A major clinical flop and a spate of weak earnings reports by U.S. large cap biotechs reverberated throughout the sector in the fourth quarter, breaking a three-quarter-long streak of outperformance. Across all market cap bands, $15 billion in global equity value was erased.
Several Chinese biotechs, however, stood out despite the noise. The biggest gainers in each of the top three market cap bands are Chinese companies working on or quickly moving into innovative therapies or technologies.
Large caps valued over $10 billion had a median gain of just 1% in 4Q17, and $57 billion in market value was destroyed in the tier.
But Shenzhen-based BGI Genomics Co. Ltd. jumped 22% in 4Q17 to reach a market cap of $13 billion. The company’s MGI Tech subsidiary launched two new next-generation sequencers at the 12th International Conference on Genomics on Oct. 31. Since BGI’s IPO on July 14, the shares have surged 1,425%.
Celgene Corp. took the worst beating in the large cap band. First, mongersen failed a Phase III trial to treat Crohn’s disease, which was followed by weak 3Q17 earnings and a hefty cut to its 2020 guidance. The company fell 28% in 4Q17, corresponding to a $32 billion loss in market cap.
Biotechs valued at $5-$9.9 billion fared best last quarter, with 13 of the 20 companies appreciating in value. The median performance in this band was a 5% gain, and the band added $9 billion in aggregate market cap during the period.
Shanghai Fosun Pharmaceutical Group Co.