling very comfortable with our conversation, I asked him how aware he was of the prior scaffold study executed on animals. I specifically pointed out the video (link above) involving the monkey(s). Jordan told me he knew nothing about the scaffold being implanted into the spine of paralyzed monkeys and that he was asked not to explore the internet in search of more information, most likely a gesture by either InVivo, the doctors or both, to prevent him from getting his hopes too high. I asked him if he wanted to see the video and he said yes, thus I asked him to shoot me a text message with his e-mail address after our conversation and I subsequently received his text immediately thereafter.

In concluding our conversation, I wished him well and told him that many people he didn’t even know were praying for him and that I believed prayer is not only answered, but extremely powerful. Obviously being a Christian, that’s what I firmly believe and thus felt comfortable in sharing that with Jordan. I told him that I would check in on him on down the road and he was very receptive to that.

After I wrote the main contents of the article, I called Jordan on Friday, December 12th, as I wanted to read the article to him prior to submitting it for publication. He didn’t answer the phone, so I left a message. In not hearing back from him, I sent him a text message on Monday, December 15th, basically repeating the same message I left on his voicemail and to also let him know that two colleagues of mine had just donated $600.00 to his site on “gofundme.” After still not hearing back from Jordan, I sent his mother a message through the “gofundme” site, once again reiterating the same thing I sent Jordan via voicemail and text. I didn’t hear back from her and then didn’t realize until this week that his grandfather had passed away the day before I called. During our conversation, he did mention that his grandfather was gravely ill back in Iowa and while at first I thought I may have not received a return call or text due to the passing of his grandfather, I now speculate a week later that either the doctors or InVivo may have requested that he and his family not make contact with any potential media source during the remainder of the trial, especially since the company just announced on Tuesday that the FDA just approved expedited enrollment for the ongoing pilot trial, possibly reducing the duration of the pilot trial by up to one year and signaling that there seem to be no safety issues with Jordan’s implant up to this point, the two month mark. I would also tend to believe that they still want to keep Jordan’s high hopes in check, regardless of the amazing progress he’s made to date.

Jordan shared with me how much he misses his work as a gear machinist and how badly he wants to return to the shop. He said that he recently watched his surgery and then told the doctors that he would be happy to be a spokesman for the procedure when the time is right. He told me with confidence, “I’m going to walk again” and that “My goal in six months is to be able to swing my leg back over the seat of my motorcycle.” It was brought up and we even discussed the possibility of him eventually completing that backflip, which just shows you the courage and determination this guy has.

John Harrell

See also:

InVivo Therapeutics (NVIV): Disruptive Technology for Spinal Cord Injuries

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As many as 20,000 people suffer spinal cord injuries annually in the U.S. (CDC estimate) and some 250,000-500,000 people globally (WHO estimate). Many of these people are left with a devastating lack of sensory and motor function below the level of injury- making even simple tasks challenging, if not impossible.

Now, a truly game-changing treatment may be on the horizon from InVivo Therapeutics (web site). InVivo Therapeutics has not only received FDA approval to proceed with clinical trials of their Neuro-Spinal Scaffold, they were granted an expedited enrollment track by FDA to accelerate those trials on December 16, 2014 (press release).

I believe InVivo Therapeutics offers tremendous upside based on reasons presented in this article.


 Overview/Share Structure

InVivo Therapeutics logo- croppedFounded in 2005 and based in Cambridge, MA, InVivo Therapeutics is a development stage biotechnology company focused on utilizing polymers as a platform technology to develop treatments to improve function in individuals paralyzed as a result of traumatic spinal cord injury (SCI). InVivo Therapeutics is developing a biocompatible Neuro-Spinal Scaffold to treat acute SCI and biocompatible Neuro-Spinal Scaffold Plus Stem Cells to treat chronic SCI. The company has proprietary technologies and intellectual property licensed under exclusive, worldwide license from Children’s Medical Center Corporation and the Massachusetts Institute of Technology, as well as intellectual property that has been developed internally in collaboration with advisors and partners.


Shares Outstanding: 101.6 million
Market Capitalization: Approximately $135 million
Insider Ownership: Approximately 27%
Employee Count: 48
Institutional Ownership: 10.2%
Insider Ownership: 26%
Revenue: (TTM) $0.00
Enterprise Value: $101.8 M (12/18/2014)
EPS: (Adjusted TTM) $-0.01
Analyst Coverage: InVivo Therapeutics currently has only one analyst following it with a $3/share price target
(Source: Thompson/Reuters and Fidelity Investments)

November 2014 Investor Presentation

InVivoTherapeutics-spinal-cord-scaffoldThe biodegradable Neuro-Spinal Scaffold developed by InVivo Therapeutics is surgically implanted at the epicenter of the wound after an acute spinal cord injury.  The scaffold has been shown to facilitate healing to spare spinal cord tissue, decrease post-traumatic cyst formation, and decrease spinal cord tissue pressure in preclinical studies. The Neuro-Spinal Scaffold has received a Humanitarian Use Device designation and is now in clinical trials for the treatment of complete traumatic acute spinal cord injury.

