12:00 AM
Jul 11, 2016
 |  BioCentury  |  Finance

Shedding red

Biotech winners, losers in 2Q16

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 at $200-$499 million.

Companies in the $500-$999 million market cap band were the other segment to finish in the black, squeezing out a 0.2% gain in the second quarter. Exelixis Inc. graduated to the next tier up, as it surged 95% to end the quarter with a market cap of $1.7 billion.

Exelixis had multiple positive developments for cancer compound Cabometyx cabozantinib (XL184) in 2Q16. These included the April 25 FDA approval of a tablet formulation of the spectrum-selective kinase inhibitor as second-line therapy to treat advanced renal cell carcinoma.

In May, Cabometyx met the primary endpoint in the Phase II CABOSUN study as first-line therapy for advanced intermediate- or poor-risk renal cell carcinoma.

A capsule formulation of the drug is approved as Cometriq in the U.S. and EU to treat medullary thyroid cancer (MTC).

The worst-performing biotech in the $500-$999 band was ImmunoGen Inc., which sank 64% and ended June 30 with a market cap of $268.3 million. A chunk of the decline came on April 29, when the stock sank 19% after the company made a host of modifications to the FORWARD I trial of its lead internal program, mirvetuximab soravtansine (IMGN853), to treat platinum-resistant ovarian cancer.

Companies in the $200-$499 million market cap band were down a median 7.2% last quarter. Through the first half, the band has fallen 25.1% and is the worst-performing segment.

Celator Pharmaceuticals Inc. was the top performer in its new tier. In 1Q16 the stock surged 527% and graduated from the microcaps after its Vyxeos significantly improved overall survival in a Phase III trial to treat high-risk acute myelogenous leukemia (AML). On May 31, Jazz Pharmaceuticals plc announced plans to buy Celator for $1.5 billion in cash, or about a 73% premium.

Celator ended the second quarter up 174% with a valuation of $1.2 billion.

Neovasc Inc. brought up the rear of the group and will start the third quarter among the microcaps. The company fell 88% to a market cap of $34.1 million in 2Q16, mostly because it lost a lawsuit related to cardiovascular devices.

Companies valued below $200 million were the worst performers in 2Q16, falling a median 8.2%. Eleven Biotherapeutics Inc. was the big winner in the group, although last...

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