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2Q Stock Wrap-Up: Large and in charge

Winners, losers in biotech stock tiers in 2Q14

In contrast to the first quarter in which all market cap segments gained ground, only the large caps finished 2Q14 in the black. Gainers outnumbered decliners 20-12 in the over $5 billion segment, which was up 4%, while decliners held the upper hand 249-398 in all other segments combined (see "Results by Market Cap").

The large cap group was buoyed by takeout target Shire plc, which was up 59%. The majority of the gain came towards the end of the quarter when the company disclosed that it had rejected three unsolicited bids from AbbVie Inc., the latest of which valued Shire at about $47 billion. Last week, the pharma raised its offer again, this time by 11%.

Actelion Ltd. and Vertex Pharmaceuticals Inc. each gained 34% thanks to positive clinical data. Actelion's selexipag met the primary endpoint in the Phase III GRIPHON trial to treat pulmonary arterial hypertension (PAH), while a combination of Vertex's Kalydeco ivacaftor and lumacaftor (VX-809) met the primary endpoint in identical Phase III trials in cystic fibrosis.

Intercept Pharmaceuticals Inc. brought up the rear in the large cap segment, falling 28%. But even with the hit, the stock was up 247% in 1H14 following a 383% gain in the first quarter on positive data in the Phase II FLINT trial of obeticholic acid to treat non-alcoholic steatohepatitis (NASH). Last quarter, the stock dropped 10% when the company raised $192 million in an April follow-on. In late May, the stock fell 18% after email correspondence revealed that Intercept had asked NIH in January to delay disclosing findings of significant lipid abnormalities in FLINT; which the NIH institute sponsoring the trial reported less than a week after the correspondence with the company.

MannKind Corp.'s 173% gain, the best in the $1-$4.9 billion group, was powered by a positive FDA panel in April and FDA approval in June of Afrezza, a dry powder formulation of insulin plus an inhaler to improve glycemic control in Type I and II diabetics.

Another big gainer in the group was GW Pharmaceuticals plc, which rose 81%. The stock gained 35% to $62.12 on NASDAQ the week of April 21 after Morgan Stanley initiated coverage with a $103 price target. GW rose 20% the week of June 16 after reporting positive preliminary data for Epidiolex to treat epilepsy. The company also raised $86.3 million in a June follow-on.

The laggards in the group were ThromboGenics N.V. and Clovis Oncology Inc. ThromboGenics fell 54% in the quarter after announcing in June that it would remain independent. In February, the ophthalmic company hired Morgan Stanley to explore strategic options and was rumored to be a takeout target of Shire in April.

Clovis had an up-and-down quarter tied to the American Society of Clinical Oncology meeting. The stock rose in May on five ASCO abstracts with Phase I and II data. It then fell the week of ASCO after a downgrade by Citi analyst Yaron

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