Recent Developments

A very positive development for InVivo Therapeutics was announced last week as the FDA gave the go-ahead for the company to accelerate enrollment in clinical trials of the Neuro-Spinal Scaffold. This is extremely significant, as it speeds up the entire trial period, cutting the enrollment period from 15 months to potentially as low as 6 months according to Senior Pharmaceutical & Biotechnology analyst Jason Napodano from Zacks Small Cap Research (article).

Regarding the expedited enrollment granted by the FDA, Mark Perrin, InVivo’s CEO, stated:

“Over the last calendar year, we have cultivated a collaborative and fruitful relationship with the FDA, and we couldn’t be happier with today’s announcement. Under our new plan, it’s possible to reduce the duration of our pilot trial by up to one year. This, of course, is dependent on patient presentation, but with today’s approval, along with our previously-announced approval of increasing the number of clinical sites up to 20, we are much better positioned to execute and complete this trial in an expedited fashion. Although we cannot predict when subjects will present, we now anticipate full enrollment in the pilot trial in 2015.”

Because the pace toward possible FDA approval for their Neuro-Spinal Scaffold is now faster, InVivo Therapeutics took a leap forward in the time frame for potential commercialization as well.

Chief Science Officer for InVivo, Dr. Thomas Ulich, gave the following presentation on the Neuro-Spinal Scaffold and its use in spinal cord injuries at the 2014 Stem Cell Meeting on the Mesa. 

The presentation is both educational and fascinating.



Strong Cash Balance Mitigates Risk of Near Term Share Dilution

In May, InVivo completed a round of financing at $1.15/share for $14.6 million in net proceeds and had a cash balance of $17.6 million at the end of Q3. (SEC filing). With $18.3 million in current assets and $4.8 million in current liabilities, the company enjoys a healthy current ratio of 3.8. Management has stated InVivo Theraputics has the cash required for all operations through March, 2016 without additional financing.

In addition to the accelerated clinical trials announced this week, this is another big positive for investors in the company. Uncertainty as to the extent of share dilution and at what price are routine concerns for investors in small and microcap biotech stocks. With InVivo Therapeutics, that risk is greatly diminished for the next 12+ months.

Cash burn has decreased following InVivo’s corporate re-alignment announced in June with expected annualized savings of $3 million and a reduction in cash expenditures of approximately 23% as compared to 2013.  This realignment allows the company to focus exclusively on the development of the Neuro-Spinal Scaffold.

“Miracle” Potential in a Massive Market

For patients suffering traumatic spinal cord injuries, there is no real treatment, no “cure” currently available. Depending on the location and extent of injury, debilitating and life-threatening symptoms are merely managed. Severe thoracic nerve injuries usually result in paraplegia and very little, (if any), control of bowel or bladder…a horrific reality for these individuals. Because trauma is the overwhelming cause of these injuries, the patients are often young adults involved in a motor vehicle crash or a sports-related injury.

As CEO Mark Perrin explained:

“There is nothing out there to help these patients. It’s such an extraordinary unmet medical need that, if successful, the commercialization plans will involve getting the word out to the medical and patient community that this option is now available, and doing everything we can to get the product into hospitals to help treat these patients” (The Wall Street Transcript).

InVivo estimates the worldwide market for treating acute complete SCI to be over $500 million annually and the chronic SCI market to be over $10 billion.


Clinical Study Outline

Pilot Study of Clinical Safety of the PLGA Poly-L-Lysine Scaffold for the Treatment of Complete (AIS A) Traumatic Acute Spinal Cord Injury

Disruptive Technology

This is truly disruptive technology for the management of SCI, and if approved by the FDA, the Neuro-Spinal Scaffold would revolutionize the treatment of spinal cord injuries. Should clinical trials in humans come anywhere close to the incredible results in this Must See Video with former CEO Frank Reynolds, “New Technology has Paralyzed Monkeys Walking“, then the current market cap of $135 million will be a fraction of where this company will ultimately trade.

The NVIV chart shows the volatility typical in a disruptive microcap company.  The breakout on 11/12 followed media reports on the first human being entered into the FDA study for the Neuro-Spinal Scaffold, and shows early reaction to yesterday’s news on the expedited enrollment granted by the FDA.
Invivo therapeutics 2 month stock chart



NVIV may be a perfect fit for aggressive investors with a high risk tolerance as the company continues down the (often bumpy) road of clinical trials and hopefully, eventual FDA approval of the Neuro-Spinal Scaffold.

Disclosure: I am long NVIV. I have not been paid by any company or third party for this article.

Disclaimer: Opinions expressed are my own and should not be considered investment advice nor an invitation to buy or sell shares of any company mentioned on this site. Investors should perform their own due diligence and consult with a Registered Investment Advisor prior to making any investment decision. See sidebar for full disclaimer.

Rockwell Medical



Supplemental: On 12/31 I received permission to post this InVivo Therapeutics Research Report from the author, Dr. Jerry Isaacson of LiceSci Capital.

