The Life Sciences Report's Biotech Watchlist, introduced in January 2013, is composed of 17 companies that industry analysts felt showed promise for the coming year-companies with productive pipelines, good management and stock-moving catalysts on the horizon. The new year presented legitimate prospects for portfolio growth and, indeed, that has been the case. In this update, we summarize the current status of Watchlist companies and introduce our Portfolio Tracker, showing the status of each company in real time.
A Quick Recap
Back in January our friends and collaborators at San Diego-based Sagient Research, publishers of the BiomedTracker, delineated important concepts about the market-moving data and events that can make or break smaller biotech companies. All stocks are affected by catalysts, but nowhere do they provide more leverage [positive or negative] than in the life of a biotech. And many of biotech's key catalysts are tied to the regulatory process.
The Prescription Drug User Fee Act [PDUFA] is the most significant piece of legislation affecting the development path of a new drug. PDUFA was designed to speed up the drug approval process by having product sponsors pay the freight for U.S. Food and Drug Administration [FDA] staff that could rid the process of staggering bureaucratic delays. Review of new drug application [NDA] submissions is now promised in 12 months for standard submissions and eight months for priority reviews. There is also an emphasis on pre-submission meetings for NDAs and biologic license applications [BLAs], with the goal of making sure the applications are filed with minimal errors and can be expedited.
The FDA also allows drug developers to request that a product be designated as "breakthrough therapy," with action on the breakthrough request promised no later than 60 days after submission. The first breakthrough designations came through in Q1/13 and included Vertex Pharmaceuticals Inc. (NASDAQ:VRTX) cystic fibrosis drug Kalydeco [ivacaftor] [approved in January] and Pharmacyclics Inc.'s (NASDAQ:PCYC) ibrutinib, which is being developed in a lead indication for chronic lymphocytic leukemia [CLL] and has breakthrough therapy status for treatment of Waldenstrom's macroglobulinemia and mantle cell lymphoma. Pharmacyclics is a Watchlist company.
Although therapies may still encounter jarring potholes on the road to FDA approval, 39 new molecular entities [NMEs] were approved in 2012, a 15-year high. Through Oct. 8, 2013, there have been 18 NMEs.
Choosing the Watchlist
Back in January, The Life Sciences Report asked a group of key biotech analysts to weigh in on their best ideas. The companies they identified included a number focused on the oncology space, with the rest targeting orphan diseases, immunotherapies, cardiovascular disease and diagnostic agents. The analysts were Mara Goldstein, senior biotechnology analyst at Cantor Fitzgerald; Raghuram "Ram" Selvaraju, managing director and head of healthcare equity research at Aegis Capital; John McCamant, editor of the Medical Technology Stock Letter; Mike King, senior analyst and managing director at JMP Securities; George Zavoico, senior biotechnology analyst at MLV & Co; and senior analyst Lisa Bayko of JMP Securities.
Of the 17 stocks on the Watchlist, 11 have posted gains ranging from 4% to 235%. The remainder has seen declines in stock value ranging from 3% to 85%. Though the doldrums of the last month-notably the government shutdown-have slowed biotech's nearly two-year-long bull, the space is still bolstered by a stiff wind that originated in 2012. As of Oct. 21, the NASDAQ Biotechnology [NBI] index is up 44%.
Links to Previous Watchlist Updates and Stories
- Biotech Watchlist Portfolio Tracker
- How Are They Doing? Update on the Progress of Expert Picks
- The Approval Process in Action [infographic]
- January 2013 Biotech Watchlist
- January 2013 Biotech Watchlist [story]
- April 2013 Biotech Watchlist Update
- April 2013 Biotech Watchlist Update [story]
- PDUFA? What's a PDUFA? Understanding the Drug Development Process Is Key to Biotech Investing
[Editor's Note: All percentage increases or decreases in company stock prices are as of Oct. 21, 2013. All markets caps are as of Oct. 21, 2013.]
