1Q Stock Wrap-Up: Small but mighty
Microcaps gain double-digits in 1Q14 as all biotech segments finish in black
Despite a correction at the end of March, all biotech market cap segments finished the first quarter in positive territory. Microcaps set the pace with a 10% gain, while large caps added 7% and were the second best performing group (see "Results by Market Cap").
The correction saw the BioCentury 100 index fall 12% in the two-week period ending March 28. During that stretch, the NASDAQ fell 2%, the Dow Jones gained 2% and the S&P rose 1%.
One trigger for the biotech sell-off was a letter Gilead Sciences Inc. received from a congressional committee requesting information on pricing methodology for HCV drug Sovaldi sofosbuvir. Gilead fell 6% in 1Q14, shedding $6.5 billion in market cap.
Joining Gilead in the red was Celgene Corp., which dipped 17% in 1Q14. The company fell after providing preliminary 2013 EPS that was below the Street's expectations. The stock slid further in January after full 4Q13 earnings missed the Street's numbers.
Illumina Inc. was the best performing large cap, gaining 34%. In January the company introduced its HiSeq X Ten Sequencing System, which can sequence a whole genome for less than $1,000 and can sequence 18,030 genomes per year.
Illumina said it believes there is a $20 billion market opportunity for its next-generation sequencing technology.
Teva Pharmaceutical Industries Ltd. was up 32%. Teva announced Erez Vigodman as president and CEO in January, and later that month Chairman Phillip Frost sent a letter to shareholders outlining plans to add new board members with global healthcare experience while reducing the board's size.
Intercept's 383% surge came after the company said an NIH-run Phase II trial of Intercept's obeticholic acid (OCA) to treat non-alcoholic steatohepatitis (NASH) met the primary endpoint.
InterMune's 127% rise was tied to Phase III ASCEND data in which Esbriet pirfenidone met the primary endpoint in patients with idiopathic pulmonary fibrosis (IPF). Esbriet is a small molecule inhibitor of tumor necrosis factor (TNF) alpha and transforming growth factor (TGF) beta 1 (TGFB1), which target p38 mitogen-activated protein kinase (p38 MAPK; MAPK14).
Exelixis Inc. and PeptiDream Inc. brought up the rear in the $1-$4.9 billion segment, both falling 42%. Late in the quarter, an independent DMC said the Phase III COMET-1 trial of Exelixis' Cometriq cabozantinib for metastatic castration-resistant prostate cancer (CRPC) did not meet criteria to support early trial unblinding.
PeptiDream didn't have a negative binary event but instead was caught up in the Japanese biotech market sell-off in the quarter. An equal price-weighted index of 30 Japanese biotechs fell 28%. The peptide discovery company went public last May.
Orphan play Ultragenyx Pharmaceuticals Inc. was the best performing stock in the $500-$999 million segment, riding the momentum of its bumped up IPO in January. The company's UX001, an extended-release formulation of sialic acid, is in Phase II testing for hereditary inclusion body myopathy (hIBM). Ultragenyx ended 1Q14 up 133%.
Active Biotech AB had the largest decline in the group. The majority of the company's 59% slide came in January after EMA's CHMP recommended against approval of an MAA from partner Teva for Nerventra laquinimod to treat relapsing-remitting multiple sclerosis (RRMS).
Momenta dropped on the