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

3Q Financial Markets Preview: Miles of milestones

2H12 has at least 117 major clinical, regulatory events for biotech

A deep line-up of milestones could help retain gains the sector has been holding onto since 1Q12. In particular, investors would love to see further breakthroughs in difficult areas such as Alzheimer's disease and obesity.

Top of mind for almost every specialist investor are Phase III data in Alzheimer's disease that are due this quarter - even though none of these buysiders expect the data to be positive.

Bapineuzumab is a humanized mAb against beta amyloid from Johnson & Johnson and Pfizer Inc. that originated at Elan Corp. plc. Eli Lilly and Co.'s solanezumab (LY2062430) is an antibody that binds soluble beta amyloid.

"It's fair to say the expectations are not very high," said LSP-Life Sciences Partners' Joep Muijrers. "If something hits there, it could have a spillover effect to the rest of the sector, but that goes against what most people are expecting."

If bapineuzumab misses, International Biotechnology Trusts' David Pinniger expects Elan to fall to $9 or $10 per share. "But if this does work, it would be the biggest news on a biotech product for decades. It would be a $5-$10 billion product, with Elan getting 25% plus mid-single digit royalties," he said. "It could generate a lot of positive noise for the sector."

Arena Pharmaceuticals Inc. last week scored a long-awaited approval of its Belviq lorcaserin to treat obesity. The stock was up 220% going into the PDUFA date, after an FDA committee voted in favor of approval for the serotonin (5-HT2C) receptor agonist. Last week, Arena shares added only 1%.

Investors took the news as a good sign for Qnexa phentermine/topiramate from Vivus Inc., sending the shares up 8% last week.

"We're pretty squarely in the camp for Vivus," said Behzad Aghazadeh of venBio. Compared with Arena, "it feels like there's been more dialog with FDA, and it has best-in-class efficacy."

In April, FDA delayed the Qnexa PDUFA date by three months to July 17 to review the company's updated REMS. The candidate had a positive FDA committee vote in February.

Big caps make good

Among the big cap biotechs with milestones this half, investors highlighted Gilead Sciences Inc., Biogen Idec Inc. and Celgene Corp.

In 4Q, Gilead is expecting additional data on an HCV combination that could help justify its $11.2 billion acquisition of Pharmasset Inc. in January.

In April, Gilead added more than $4 billion to its market cap after reporting positive Phase IIa data for Pharmasset's nucleotide analog HCV NS5B polymerase inhibitor GS-7977 paired with the selective HCV NS5A protein inhibitor daclatasvir from Bristol-Myers Squibb Co. While another study for this combo is slated to report in 4Q12, the companies are expected to part ways and pursue their own cocktails (see BioCentury, April 23).

Gilead also has an Aug. 27 PDUFA date for its Quad HIV treatment, which combines elvitegravir, cobicistat, emtricitabine and tenofovir.

For Biogen Idec, a long-anticipated approval of BG-12 for multiple sclerosis (MS) could come by year end, based on a February submission and a standard 10-month review at FDA. The oral dimethyl fumarate that activates the nuclear factor (erythroid-derived 2)-like 2 (NFE2L2; NRF2) pathway is under review in the U.S. and in Europe.

Next half, Biogen Idec also will have Phase III data for dexpramipexole to treat amyotrophic lateral sclerosis (ALS), as well as for two long-acting hemophilia products (see "Revving the Engine," A20).

"We have had a lot of positive data from Biogen Idec for BG-12," noted Stefan Kraft of Medical Strategy. "It's already appreciated relatively well by the markets."

Celgene, meanwhile, shed more than 17% of its value last quarter on the withdrawal of a European application to expand the label of multiple myeloma (MM) drug Revlimid lenalidomide. But the company has several milestones through year end that might help it regain favor, according to buysiders.

This half, Celgene expects data from a Phase III trial of Revlimid to treat relapsed and refractory mantle cell lymphoma (MCL). Other Phase III milestones include pomalidomide to treat myelofibrosis by year end; Abraxane nab-paclitaxel in treatment-naïve metastatic melanoma early this quarter and in advanced metastatic pancreatic cancer late this year or early next; and apremilast to treat psoriatic arthritis this summer, and to treat psoriasis late this year or early next.

Abraxane nab-paclitaxel also has an Oct. 12 PDUFA date for first-line treatment of advance non-small cell lung cancer (NSCLC).

Minding the middle

Among the larger mid-caps, buysiders had about a dozen picks, including known or rumored acquisition targets Amylin Pharmaceuticals Inc., Human Genome Sciences Inc. and BioMarin Pharmaceutical Inc. (see "Magic in Mid-Caps," A29).

Bristol-Myers proved some investors correct when it announced late Friday an agreement to acquire Amylin for $31 per share in cash, which will come out to an aggregate price of about $5.3 billion after the two-step deal, which also involves AstraZeneca plc.

Investors anticipate a deal for HGS by year end. If this doesn't come through, one buysider expects its share price would fall below $10.

HGS finished last quarter at $13.13.

Onyx Pharmaceuticals Inc. gained more than 40% in June on the vote by FDA's Oncologic Drugs Advisory Committee in favor of Kyprolis carfilzomib to treat relapsed and refractory multiple myeloma. The July 27 PDUFA date could be an occasion for another leg up. In addition, this half it will have Phase III data for Nexavar sorafenib to treat metastatic thyroid cancer.

Prostate cancer favorite Medivation Inc. could also see a PDUFA date this year for enzalutamide (formerly MDV3100) to treat castration-resistant prostate cancer (CRPC) in patients previously treated with docetaxel.

It submitted an NDA to FDA on May 22 and requested Priority Review. If granted, the PDUFA date would be in November. The compound has Fast Track designation.

"The data have been very good," said Kraft. "The probability that it's approved in metastatic prostate cancer is relatively high."

He added enzalutamide could have an advantage over J&J's Zytiga abiraterone, because Zytiga is given with steroids, and trials suggest enzalutamide could be used without...

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