Amarin Corp. (NASDAQ:AMRN)
Back on Feb. 26, Amarin filed a supplemental new drug application [sNDA] for Vascepa [icosapent ethyl], its fish oil drug approved in July 2012 to lower triglycerides in patients with high triglycerides and mixed lipidemia, the drug's ANCHOR indication. The FDA is scheduled to act on this application on Dec. 20; however, on Oct. 16, the agency's Endocrinologic and Metabolic Drugs Advisory Committee met and voted 9-2 against approval. The FDA does not have to follow the panel's advice, but investors hammered Amarin shares for a quite significant 60+% loss when trading resumed on Oct. 17. The company is down 72% year to date, and the stock is now back down in small-cap territory, with a $397M market value.
Ariad Pharmaceuticals Inc. (NASDAQ:ARIA)
It has been a tough year for Ariad. In mid-December 2012, the company got a surprise holiday gift when the FDA approved Iclusig [ponatinib] for two rare blood and bone marrow diseases, chronic myelogenous leukemia and Philadelphia chromosome positive acute lymphoblastic leukemia. It was a surprise because it came three months ahead of its scheduled PDUFA date, but investors sold on the news . . . and it has been all downhill from there. In early October of this year, news emerged that the FDA was scrutinizing Iclusig following increased reports of life-threatening blood clots and severe narrowing of arteries and veins. Although Iclusig is intended for patients who are no longer doing well with first-line therapies, the drug's original label did warn about blood-clotting risks. On Oct. 18, Ariad announced that it was stopping its Phase III EPIC trial of Iclusig in patients with newly diagnosed chronic myeloid leukemia. Ariad shares are down 85% YTD, and the market cap is down to $563M.
Celgene Corp. (NASDAQ:CELG)
Celgene is up 96%, with a $66B market cap. Analyst Mara Goldstein thoroughly explained why she recommended Celgene as a growth name, even though it was a large-cap stock at the time. For Goldstein this story was about the continuing development of a basket of products, including the multiple myeloma essential, Revlimid [lenalidomide], as well as Pomalyst [pomalidomide] also for myeloma, which was approved early February of this year.
There was also an sNDA being filed for an old chemotherapeutic agent formulated as Abraxane [paclitaxel protein-bound particles] for treatment of pancreatic cancer. Based on the company's IMPACT study showing a clinically relevant increase in overall survival, Abraxane was approved by the FDA on Sept. 6 for use in combination with standard-of-care cytotoxic agent gemcitabine as the first new therapy sanctioned for metastatic adenocarcinoma of the pancreas in almost eight years. Celgene has also been developing apremilast for autoimmune disease indications, in particular rheumatoid arthritis and psoriatic arthritis. Investors have been anticipating Phase 3 data that could come in H2/13. Celgene hasn't disappointed; it has given investors a near double YTD.
Celldex Therapeutics (NASDAQ:CLDX)
Celldex is up 235%, with a market cap of $2.9B. Analyst Mara Goldstein got a near quadruple on Celldex, which grew up from small-cap to mid-cap company with its recent valuation. Celldex develops products that modulate the immune system; drugs in its pipeline target various cancers as well as other diseases.
Celsion Corp. (NASDAQ:CLSN)
In Q1/13, Celsion's ThermoDox [liposome-encapsulated doxorubicin] suffered a letdown in its Phase III HEAT trial for hepatocellular carcinoma [HCC], which resulted in a single-day drop in the company's stock of 81%-a textbook case of a binary event affecting a one-product pipeline and causing shares to tumble dramatically. Year to date [YTD] the stock is down 85%. The company's market cap is about $73 million [$73M].
Galena Biopharma Inc. (NASDAQ:GALE)
Galena is testing its immunotherapeutic product NeuVax [nelipepimut-S] in a Phase III trial called PRESENT. The vaccine is intended to prevent recurrence of breast cancer in women with low to intermediate HER2 expression. Over the course of three years patients will receive a total of 11 immunizations; the primary endpoint will be disease-free survival.
