4Q14 Stock Wrap-up: Grow early, grow often

Winners, losers in biotech stock tiers in 4Q14

Biotech stocks rose in 4Q14, with only the microcaps segment, with valuations under $200 million, finishing down. The rally followed two quarters in which only the large cap segment, with valuations over $5 billion, were up.

The fourth quarter saw strong performances by companies new to public markets. In the $500-$999 million tier, eight of the top 10 gainers completed their IPOs in 2013 or 2014, and in the $1-$4.9 billion and $200-$499 million tiers, six and five of the top 10, respectively, closed IPOs in the past two years.

For the year, microcaps were down 14%. And despite gaining in 4Q, companies valued at $500-$999 million also fell on the year, with a drop of 7% and decliners outnumbering gainers 46-34.

Large caps finished up 32% with growth for all but one of the 31 companies that started 2014 above $5 billion. The single decliner, diagnostic company Qiagen N.V., fell 1% on the year. (see "Results by Market Cap," page 10).

Fourth-quarter gains in the large cap group were led by Cubist Pharmaceuticals Inc., which closed up 52% after Merck & Co. Inc. said it would acquire the antibiotic company for about $9.5 million.

Incyte Corp. rose 49% in the quarter, starting its ascent after reporting a 63% jump in sales of myelofibrosis drug Jakafi ruxolitinib in 3Q14 and raising full-year guidance for the drug. In December, FDA approved Jakafi for the new indication of polycythemia vera.

Intercept Pharmaceuticals Inc. was hardest hit, down 34% in 4Q14, although the shares still finished the year up 128%, putting the company in the large cap tier. In November, investors hammered the stock following The Lancet's publication of data from the Phase II FLINT trial of obeticholic acid to treat non-alcoholic steatohepatitis, even though the report largely rehashed old ground. However, investors misinterpreted the report to mean there would be a delay in the company's timelines. Intercept still plans to start a Phase III trial in 1H15 (see BioCentury Extra, Nov. 7, 2014).

Leading the $1-$4.9 billion group was Juno Therapeutics Inc., which rose

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