12:00 AM
Oct 03, 2016
 |  BioCentury  |  Finance

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 Group.

The worst performer in the $1-$4.9 billion band suffered major clinical setbacks. Novavax Inc. shed 71% of its value in 3Q16 and will start the fourth quarter down two tiers. All the company's losses came on Sept. 16 after its RSV F vaccine failed in the Phase III Resolve trial to treat respiratory syncytial virus (RSV) infection in elderly adults.

The company said it will not submit a BLA to FDA in 2017, but it does think there is a path forward for the vaccine.

The $500-$999 million band posted a 7.5% gain in 3Q16. Sarepta Therapeutics Inc. jumped a tier after a 222% gain in 3Q16. On Sept. 19, FDA approved the company's Exondys 51 eteplirsen (AVI-4658) to treat Duchenne muscular dystrophy (DMD) amendable to exon 51 skipping.

Clovis also more than doubled, with a 163% surge to $36.05. The biotech will start next quarter up a tier, having closed 3Q with a market cap of $1.4 billion. The company's 3Q16 moves were tied to rucaparib (CO-338), an oral inhibitor of PARP-1 and PARP-2 to treat BRCA-mutated advanced ovarian cancer.

In August, FDA granted Priority Review to Clovis' NDA seeking accelerated approval. In early September, the stock gained an additional 15% when it said FDA does not plan to hold an advisory committee meeting to discuss the NDA.

Clovis was trading close to $100 in November 2015, before it ran into a host of issues related to rociletinib, its lead compound at the time.

A pair of high-profile IPOs from 2016 were among the worst 3Q16 performers in the $500-$999 million band. Kadmon Holdings Inc. went public on July 26 at $12 with a $538.4 million postmoney valuation and ended Sept. 30 down 39% from its IPO price on no news. The company develops therapies for autoimmune and fibrotic conditions, cancer and genetic diseases.

CRISPR company Editas Medicine Inc. shed 45% in the third quarter despite announcing a host of partnerships.

The $200-$499 million space had the best performance in 3Q16, adding 14.3%....

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