Rounds Report: Solid Biosciences Bull Charged Ahead While Portola Gained FDA Approval Of AndexXa

Summary

• Overall bioscience market closed the week with a robust rally. Solid Biosciences topped our list, as its trading momentum is increasingly stronger by the day.
• We expect the Solid’s shares to be catapulted to the new high when the FDA remove its clinical hold going forward.
• Portola shares rallied due to the FDA approval of AndexXa.

My habit of committing far more time to learning and thinking than to doing is no accident. - Charlie Munger

Trading Analytics

Welcome to the edition of Integrated BioSci Rounds Report for May 04, 2018. As usual, we’ll elucidate notable trading analytics for the day, recent insider transactions, and interesting market developments. Without further ado, let’s take an overall assessment of the bioscience space. As follows, the iShares of NASDAQ Biotechnology Index (NASDAQ:IBB) traded up $1.01 (+1.06%) at $102.35. Moreover, the SPDR S&P Biotech (NYSE:XBI) exchanged hands $1.45 higher at $87.37 (for +1.69% gains). It’s likely that investors were trading with a positive sentiment for the day. Regardless of the daily inclination, there are substantial prospects in the bioscience sector: one that delivers hope for patients while rewarding supporters with substantial wealth in the long haul.

Figure 1: Notable BioSci movers. (Source: Morningstar)

Moving to specific equities, Solid Biosciences (NASDAQ:NASDAQ:SLDB) won the highlight spot for the day. The stock rallied aggressively by logging over $2.77 to trade at $18.87 (for 17.21% profits). Based in the innovation hub (Cambridge, MA), Solid is powering by the innovation of corrective gene therapies, disease-modifying therapeutics, and assistive devices (as shown in figure 2). The company seeks to service the lucrative Duchenne muscular dystrophy (“DMD”) market. Notably, Duchenne muscular dystrophy (“DMD”) is an X-linked rare genetic condition, resulting in muscle weakness, inability to walk (in their early teens), as well as heart and lungs failure.

Figure 2: Therapeutic pipeline. (Source: Solid Biosciences)

It’s highly likely that the silver bullet to DMD is SGT-001, a gene therapy that employed the adeno-associated virus (“AAV”) - to transfer the correct dystrophin genes dubbed microdystrophin (to patients suffering from DMD). Already earned the rare pediatric disease designation in both the US and the EMA, the stellar molecule can potentially slow or stop the disease progression regardless of stage or genetic mutation. We expect the stock to continue to trade northbound. And, the shares should be catapulted to a new high (when the FDA to remove the clinical hold on SGT-001 in the near future).

Bioscience Catalyst

Next up, the agency approved AndexXa. As an antidote to Factor Xa inhibitors, the said molecule is used to reverse the life-threatening bleeds that can occur with the novel oral anticoagulants (NOACs), i.e. rivaroxaban and apixaban. Commenting on the recent development, Dr. Stuart Connolly (Chairman and professor at McMaster University) enthused,

Today’s approval represents a significant step forward in patient care and one that the medical community has been eagerly anticipating. Andexxa’s rapid reversal of the anticoagulating effects of rivaroxaban and apixaban will help clinicians treat life-threatening bleeds, where every minute counts.

Already gained both the orphan and breakthrough therapy designations, AndexXa was approved through the accelerated pathway. As with other approved medicines, Portola is required to conduct a phase IV post-marketing surveillance. Notably, the company will initially conduct a soft-launch for AndexXa as early as June. If the drug receives the FDA approval to launch the Generation 2 manufacturing process in early 2019 (the same time as the final EMA approval decision), the firm will commence an aggressive launch. We explicated in the prior research,

Based on our calculations, the annual peak revenues from AndexXa is approximately $2.25B. After the 50% discounts (for the reduced market penetration, launch delay, and unforeseen variables), the peak estimate is still in the $1.12B ballpark. Evidently, the said figure is comparable to the $1.65B sales of Praxbind. Taking $1.12B with the ($1.5B to $2.0B) figures for Bevyxxa should add up to roughly $2.6B annual revenues. Interestingly, there are two industry tailwinds to help launch AndexXa into a blockbuster drug. First, the use of NOACs - for stroke, pulmonary embolism (“PE”), venous thromboembolism (“VTE”) - is increasing robustly due to their superior efficacy and safety profile versus enoxaparin and warfarin as well as the user convenience edge. With more prescription, there is an increasing chance of NOACs’ associated bleeding. In 2016, there were roughly 117.0K hospital admissions pertaining to Factor Xa inhibitor bleed and nearly 2.0K bleeding-related death monthly.

Final Remarks

In all, the bioscience market closed out the week with an exclamation mark. Many firms under our coverage appreciated strongly. Solid biosciences procured solid gains for the shareholders. Better yet, that might only be the commencement of what will be a gargantuan bull run later in the year with clinical hold removal catalyst. Moreover, the Portola shares rallied strongly following the approval of AndexXa. There should be much more upsides ahead come year-end when the EMA makes the regulatory decision for the said molecule. On the longer horizon, there are significant unlocked values in the form of blockbuster sales as well as cerdulatinib clinical binary.

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