3Q Stock Wrap-Up: Back in black

After soft 2Q12, large cap biotechs led the charge as all tiers finished up

Large cap biotechs stormed back after a weak 2Q12 to post a 7% gain for a third quarter in which every market cap segment finished in the black, albeit just barely for the micro-caps. For the second successive quarter the smallest names brought up the rear, though the group's 0.1% gain in 3Q12 compares favorably with the 15% slide in 2Q12.

For the year, the $5 billion-plus tier has outpaced the smaller segments, thus far posting a 26% gain. Micro-caps are up 5%, the smallest gain.

Regeneron Pharmaceuticals Inc. was the biggest winner among the big caps during 3Q12, posting a 34% gain.

Regeneron's surge is based on sales of wet age-related macular degeneration (AMD) drug Eylea aflibercept, which the company launched last November. Regeneron has raised its guidance for 2012 sales three times this year, most recently in July to $700-$750 million. Its initial guidance was $140-$160 million.

The laggard amongst the large caps was Elan Corp. plc, which shed 22% on the quarter. The Irish biotech has edged down since July when it got dinged by disappointing Phase III data for IV bapineuzumab to treat Alzheimer's disease.

Pfizer Inc. and Johnson & Johnson, which bought Elan's rights to the AD immunotherapy program in 2009, shelved the IV formulation of the anti-beta amyloid mAb in September. A subcutaneous version is in Phase II testing.

Regeneron is also leading the pack of big-cap biotechs with a 175% gain through nine months. The next biggest mover, HCV and cystic fibrosis player Vertex Pharmaceuticals Inc., closed the first nine months of the year up 68%.

Ariad Pharmaceuticals Inc. led the $1-$4.9 billion tier, posting a 41% gain after submitting applications for ponatinib to treat resistant or intolerant chronic myelogenous leukemia (CML) and Philadelphia-chromosome positive (Ph+) acute lymphoblastic leukemia (ALL).

HCV company Idenix Pharmaceuticals Inc. was the worst performing of the mid-caps last quarter. It fell 55% after FDA placed a hold on IDX184, a nucleotide HCV NS5B polymerase inhibitor in Phase IIb testing. The hold was based on IDX184's structural and mechanistic similarities with BMS-986094, which Bristol-Myers Squibb Co. shelved after two deaths were observed in a Phase II trial (see BioCentury, Sept. 10).

Among companies valued under $1 billion, RNAi company Alnylam Pharmaceuticals Inc. posted the biggest 3Q12 gain at 41%, based on Phase I data for ALN-TTR02 to treat transthyretin (TTR)-mediated amyloidosis.

Peregrine Pharmaceuticals Inc. had biotech's biggest rollercoaster ride as the cancer company gained $1.43 (47%) to $4.50 on Sept. 7 after saying its bavituximab improved median overall survival in non-small cell lung cancer (NSCLC) in a Phase IIb trial.

The stock promptly lost all the gains and more after Peregrine reported on Sept. 24 the discovery of "major discrepancies" with the results that it said could have been caused by a third party contracted to manage patient treatment code assignments.

The negative news sent the company's stock tumbling $4.23 (78%) to close at $1.16. The two moves result in a gain of $149 million in market cap followed by a loss of $440.7 million.

Even so, Peregrine finished the quarter up 91% to $1.03, which translated into a market cap of $106.4 million (see "Ruffled Feathers," A32).

Though the micro-caps have not posted big gains overall, endocrine and metabolic company Savient Pharmaceuticals Inc., antisense play Sarepta Therapeutics Inc., neurology company Catalyst Pharmaceutical Partners Inc. and infectious disease and neurology company Hemispherx Biopharma Inc. all posted 180%-plus gains in 3Q.

KV Pharmaceutical Co., which declined 91% on the quarter, was the worst performer among the sub-$200 million biotechs. The company filed for Chapter 11 bankruptcy citing FDA's lack of enforcement for its preterm birth Orphan drug Makena hydroxyprogesterone caproate.

Companies and Institutions Mentioned

Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY), Cambridge, Mass.

Ariad Pharmaceuticals Inc. (NASDAQ:ARIA), Cambridge, Mass.

Bristol-Myers Squibb Co. (NYSE:BMY), New York, N.Y.

Catalyst Pharmaceutical Partners Inc. (NASDAQ:CPRX), Coral Gables, Fla.

Elan Corp. plc (NYSE:ELN), Dublin, Ireland

Hemispherx Biopharma Inc. (NYSE-M:HEB), Philadelphia, Pa.

Idenix Pharmaceuticals Inc. (NASDAQ:IDIX), Cambridge, Mass.

Johnson & Johnson (NYSE:JNJ), New Brunswick, N.J.

KV Pharmaceutical Co., (OTCQB:KVPHQ), St. Louis, Mo.

Peregrine Pharmaceuticals Inc. (NASDAQ:PPHM), Tustin, Calif.

Pfizer Inc. (NYSE:PFE), New York, N.Y.

Regeneron Pharmaceuticals Inc. (NASDAQ:REGN), Tarrytown, N.Y.

Sarepta Therapeutics Inc. (NASDAQ:SRPT), Bothell, Wash.

Savient Pharmaceuticals Inc. (NASDAQ:SVNT), East Brunswick, N.J.

Vertex Pharmaceuticals Inc. (NASDAQ:VRTX), Cambridge, Mass.

Tables

Index performance
Index 3Q12 YTD
BioCentury Europe 15% 41%
NASDAQ Biotechnology 10% 37%
BioCentury 100 7% 32%
NYSE Arca

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