Plenty of catalysts are brewing in the biotechnology sector to shape investor sentiments early in 2007, and chief among them are clinical-trial results and regulatory filings and decisions.

“A good outcome on flagship drugs will spell the start of some positive momentum in the sector,” said National Bank Financial analyst Prakash Gowd. “We’re overdue.”

Waiting in the wings to report late-stage clinical data are Theratechnologies Inc., with a niche drug to treat an HIV side-effect; ViRexx Medical Corp., with an ovarian cancer drug; and YM Biosciences Inc., with interim and final data from a breast cancer study. Important mid-stage clinical results are also due from Liponex Inc. and ConjuChem Inc.

Investors are already giving the nod to Montreal-based Theratechnologies on the strength of its growth hormone-related drug to treat a disease that causes abnormal fat deposits in HIV patients. The company’s share price has doubled since mid-July.

Dominion Securities analyst Philippa Flint sees a “strong probability” of positive results from Theratechnologies’ clinical trial and expects it would then sign a licensing and marketing partnership.

If the stock rallies on favourable trial data, the company could also raise new equity to develop its pipeline. The same goes for Liponex, which has make-or-break clinical results due in February for a drug designed to raise “good” cholesterol levels to prevent heart disease.

If the mid-phase trial succeeds, the Ottawa company could find itself in a bidding contest for licensing and marketing partners, in the wake of Pfizer Inc. pulling the plug on its highly touted, good-cholesterol raising drug, torcetrapib. (Liponex’s drug, CRD5, works differently than torcetrapib.)

Dundee Securities analyst David Martin said Liponex is well positioned to benefit from the torcetrapib failure. He calls the stock an “idea of interest” and he predicts that a positive trial outcome could take the market capitalization to at least $100-million, from the current $22-million.

David Dean, an analyst with Sprott Securities, said ConjuChem’s coming test results are important. While previous studies have “validated the technology” of its drug for Type 2 diabetes, the new data will “provide insight as to the viability of the drug as a therapy.”

On the regulatory front, Nuvo Research Inc., with headquarters in Mississauga, Ont., will learn at the end of this month whether its topical lotion to treat osteoarthritis will be cleared for sale by the U.S. Food and Drug Administration.

“If the larger biotechs come on strong, it will trickle down to improve sentiment overall,” Mr. Gowd said. “We’re overdue.”

High on the list of potential market-movers is Vancouver-based Cardiome Pharma Corp., which saw its new heart drug delayed after the FDA refused to accept a regulatory filing by its marketing partner. A new submission is being readied, but investors may be reluctant to jump on the bandwagon until the FDA accepts it for review.

Labopharm Inc., of Laval, Que., is in a similar bind. It is in talks with the FDA to answer regulatory questions about its regulatory filing for a new pain medicine.

Labopharm hopes to convince that agency that the data package is complete so it doesn’t have to do additional testing. If it succeeds, the FDA could approve sale of the drug around mid-year. Otherwise, it’s back to the clinic.

Neurochem Inc., also of Laval, expects to get a decision from the FDA on April 16 about its Kiacta drug to treat an abnormal buildup of toxic fibril mass in organs such as the kidney.

While the drug was safe and showed some efficacy in pivotal testing, it failed to post a statistical success. On the other hand, some analysts figure the FDA will approve Kiacta simply because no other treatment exists for the disease.

After this year’s donnybrook to acquire B.C. drug developer AnorMed Inc., analysts are predicting the heightened takeover activity in the United States will drift north next year, targeting any company with a product that is licensable.

It could act as a “catalyst for the whole sector,” said Westwind Partners analyst Aaron Bennett.

Mr. Bennett is keeping an eye on Nuvo Research Inc. Pending FDA approval for its osteoarthritis lotion, the company could be in play, as larger companies may decide it’s cheaper to own the company outright than to license the drug.

He’s also watching Cardiome Pharma Corp. because it has not yet signed a partnership agreement for what could be a blockbuster heart drug. His other picks include CryoCath Technologies Inc., because the Montreal company generates revenue and has new medical devices on the way; and Quebec-based Axcan Pharma Inc., because he expects general consolidation in the gastrointestinal sector.

Finally, he likes TLC Vision Corp. The Toronto company could be attractive to private equity, he reasons, because it generates ample amounts of cash and is in a transitional phase.