Insys Therapeutics Inc. (Nasdaq: INSY) – our “War on Pain” biotech play – has given us a profit of more than 10.7% since we recommended the stock a little less than two weeks ago.
I hope you like profits, because that’s just for starters.
[ad#Google Adsense 336×280-IA]The U.S. Food and Drug Administration (FDA) last week approved the final “product label” for the company’s new synthetic marijuana drug – which means Insys can bring this new therapy to market in August.
Investors who specialize in drug stocks are always trying to pull profits from trades based on the three-step FDA “phalanx” that up-and-coming biotechs must navigate to finally get a new drug to market.
But if you really want to cash in, commercialization is the “triggering event” that can make that happen.
And that’s exactly where Insys is right now.
Let me give you a little bit of context here – before I explain exactly what’s going to happen next…
These Companies Can Bring Huge Investor Profits
The drug-development process is one I know well. The decades I spent as a business journalist included long stints on the biotech beat.
And during that time, I learned – firsthand – why it can take 10 years and a billion dollars to bring a drug candidate out of the lab, take it through the FDA regulatory gauntlet, and finally end up with a drug that can generate real revenue and profits.
I’ve employed that expertise to a very profitable advantage for my paid-up Private Briefing subscribers.
The very first stock that I recommended on the very first day of Private Briefing’s life back in August 2011 was a development-stage drug firm called Galapagos NV (Nasdaq ADR: GLPG). From the “Buy” price of $8.60 a share, Galapagos soared to a recent peak of $94.88.
Best of all: I re-recommended it over and over on the way up, meaning thousands of subscribers had multiple chances to grab hefty slices of this 1,003% peak gain.
Back in 2012, I studied the big pharma sector – and could see that the top players were facing a “patent cliff” on their blockbuster drugs. But I also saw that those firms were stuffed with cash from those big-profit drugs – and predicted those firms would embark on shopping sprees to replace those going-off-patent drugs.
I predicted a “Biotech Buyout Boom” – and identified three stocks that could be takeover targets. All three stocks I recommended zoomed, and one – a cancer pioneer – brought my readers an 818% profit.
So I understand the biotech sector, I understand the “right” stocks to pick, and I understand how big new trends can trigger some of the heftiest windfalls you see.
And two of the biggest new trends offer us some of the biggest potential gains with Insys. Those trends…
- The “War on Pain” – where doctors, currently on the front lines of the so-called “Opioid Crisis” of overdose deaths, are trying to find non-opioid drugs that can solve chronic pain.
- The “Legalization of Medical Marijuana,” where doctors, researchers, and our elected leaders, recognizing the broad treatment potential of cannabinoid-based therapies – are ramping up research even as they drop legal barriers for marijuana-based drugs.
Here’s what I mean…
There Are Multiple Converging Profit “Triggers” at Work
Insys has big upside because it’s trying (and, so far, succeeding with flying colors) to work at the “convergence” of those two powerful trends I mentioned.
The company already offers conventional opioid-based pain drugs. One of its key products is a drug called Subsys, a fentanyl spray aimed chiefly at cancer patients experiencing “breakthrough” pain. The product is designed to be sprayed under the tongue, where it’s absorbed through the skin.
But now the firm is looking to commercialize a drug called Syndros – which is its own branded version of a medication known as Marinol.
Marinol is a synthetic form of Delta-9-THC, a compound that occurs naturally in marijuana. The FDA has approved Marinol to treat nausea in chemotherapy patients who’ve failed to adequately respond to conventional treatments.
And today, the FDA has approved the final “product label” for an oral solution of Syndros.
Syndros is approved for use in treating anorexia associated with weight loss in patients with AIDS, and for treating chemotherapy patients who suffer from severe nausea – and who’ve not responded to other treatments.
“The finalization of the approved product label for Syndros by the FDA marks a milestone for Insys and the last regulatory step required prior to the product’s launch,” Insys CEO Saeed Motahari said. “Syndros is the second product entirely developed and commercialized by Insys. We maintain our commitment to bringing novel therapeutic solutions to patients in need and are excited to launch Syndros in August.”
Right now, here in the United States, there are more than 15 million patients diagnosed with cancer. And of all the cancer patients who are being treated with chemo, about three-quarters suffer from the debilitating effects of nausea and vomiting.
That means there’s a big potential market – and it also means Syndros is a drug that could help a lot of folks.
Since the early 1980s, there have been 1.2 million patients diagnosed in the United States with AIDS. Despite the progress made with the many treatments, as many as 8% of the patients experience anorexia associated with weight loss.
This is just for starters.
Going Beyond the Label
The “product label” is what a medication is most used for.
But once a drug reaches the market, it is often prescribed for “off-label” uses, too. These are uses for which a drug is known to be effective, a fact that increases the number of prescriptions that get written.
Often, companies go back and set up additional studies or clinical trials for these “off-label” indications – and end up succeeding, a fact that further opens up the market for a drug.
Though not widely known, Marinol has also shown itself to be effective in the treatment of pain. And pain is a big, big issue here in the United States.
According to market researcher VisionGain, the worldwide business for pain drugs is worth about $68 billion right now.
Other studies say it’s even bigger.
Transparency Market Research says demand for pain therapeutics will cause global sales to grow from about $60.2 billion in 2015 to $83 billion by 2024.
And with medical marijuana research accelerating, it’s highly likely other indications will be found for drugs like Syndros.
That’s why the market for legally sanctioned cannabis products – worth a mere $1.5 billion as recently as 2013 – could zoom to as much as $100 billion by 2029. It’s one of the reasons why my colleague, Michael Robinson, our Director of Tech & Venture Capital Research, is so bullish on the so-called “pot stocks.”
Insys will ride that long-term growth wave. And so will you, I hope, as you play along with us here.
And in the near term, its share price should benefit from an ongoing turnaround.
A 10.7% gain may not sound like much. But that gain coming in a mere two weeks is equal to an annualized gain of 10,345%.
So we see bigger profits to come.
— William Patalon III
Source: Money Morning