Biotech Weekend Recap: Clinical Trials, Company Files

by: Bio Insights

My last weekend recap, which covered the most vital biotech moves in the trading week of October 1-5, turned out to be very popular. Because it's tough to keep track of all the moves in the sector, here we go again with a recap of October 8-12:

Clinical Trials

Eli Lilly (NYSE: LLY) saw unusually high buying halfway through Monday due to released phase III results for their drug solanezumab in the treatment of patients with mild to moderate Alzheimer's disease. Some of Lilly's results demonstrated that Alzheimer's patients could see a slowdown of disease progression, but the study didn't actually meet its primary endpoint. This means that the results were not statistically significant, and Lilly will have to succeed in another trial to submit an NDA for solanezumab. Nonetheless, shares rallied to a new 52-week high on Tuesday (of $53.55/share) then retreated throughout the rest of the week to $50.54/share at Friday's closing bell. I don't think solanezumab was worth the $3 billion increase to Eli Lilly's market cap anyway, as elaborated on here.

Continuing the theme of simultaneously good and bad clinical trial results, we saw Vertex Pharmaceuticals (NASDAQ: VRTX) on Thursday (the 11th) with the phase II results for its Cystic Fibrosis drug VX-809. The data was initially presented at the North American Cystic Fibrosis Conference, which is still being held in Orlando. The market had to wait until Friday (the 12th) to react to the presentation slides, which demonstrated that VX-809 was not a very good Cystic Fibrosis treatment on its own but performed quite well in combination with the already-marketed ivacaftor. Shares dropped almost 6% on the mixed results, but they weren't necessarily that bad. You can read more about it here.

Not all clinical trial results were cloudy, though. Lexicon Pharmaceuticals (NASDAQ: LXRX), for instance, saw very solid phase II results for its carcinoid syndrome drug telotristat etiprate, which has the green light to progress to phase III trials. This caused shares to jump 12.55% on Friday, although most Lexicon investors are more interested in their upcoming diabetes drug LX4211, since it's targeting what is arguably the most profitable drug market out there.

Still reacting to its phase IIb clinical trials for eteplirsen in the treatment of Duchenne Muscular Dystrophy, Sarepta Therapeutics (NASDAQ: SRPT) continues to sell off the 200% monster-rally it saw on October 3rd. I did warn against the selling that would result from profit-taking in the stock, although a 40% retreat from the stock's highs does seem a bit excessive. Bears who were short the stock prior to October 3rd, however, are still deep underwater on their positions (by almost 100%, depending on the starting price).

Note: If I missed any clinical trial moves that you wanted to see in the recap, please let me know in the comments section.

Important Company Filings

What weekend would be complete without discussion about Amarin Corporation (NASDAQ: AMRN), the creator of Vascepa and probably the most highly-watched name in biotech. The company released an 8-K filing on October 10th that claimed that the FDA has still not contacted the company about the NCE status of Vascepa. Wall Street is focusing very heavily on the NCE ordeal, which is sending shares lower. AMRN is down 13% this week alone. If you want a more detailed recap, and a bullish argument for the stock, you can read it here.

NPS Pharmaceuticals (NASDAQ: NPSP) soared almost 19% higher on Friday, reacting to the FDA's release of briefing documents for an upcoming advisory Gastrointestinal Drug review of Gattex. Gattex (teduglutide) is a treatment for adults with short bowel syndrome, and is indeed the flagship product of NPS. The NDA for the drug has already been submitted, and the advisory committee will vote on the drug's approval October 16th (Tuesday next week). While the advisory committee's vote is not going to guarantee (or deny) an FDA approval for Gattex, generally the market trades these votes as if they were FDA decisions. The FDA usually agrees with its committees.

Anyone who was attempting to catch falling AEterna Zentaris (NASDAQ: AEZS) stock woke up to a nasty surprise on Friday. AEZS shares got smashed open by the bears at the opening bell - bringing losses of over 22% by 4:00 Eastern Time. This move accounts for the company's filings for a $16.5 million offering of common shares and warrants. This is exactly why the market hates stocks that undergo reverse splits, as mentioned in my last article on AEterna Zentaris.

Disclosure: I am long AMRN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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