Dressed in black

Biotech winners, losers in 3Q16

Every single market cap band finished in the black in 3Q16, a feat not accomplished since the first quarter of 2014. M&A and a string of positive clinical and regulatory news fueled the 3Q16 rally for companies of all sizes.

After a six-month funk, big cap biotechs returned to form and posted an 8.7% gain in 3Q16. Medivation Inc. paced the big caps in what was its swan song as a stand-alone company. The cancer play ended the quarter up 35%, edging out Seattle Genetics Inc. for the top spot thanks to Pfizer Inc. The pharma bought Medivation for $14 billion in cash in a deal that closed Friday.

Seattle Genetics Inc., gained 34% in 3Q16. On Aug. 1, the company's Adcetris brentuximab vedotin met the primary endpoint in a Phase III study to treat CD30-expressing cutaneous T cell lymphoma in patients who had received prior systemic or radiation therapy.

A specialty pharma occupied the bottom slot in the big cap band. Jazz Pharmaceuticals plc fell 14% in 3Q16. Much of the decline came on Aug. 10, the first trading day after Jazz announced second quarter earnings that fell short of consensus estimates.

Companies valued at $1-$4.9 billion were the second-best performing market band, surging 11.7% in 3Q16. Ariad Pharmaceuticals Inc. posted a gain of 85% in 3Q16. Most of the gains came in the last two weeks of September after rumors circulated the cancer company was a takeover target.

Exelixis Inc., which graduated to the tier in 2Q16, was leading the group until Sept. 28 when it shed 14% to $13.35 after its Cabometyx cabozantinib plus a PD-1 inhibitor led to an overall response rate (ORR) in a Phase I genitourinary cancer trial that was lower than ORRs produced by other combinations of immuno-oncology agents and targeted therapies.

Nevertheless, the stock finished 3Q16 up 64%. In August, the company reported $17.6 million in second quarter sales of newly launched Cabometyx in renal cell carcinoma (RCC). Analysts had expected $4.7-$7.5 million.

In September the EC approved Cabometyx as monotherapy to treat advanced RCC in patients previously treated with a VEGF inhibitor. The approval triggered a $60 million milestone payment to Exelixis from partner Ipsen

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