U.S. Biotech/Pharma Sector Daily Observations Letter: January 29, 2018

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Includes: ABLX, ARDM, BTC-USD, COIN, IBB, PTCT
by: Bhavneesh Sharma
Summary

Small pullback in S&P 500 but biotech indexes continued the uptrend.

Sanofi acquired Ablynx for $4.8B for its nanobody platform.

PTC Therapeutics released early intrim data in SMA type 1.

More insights on the sector are provided.

Market and sector outlook

Small pullback (as expected) in the U.S. equity indexes (advances: declines= 20%: 70%) but a new high is likely before a meaningful pullback. Today's pullback in equities appears related to a selloff in bonds (due to rising yields). Support for S&P 500 is at 2830-2840.

VIX was up 25%. High yield bonds (HYG) were down 0.35%. 10-year yield continued to climb higher (2.73%).

Nasdaq Biotechnology Index (IBB) was, however, up for the day (0.39%) with continued outperformance by small caps. A small pullback is likely.

Up on >5x volume (excluding penny stocks):

  • Protagonist Therapeutics (PTGX)= 13% (analyst initiation, early 2018 data)
  • Restoration Robotics (HAIR): 9.94% (robotic hair transplant system)
  • Biotime (BTX)= 7.3% (HIV related lipodystrophy, dry AMD, upcoming data on Feb. 3)
  • Foamix Pharmaceuticals (FOMX): 4.98% (acne, rosacea)

Upward reversal alert: CASI, QTNT

Downward reversal alert: FWP, MGEN

Day’s events’ outlook:

The big news to begin the day was Sanofi’s (SNY) $4.8B buyout of rare disease European company Ablynx (ABLX), beating Novo’s bid. With the acquisition, Sanofi has expanded its pipeline to add Alblynx’s nanobody platform with on-going development in rare disease, autoimmune diseases, and immune-oncology. Ablynx has been a component of our proprietary rare/orphan disease index for over a year.

PTC Therapeutics (PTCT) presented interim data from an ongoing phase 1 FIREFISH trial for RG7916 (licensed by Roche, RO7034067) in the treatment of SMA type 1. In comparison to the therapies like Spinraza (Biogen) and Avexis’s (AVXS), AVXS-101, RG7916 is administered orally. Early data showed acceptable safety and improved survival. On the other hand, it remains to be seen, how the advanced data for this trial will compare with that from AVXS-101 which has a time-lead (in the pivotal trial) (promise of one-time gene therapy cure vs. daily oral administration). PTC’s pending discussions with FDA regarding Translarna in DMD is mainly why we are following the company.

Aradigm (ARDM) received CRL from FDA regarding its Linhaliq NDA. FDA has recommended an additional phase 3 trial to study the endpoints which may need two years to complete. Still, keeping the company on the watchlist as the management plans to continue discussions with FDA and pursue approval application in the E.U.

An antagonist of the ‘daring/ruthless gene (per Nature magazine) AVPR1A, Balovaptan won the breakthrough therapy designation from FDA in treating autism (Roche) (OTCQX:RHHBY), though the drug may not be in the market till after 2020.

Anyone wants yet another fluoroquinolone? Melinta (MLNT) launched delafloxacin in the U.S. today.

Big insider buying in recent IPO, Menlo Therapeutics (MNLO)! Phase 2 data of Serlopitant in atopic dermatitis related pruritus could be released this year (trial is enrolled).

Noted 3.5M shares purchase of Genocea (GNCA) by Biotechnology Value Fund. NEA already has a stake. We like the early stage cancer neoantigen pipeline (clinical trials to start in 2018).

Bitcoin (BTCUSD) still continues to trade within a range but looks like the range will break to the downside targeting $7500-$8000. A break above $12,000 will make this less possible.

Disclosures: This post is for educational purpose only and is not investment advice. I/we may have a position in the securities mentioned in this post.

Disclosure: I am/we are long SEE THE POST. 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.