Amid a tumultuous time on the stock markets some clear winners and losers emerged among the sector’s smaller drug makers in the first half of the year. Step forward Genmab (OTCPK:GMXAY), Hanmi (HAMPF) and Celator (NASDAQ:CPXX); hang your heads Endo (NASDAQ:ENDP), Aegerion (NASDAQ:AEGR) and Infinity (NASDAQ:INFI).
As is often the case with companies of this size, share price shifts are driven more by the fate of individual products than the macro trends that steer their larger peers. However, among the mid-caps it does seem that the fallers were more severely punished than the risers rewarded (see tables below).
Maybe investors’ search for safe havens is also affecting this section of the industry, which naturally boasts the riskiest investment prospects. (2016 share gainers signal flight to safety, July 5, 2016).
Not that Endo can blame its dire situation on the economy. Alongside Valeant (NYSE:VRX), the company has amply demonstrated the pitfalls of launching a debt-fueled acquisition spree during a valuation bubble.
Perrigo (NASDAQ:PRGO) can also perhaps be tarred with the same brush - its $4.7bn acquisition of Omega in 2014 was ultimately described by analysts as a “near disaster”.
Actelion (OTCPK:ALIOY), long pegged as a bid target, remains buoyed by its strong drug franchise even as M&A activity among speciality pharmaceutical companies has dimmed. And it is notable that Medivation (NASDAQ:MDVN) represents the sole US company in the risers, but is there only thanks to a bid approach.
Elsewhere among the mid-caps pipeline progress or regress has provided a prompt. Genmab finally struck gold with Darzalex in multiple myeloma, partnered with Johnson & Johnson, and Hanmi is benefiting from a string of big pharma licensing deals.
Alkermes (NASDAQ:ALKS) suffered a phase III failure in depression while, interestingly, both Ionis (NASDAQ:IONS) and Alnylam (NASDAQ:ALNY) feature in the mid-cap fallers. The collapse of the former’s amyloidosis project should have been a boon to the latter’s rival position, however as biotech sentiment has ebbed Alnylam has struggled to keep investors engaged in its still largely unproven, albeit late-stage, RNAi pipeline.
A couple of companies among the small caps amply demonstrate the binary nature of this end of the sector.
XBiotech (NASDAQ:XBIT), the biggest climber at June 30, just days later can no longer claim the high ground. A highly questionable analysis of a phase III trial of its lead candidate failed to convince investors about the efficacy of the drug in colorectal cancer and its shares have plunged 39% since.
Tesaro meanwhile claimed its spot a mere seven days ago, with the unquestionable success of its phase III ovarian cancer candidate, niraparib. GW Pharma (NASDAQ:GWPH), meanwhile, continues to advance on hopes for its cannabis-based epilepsy product.
The fallers represent a catalog of failed pipelines and commercial disappointment, from the flop that is Aegerion’s Juxtapid to the demise of Infinity’s duvelisib, which has been long in the making.
Still, as the table below shows, even the tiniest companies are capable of beating all the odds. The $1.2bn in market cap that Celator (CPXX) added in the wake of its impressive leukemia results rivals the value creation of some of the mid-caps.
These events are rare, however. Investing in this area of the market remains only for the brave.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.