There is also a Phase IIb trial in progress with NeuVax in combination with Herceptin [trastuzumab], and a Phase 1/2 study with Galena's second targeted cancer immunization agent, folate binding protein [FBP] in ovarian and endometrial cancers. Results from the Phase I study with FBP were announced in June at the American Society of Clinical Oncology [ASCO] annual meeting. Galena is up about 39% year to date, with a market cap of about $186M.
Hyperion Therapeutics Inc. (NASDAQ:HPTX)
Hyperion received approval for Ravicti [glycerol phenylbutyrate], for urea cycle disorders, on Feb. 1. Shares are up about 103% year to date, as product rollout continues. Hyperion's market cap is about $463M.
Medivation Inc. (NASDAQ:MDVN)
On April 1 Medivation and partner Astellas Pharma Inc. (OTCPK:ALPMF) announced an updated interim analysis plan for the Phase III PREVAIL trial of Xtandi [enzalutamide] in chemotherapy-naïve patients with metastatic castration-resistant prostate cancer. Still expected in 2013, these data could herald Xtandi as a best-in-class agent compared to Johnson & Johnson's Zytiga [abiraterone acetate]. The company's stock price shot up on the catalyst, but has lost most of those gains since then. Medivation is down 3% YTD, and its market cap is about $3.9B.
Navidea Biopharmaceuticals Inc. (NYSEMKT:NAVB)
Navidea received approval of its radiopharmaceutical diagnostic medium, Lymphoseek [technetium Tc 99m tilmanocept] on March 13. Lymphoseek is an isotope that is sensed intraoperatively by the surgical oncologist with a gamma detector and is approved to map the location of lymph nodes draining and disseminating metastatic disease from primary breast cancers and melanomas.
Hoping to expand into new disease indications, the company has been conducting a Phase III study of Lymphoseek in head-and-neck cancers. The company hopes to file an sNDA for this indication before the end of 2013. While this story continues to hold together, the stock is down about 25% year to date. In the future, stock catalysts will include approval for new disease indications, uptake by surgeons and hospitals, and actual product revenues. Lymphoseek is marketed through Cardinal Health Inc. (NYSE:CAH), the largest sales channel for diagnostic isotopes in the U.S. Navidea's market cap is about $259M.
NewLink Genetics Corp. (NASDAQ:NLNK)
NewLink Genetics is developing algenpantucel-L for pancreatic cancer and tergenpumatucel-L for non-small cell lung cancer. Both are in Phase III trials. Shares are up 45% YTD, and the company is now valued at about $442M.
Onyx Pharmaceuticals Inc. (NASDAQ:ONXX)
Onyx, an oncology franchise, experienced the drug developer's dream-come-true when two of its drugs, Kyprolis [carfilzomib] for multiple myeloma and Stivarga [regorafenib] for metastatic colorectal cancer and gastrointestinal stromal tumor, moved to the market in 2012. The share price doubled last year, and was up about 61%, with a market cap of about $7 billion [$7B] by the time the company was acquired by Amgen Inc. on Oct. 1 for $658M.
Peregrine Pharmaceuticals Inc. (NASDAQ:PPHM)
Peregrine's monoclonal antibody bavituximab, in development as a second-line therapy in non-small cell lung cancer [NSCLC], has rebounded following a labeling snafu that compromised its Phase IIb study. A subsequent analysis of the study results showed a "meaningful but not statistically significant 4.4-month increase" in median overall survival [mOS], explained George Zavoico of MLV & Co. back in our April Watchlist update. After the company explained the situation to investors, shares popped 73%. Shares are up about 4% YTD.
In May, Peregrine announced that it had mapped out its pivotal Phase 3 trial design for bavituximab in second-line NSCLC with the FDA. The study will be known as the SUNRISE trial and is expected to begin by year-end. Shares are up 4.48% YTD; the company's market cap is about $217M.
