Brexit nearly wiped out what looked to be a rebound quarter for biotech. Only two market cap segments finished in positive territory, and smaller companies continued to get pounded. Big caps finished in the red for the second quarter in a row, this time shedding 0.4% in 2Q16.
Just like 1Q16, a European biotech paced the big caps. This time it was Genmab A/S, which added 33% in 2Q16, finishing with a market cap of $10.5 billion.
The company's gains were driven by Darzalex daratumumab, which showed stellar Phase III data in relapsed multiple myeloma (MM) patients who had failed at least one prior therapy. The anti-CD38 antibody has accelerated approval from FDA to treat MM in patients that have failed at least three prior therapies, and has conditional approval in the EU to treat MM patients who have received a proteasome inhibitor and an immunomodulatory agent.
In 1Q16, Actelion Ltd. was the best-performing big cap, adding 3% thanks to strong earnings. The stock is up 17% through the first half.
Specialty pharmas were again the worst performers among companies valued north of $5 billion. Endo International plc sank 45% and will begin the third quarter in the tier valued at $1-$4.9 billion. The company sank 39% on May 6 after reporting disappointing 1Q16 earnings and slashing its full year revenue and EPS guidance.
Behind Endo, Valeant Pharmaceuticals International Inc. fell 23% in 2Q16.
Companies valued at $1-4.9 billion were the best-performing band, adding a median 1.9% in 2Q16. Tesaro Inc. was by far the biggest gainer, all of which happened on a single day. The stock surged $40.19 (108%) to $77.40 on June 29 when niraparib (MK-4827) met the primary endpoint of improving progression-free survival (PFS) in the Phase III NOVA trial in platinum-sensitive ovarian cancer patients.
The company plans to seek U.S. and EU approval of the PARP inhibitor in the fourth quarter.
Tesaro ended the quarter up 91% with a market cap of $3.7 billion.
Circassia Pharmaceuticals plc also was a one-day wonder, albeit on the downside. The stock dropped 179.30p (66%) to 91p on June 20 when Cat-SPIRE missed the primary endpoint in the Phase III CATALYST study to treat moderate to severe cat allergy. The company is reviewing the future of its entire allergy platform.
Circassia ended June 30 with a market cap of $387.7 million, down 63% on the quarter and will start 3Q16 down two tiers, among companies valued