12:00 AM
 | 
Jan 02, 2012
 |  BioCentury  |  Finance

Small-fry squashed

Small cap biotechs lost one-third of their value in 2011; big caps gained 8%

Among last year's best-performing large cap biotechs were an acquiree and an acquirer: HCV play Pharmasset Inc. and Valeant Pharmaceuticals International Inc. Other big cap stocks also did well overall, while investors abandoned their small- and microcap brethren in 2011.

Biotechs valued at less than $200 million as well as those with a $200-$499 million market cap shed almost one-third of their value on the year, while biotechs valued at $5 billion or more added 8% last quarter and on the year (see "Results by Market Cap").

Pharmasset rose 56% in 4Q11 after Gilead Sciences Inc. said it would acquire the HCV play for $11 billion. The shares popped 489% in 2011, having started the year valued at $1.5 billion. Just two years ago, Pharmasset was valued at only $586 million.

Valeant, which is building a specialty pharma business through M&A informed by sophisticated tax and accounting techniques, added 26% on the quarter and 65% on the year.

The company's hostile takeover bid for microcap Ista Pharmaceuticals Inc. drove the ophthalmic play's shares up 104% to $7.05, above Valeant's $6.50 per share cash offer. The offer totals about $327 million, after backing out Ista's debt.

Among the largest biotechs, Biogen Idec Inc. and Amgen Inc. were the big winners last quarter, gaining 18% and 17%, respectively.

Biogen Idec rose in October on Phase III data for BG-12 to treat multiple sclerosis and managed to hold on to most of the gain through year end.

Amgen ran up during a busy December in which it increased its quarterly dividend for 1Q12 to $0.36 from $.0.28; did a $5 billion share buyback; promoted President and COO Robert Bradway to CEO; promoted SVP of Global Development and CMO Sean Harper to EVP of R&D; and disclosed a biosimilar cancer antibody deal with Watson Pharmaceuticals Inc. (see " Elementary, Watson," A17).

Last year's highly anticipated launch stories fell to the bottom of the barrel when it came to performance last quarter. In the group valued above $5 billion, HCV company Vertex Pharmaceuticals Inc. was off 25%. In the $1-$4.9 billion segment, cancer immunotherapy company Dendreon Corp. shed 16%; pulmonary and fibrotic disease company InterMune Inc. lost 38%; and autoimmune, cancer and infectious disease company Human Genome Sciences Inc. fell 42%.

Another former superstar, Amarin Corp. plc, continued to decline last quarter, falling 19% amid ongoing patent issues. In early November, the U.S. Patent and Trademark Office issued a non-final rejection letter for a patent application covering hypertriglyceridemia treatment AMR101, which has a July 26 PDUFA date.

Salix Pharmaceuticals Ltd. was the top gainer last quarter in the $1-$4.9 billion group, adding 62%. It jumped on FDA draft guidance that would delay generic competition for Xifaxan rifaximin to treat travelers' diarrhea and on positive Phase III data for the opioid-induced constipation treatment oral methylnaltrexone. Salix has rights to the OIC product from microcap Progenics Pharmaceuticals Inc., which gained 49% on the quarter.

Phase III data also were responsible for the most upside and downside in the $500-$999 million segment last quarter. The biggest gainer was Medivation Inc., which rose 172% on positive data for prostate cancer treatment MDV3100.

Halozyme Therapeutics Inc. also was up 55% on positive Phase III data for Roche's subcutaneous Herceptin trastuzumab. The product uses Halozyme's drug delivery technology.

A Phase III miss for Targacept Inc.'s TC-5214 to treat major depressive disorder (MDD) led to a 63% drop on the quarter.

Synageva BioPharma Corp. gained 111%, the most among the $200-$499 million small caps. The company, once called AviGenics Inc. and repurposed into a Phase I rare disease play with senior managers from Genzyme Corp., Alexion Pharmaceuticals Inc. and Roche, completed a reverse merger in December with Trimeris Inc.

Performing almost as well was cancer company Spectrum Pharmaceuticals Inc. with a 92% bump on a quarter that included a Phase III trial start for belinostat (IV PXD101) to treat peripheral T cell lymphoma (PTCL). In addition, FDA approved removal of the requirement for a bioscan before treating non-Hodgkin's lymphoma (NHL) patients with Zevalin ibritumomab tiuxetan. The company expects the change will expand the U.S. market for Zevalin.

Ophthalmology company Alimera Sciences Inc. fared worst among the small caps with an 92% drop after receiving a second complete response letter for Iluvien to treat diabetic macular edema (DME). The company said the letter requested two additional clinical trials. Alimera has rights to the injectable insert delivering fluocinolone acetonide from microcap pSivida Corp., which was down 74% on the news.

Small cap BioSante Pharmaceuticals Inc. lost 78% last quarter on a failed Phase III trial of LibiGel Transdermal testosterone gel to treat hypoactive sexual desire disorder in menopausal women.

HCV company Inhibitex Inc. was the sole company among microcaps under $200 million to jump multiple tiers. It gained 345%, climbing from a $192 million valuation to $877 million on the coattails of Pharmasset and speculation that it could be the next takeout, as well as on positive Phase Ib data for INX-189 to treat HCV.

A Phase III failure accounted for the largest dive among the microcaps: an 89% drop for drug delivery company Emisphere Technologies Inc. Its oral salmon calcitonin (SMC021) missed the endpoint in a trial to treat postmenopausal osteoporosis.

German diagnostics company Epigenomics AG also shed 69% on disappointing data for Epi proColon 2.0, a DNA-based colorectal cancer test. The company said the results were at the lower end of expected performance.

Companies and Institutions...

Read the full 4734 word article

User Sign in

Trial Subscription

Get a 4-week free trial subscription to BioCentury

Article Purchase

$150 USD
More Info >