Pharmacyclics' ibrutinib [PCI-32765], a Bruton's tyrosine kinase [BTK] inhibitor, has enjoyed tremendous success in clinical trials for patients with B-cell blood cancers, particularly chronic lymphocytic leukemia [CLL] and mantle cell lymphomas [MCL]. In late August the company was told by the FDA that its NDA for ibrutinib had been accepted, which triggered a $75M milestone payment from development partner Janssen Biotech [a unit of Johnson & Johnson (NYSE:JNJ)]. Investors are awaiting approval, which could come by the end of this year. The stock is up 107% YTD, and the market cap is about $9.5B.
Prana Biotechnology Ltd. (NASDAQ:PRAN) [PBT:ASX]
Prana was another of Zavoico's Watchlist picks. He called it one of the biggest risk/reward opportunities of this year, citing its investigational drug PBT2, which has restored cognition in mouse models of Alzheimer's disease [AD]. PBT2 is currently in a Phase 2b trial for AD and in Phase IIa for Huntington's disease. Zavoico called Prana's focus on the role played by biological metals in the development of degenerative diseases such as Alzheimer's and Huntington's "a potential game-changer," and cited the therapy's novel approach as fitting with an FDA emphasis on finding "innovative approaches" that could benefit cognitive function for patients. The stock is up about 69% YTD, but has been volatile, due in part to its micro-cap status with a $152M market valuation.
Sangamo BioSciences Inc. (NASDAQ:SGMO)
Sangamo is developing DNA-binding proteins to regulate genes. The stock is up 74%; the company is conducting a Phase II study of SB-728-T, which it believes may be a "functional cure" for HIV/AIDS.
In early March Sangamo presented data from its Phase I study showing that a single treatment with SB-728-T produces a "durable reconstitution of the immune system" by expanding memory CD4+ T-cells, which have the capacity to recall and then rapidly respond against HIV and other foreign antigens. With personalized medicine and associated biomarkers gaining credibility with regulators, data from this study also demonstrated that specific cell surface markers, as well as gene expression characteristics, might predict which patients would be most responsive to the therapy. More than 33M people globally have HIV and AIDS, with an estimated 1.2M in the U.S. Sangamo's market cap is about $575M.
Sarepta Therapeutics Inc. (NASDAQ:SRPT)
Sarepta is up about 58% YTD, but that pales next to last year's 481% rise. Sarepta is an antisense drug development company working on a true disease-modifying therapy for Duchenne muscular dystrophy [DMD]. Normally a patient with DMD, considered an orphan indication, becomes incapable of walking between the ages of seven and 13, and may not live beyond the second or third decade of life.
At the beginning of April, the company put out top-line data on its exon-skipping drug eteplirsen [AVI-4658] in a Phase IIb study that showed a "sustained benefit" in patients. Eteplirsen modifies protein synthesis from DNA to skip exon 51 of the dystrophin gene, making the resulting dystrophin protein shorter but still serviceable. It's a structural and functional repair that can slow, or perhaps prevent, muscle breakdown. In September, the company announced that study results at 96 weeks "showed a continued stabilization of walking ability in eteplirsen-treated patients." Sarepta's current market value is in the $1.4B range. If eteplirsen gains acceptance and ultimate approval, the stage is set for a leap in Sarepta's share price.
Trius Therapeutics Inc. (TSRX)
Trius delivered good news on March 25 when it released data from its Phase III ESTABLISH 2 trial with tedizolid phosphate for acute bacterial skin and skin structure infections. The study met its primary endpoints, determined by both the FDA and the European Medicines Agency, as well as all secondary efficacy endpoints. Trius was acquired by Cubist Pharmaceuticals Inc. in September for $658M, giving investors a 185% return from the start of 2013.
This interview was conducted by George S. Mack of The Life Sciences Report.
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I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.