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Doubling down

1Q12 stocks: At least one biotech doubled value in every market cap group

Biotech investors lifted valuations across the board last quarter and made a handful of big bets that were driven by potential acquisitions, lawsuit settlements, strong earnings and positive clinical and regulatory news.

At least one biotech in each of BioCentury's five market cap segments doubled its valuation. That's no mean feat, especially for the big caps. In total, there were at least 20 opportunities for investors to double their money in a biotech company in 1Q12.

Regeneron Pharmaceuticals Inc. was far and away the top large cap performer. Its shares rose 110%, adding $5.6 billion to its valuation, which ended the quarter at $10.7 billion.

The last time a biotech with a market cap of $5 billion or more doubled its valuation in a single quarter was in 2Q03 when Genentech Inc., now a unit of Roche, went from $17.9 billion to $37 billion on positive Phase III data for Avastin bevacizumab to treat metastatic colorectal cancer.

Regeneron's shares took off in early January after it settled litigation with Genentech over Eylea aflibercept. Regeneron launched the VEGF inhibitor to treat wet age-related macular degeneration (AMD) in November 2011.

The company's two approved products both are under review for additional indications. Eylea has a Sept. 23 PDUFA date to treat central retinal vein occlusion (CRVO) and is in Phase III testing for diabetic macular edema (DME). Arcalyst rilonacept has a May 18 FDA panel and a July 30 PDUFA date to prevent gout flares. It is already approved to treat cryopyrin-associated periodic syndromes (CAPS).

Regeneron also has resubmitted a BLA for Zaltrap aflibercept as a second-line treatment of metastatic colorectal cancer. The biotech will have final Phase III data for the compound in prostate cancer this quarter.

Eleven of the other 15 large caps were up by at least double digits in 1Q.

Shire plc was the major exception - it fell 8%. At the end of the quarter, the company said a Phase III trial of MMX mesalazine to treat diverticulitis missed its primary endpoint. Shire said it would not pursue a regulatory application for the 5-aminosalicylate (5-ASA) mesalazine formulated using Multi-Matrix system (MMX) technology. The compound is marketed to treat ulcerative colitis.

Takeover tries

In the next tier of $1-$4.9 billion market cap companies, Amylin Pharmaceuticals Inc. more than doubled on rumors in the waning days of the quarter that it had rejected a $22 per share takeover bid by Bristol-Myers Squibb Co. It was up 119% to $24.96, adding $2.3 billion in market cap to reach $4 billion.

Pharmacyclics Inc. was next with a gain of 87%. The stock had been climbing steadily since mid-2011, but popped in February when its 4Q11 earnings report showed that revenue from a December 2011 deal with Johnson & Johnson's Janssen Biotech Inc. pushed the biotech into the black for the quarter.

The partners are developing ibrutinib (PCI-32765), a Bruton's tyrosine kinase (Btk) inhibitor in Phase II testing to treat chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma (MCL), diffuse large B cell lymphoma (DLBCL) and multiple myeloma (MM).

Illumina Inc. jumped into the large cap group on the back of a hostile takeover bid by Roche. Last week, the pharma raised its bid to $51 from $45.50, which would value Illumina at $6.2 billion. The biotech's shares closed the quarter at $52.61, up 73%.

Medivation Inc. and Amarin Corp. plc gained 62% and 51%, respectively. The former presented positive Phase III data for prostate cancer candidate MDV3100. The latter made headway on establishing patent protection for lead candidate AMR101 to treat hypertriglyceridemia (see "Thinking Small Again," A8).

MDV3100 is an oral androgen receptor antagonist, while AMR101 is the purified form of the ethyl ester of eicosapentaenoic acid (ethyl-EPA)

Onyx Pharmaceuticals Inc. was the worst performer in the $1-$4.9 billion market cap band last quarter, shedding 14%. The stock has been volatile since mid-December when FDA assigned a

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