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Biotech winners, losers in 1Q17

At the end of 2016, investors argued that equity values had nowhere to go but up. This proved to be the case in 1Q as all market cap bands finished in the black. Sector specialists, lured by expectations of business-friendly policies from Washington and a wave of future M&A, returned from the sidelines to take advantage of bargain prices.

Large cap biotechs valued at $5 billion and up were the second-best performing tier during the quarter, posting a median increase of 9.1% and gaining nearly $78 billion in aggregate equity value. Vertex Pharmaceuticals Inc. led the charge with a 48% advance that added over $8 billion to its market cap, closing the quarter at $25.6 billion. On March 28 the company disclosed positive Phase III results for its tezacaftor/Kalydeco ivacaftor combination to treat cystic fibrosis. With these results in hand, the biotech plans to test triple combo therapies that could substantially expand the addressable patient population.

Bringing up the rear among large caps was Ionis Pharmaceuticals Inc., which declined 16% to finish with a market cap of $4.7 billion, dropping a tier. In the company’s Phase III APPROACH study, volanesorsen (IONIS-APOCIIIRx) met the primary endpoint of reducing triglyceride levels in patients with familial chylomicronemia syndrome (FCS). But the biotech reported that “many” patients treated with the antisense inhibitor of apolipoprotein C-III (APOCIII; APOC3) experienced platelet declines, and five of 33 treated subjects discontinued treatment as a result.

The $1-$4.9 billion band performed best, surging to a 9.4% median gain and adding just under $25

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