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Rockwell Medical (RMTI) Speculative Buy as January PDUFA Date Nears


  • January 24 PDUFA date set for patented, drug with large market potential = near term catalyst
  • Shares may be coming off double bottom formation
  • Completed capital raise in November by BofA Merrill Lynch at 9:00/share for net proceeds of $54.7 million
  • $53 million in ttm revenue from existing operations



Overview/Share Structure

Rockwell Medical logoRockwell Medical, Inc. (RMTI) is a biopharmaceutical company targeting end-stage renal disease (ESRD) and chronic kidney disease (CKD) with products and services for the treatment of iron deficiency anemia, secondary hyperparathyroidism and hemodialysis.

Founded in 1995 and headquartered in Wixom, MI, Rockwell Medical has 286 full time employees.

Shares outstanding: 46.6 million (following November capital raise)

Insider ownership: 18.6% with 420,000 shares purchased in last 4 months and zero insider sells

Institutional ownership: 22-28% (depending on source)


January 24 PDUFA Date for New Drug, “Triferic”

For those new to pharma/biotech stocks, a critically important day is the PDUFA date (pronounced puh-doo-fuh). It stands for “Prescription Drug User Fee Act” and the trading leading up to the PDUFA date is typically volatile.

What’s at stake is huge, as the PDUFA date is the day the FDA votes to approve or reject a new drug. Sometimes, the FDA will rule before the announced PDUFA date, but it’s the day by which a decision is expected.

Triferic is Rockwell’s late-stage investigational iron maintenance therapy for the treatment of iron deficiency in chronic kidney disease patients receiving hemodialysis, and the PDUFA date set for approval or rejection by the FDA is January 24.

While this may not be as exciting as a cure for cancer, the market/revenue implications for Rockwell are big. End Stage Renal Disease (ESRD) is the condition where a patient’s kidneys have completely failed. As a result, patients with ESRD require dialysis treatments several times/week (or a kidney transplant) to survive. There is no cure. Unfortunately, ESRD affects 2.52 million patients globally and is growing 6-8% annually, exceeding population growth rates in much of the world.

The key to understanding Triferic’s potential is that these 2.5 million dialysis patients also suffer from chronic anemia (low hemoglobin levels) and serious (sometimes life-threatening) liver failure. Liver failure in this patient population is most often caused by iron toxicity resulting from the iron replacement therapies currently used to treat the underlying anemia. It’s a real (and expensive) problem for hospitals and renal physicians to manage hemoglobin and iron levels in these patients, and Triferic addresses the problem.

Triferic is administered during the patient’s dialysis treatment and in positive clinical trials has shown to be efficacious in preventing anemia and high iron levels that can lead to liver failure. There were no adverse effects from the drug reported in the studies. Should the FDA approve Trifecta for use in ESRD patients, then I can see widespread use of by physicians to more easily manage their patients.

Moreover, hospitals nationwide have an increasing role in patient treatment modalities. Hospitals nationwide must be accredited by and follow “best practice standards” set by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). The JCAHO has enormous power in healthcare administration nationwide. If a hospital loses accreditation from JCAHO, they lose their Medicare funding…a devastating blow. While JCAHO may not literally “prescribe” a drug, they can strongly influence its use by making hospitals prove they are using “disease-specific best practices” to lower cost and reduce the average patient length of stay. So a drug like Triferic can become a best practice protocol used by hospitals to demonstrate to JCAHO what they are proactive in reducing patient length of stay limiting expensive complications of anemia and liver toxicity in ESRD patients. These protocols become part of a standard set of orders that physicians who are authorized to practice at a particular hospital must follow.


Existing Operations

Risk in RMTI is somewhat mitigated in the fact the company has a 20 year operating history and ttm revenues of $53 million from sales of various solutions and products for dialysis. In October 2014, the company entered into an exclusive licensing agreement with Baxter Healthcare, a $40 billion industry giant, to market their dialysis solutions (listen to conference call). So, unlike a pharma microcap with one product that’s make or break leading up to the PDUFA date, RMIT has several irons in the fire for future revenue expansion.


Possible Double Bottom

RMTI shares are volatile and might be making a double bottom formation. With end of year tax-loss sales, support could be broken with new lows made between now and eoy, so caution is advised. In fact it’s possible that RMTI may have broken to new lows by the time this is published.

Rockwell Medical chart

Analyst Estimates

For those who follow analyst estimates, there are 5 currently covering Rockwell Medical. Their average estimate for 2014 is for a loss of .46/share, improving (dramatically) to positive earnings of .24/share for 2015.


Suggested Trade

I believe shares have a reasonably strong chance of coming off the bottom here and are likely to move up rapidly by January as the 1/24/2015 PDUFA date nears.

Buy RMTI shares above recent $8.10 low and below $9 with a tight stop loss. Should shares be under $8.10 by the time you read this- you might consider holding off for even lower prices as the year winds down and tax loss sellers complete their exit.

Disclosure: I am long RMTI @ $8.14

Rockwell Medical



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