An Investor's Look At The New Drugs Of 2018 And Their Makers

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Includes: IBB, XBI
by: C. C. Abbott
Summary

In 2018, the FDA approved 59 new drugs, up from the 46 in 2017, setting a new record.

Among the approvals, 19 drugs have novel mechanisms of action, 14 breakthrough therapies, 34 orphan drugs, 4 accelerated approval.

I look at these 59 approvals and the stock performance of their makers on the day of the approval news, and at different time frames.

While small cap companies, SIGA, RIGL were gainers on the day of approval, LOXO, a mid cap companies is a definite winner across several time frames.  AKAO, DOVA, VSTM, all micro cap companies, lost substantially since approval.

For the 5 year charts, LOXO, FOLD, ARRY, all mid cap were the top gainers, while CBIO, TTPH, AKAO were the biggest losers.

Introduction

2018 has been a productive year for the pharmaceutical industry with a record approval of 59 new drugs.

FDA approval record

Source: Chemical & Engineering News.

In order of approval date, the 59 new drugs are as follows:

Drug Name

Company

Approval Date

Indication

Additional Information*

Lutathera

Novartis (NVS)

1/26/2018

Somatostatin receptor-positive gastroenteropancreatic neuroendocrine tumours

Novel MOA

OD

Biktarvy

Gilead Sciences (GILD)

2/7/2018

HIV infection

Symdeko

Vertex Pharmaceuticals (VRTX)

2/13/2018

Cystic fibrosis

OD, BT

Erleada

Johnson & Johnson (JNJ)

2/14/2018

Prostate Cancer

Trogarzo

TaiMed Biologics

3/6/2018

Multidrug-resistant HIV infection

Novel MOA

OD, BT

Ilumya

Sun Pharmaceutical Industries (OTCPK:SMPQY)

3/20/2018

Psoriasis

Tavalisse

Rigel Pharmaceuticals (RIGL)

4/17/2018

Chronic immune thrombocytopenia (low blood platelet count)

Novel MOA

OD

Crysvita

Ultragenyx Pharmaceuticals (RARE)

4/17/2018

X-linked hypophosphatemia

Novel MOA

OD, BT

Akynzeo

Eisai (OTCPK:ESALY)

4/19/2018

Nausea

Lucemyra

US WorldMeds (private)

5/16/2018

Opioid withdrawal

Novel MOA

Aimovig

Amgen (AMGN)

5/17/2018

Migraine prevention

Novel MOA

Lokelma

AstraZeneca (AZN)

5/18/2018

Hyperkalemia

Doptelet

Dova Pharmaceuticals (DOVA)

5/21/2018

Thrombocytopenia in adults with chronic liver disease

Palynziq

BioMarin Pharmaceuticals (BMRN)

5/24/2018

Phenylketonuria

Novel MOA

OD

Olumiant

Eli Lilly and Co. (LLY)

5/31/2018

Rheumatoid arthritis

Moxidectin

Medicines Development for Global Health (private)

6/13/2018

River blindness (onchocerciasis)

OD

Epidiolex

GW Pharmaceuticals (GWPH)

6/25/2018

Rare, severe forms of epilepsy

OD

Zemdri

Achaogen (AKAO)

6/25/2018

Urinary tract infections

Antibiotic

Mektovi

Array BioPharma (ARRY)

6/27/2018

Unresectable or metastatic melanoma

OD

Braftovi

Array BioPharma (ARRY)

6/27/2018

Unresectable or metastatic melanoma

OD

TPOXX

Siga Technologies (SIGA)

7/13/2018

Smallpox

Novel MOA

OD

Tibsovo

Agios Pharmaceuticals (AGIO)

7/20/2018

Acute myeloid leukemia

Novel MOA

OD

Krintafel

GlaxoSmithKline (GSK)

7/20/2018

Malaria relapse prevention

OD, BT

Orilissa

AbbVie (ABBV)

7/23/2018

Endometriosis

Novel MOA

Omegaven

Fresenius Kabi

7/27/2018

Parenteral nutrition-associated cholestasis

OD

Mulpleta

Shionogi (OTCPK:SGIOY)

7/31/2018

Thrombocytopenia in adults with chronic liver disease

Poteligeo

Kyowa Hakko Kirin

8/8/2018

Two rare types of non-Hodgkin lymphoma

Novel MOA

OD, BT

Onpattro

Alnylam Pharmaceuticals (ALNY)

8/10/2018

Polyneuropathy of hereditary transthyretin-mediated amyloidosis

Novel MOA

OD, BT

Annovera

TherapeuticMD (TXMD)

8/10/2018

Pregnancy prevention

Galafold

Amicus Therapeutics (FOLD)

8/10/2018

Fabry disease.

Novel MOA

OD, AA

Diacomit

Biocodex

(private)

8/20/2018

Seizures associated with Dravet syndrome

OD

Oxervate

Dompe famaceutici (private)

8/22/2018

Neurotrophic keratitis

Novel MOA

OD, BT

Takhzyro

Shire (SHPG)

8/23/2018

Types I and II hereditary angioedema

OD, BT

Xerava

Tetraphase Pharmaceuticals (TTPH)

8/27/2018

Complicated intra-abdominal infections

Antibiotic

Pifeltro

Merck & Co. (MRK)

8/30/2018

HIV-1 infection

Lumoxiti

AstraZeneca (AZN)

9/13/2018

Hairy cell leukemia

OD

Ajovy

Teva Pharmecutical Industries (TEVA)

9/14/2018

Migraine prevention

Copiktra

Verastem (VSTM)

9/24/2018

Chronic lymphocytic leukemia, small lymphocytic lymphoma and follicular lymphoma

OD, AA

Emgality

Eli Lilly and Co. (LLY)

9/27/2018

Migraine prevention

Vizimpro

Pfizer (PFE)

9/27/2018

Metastatic non-small-cell lung cancer

OD

Libtayo

Regeneron Pharmaceuticals (REGN)

9/28/2018

Cutaneous squamous cell carcinoma

BT

Seysara

Paratek Pharmecuticals (PRTK)

10/1/2018

Acne vulgaris

Antibiotic

Nuzyra

Paratek Pharmecuticals (PRTK)

10/3/2018

Community-acquired bacterial pneumonia and skin infections

Antibiotic

Revcovi

Ladiant Biosciences (private)

10/5/2018

Adenosine deaminase-severe combined immunodeficiency

OD

Tegsedi

Akcea Therapeutics (AKCA); Ionis Pharcaceuticals (IONS)

10/5/2018

Polyneuropathy of hereditary transthyretin-mediated amyloidosis

Novel MOA

OD

Talzenna

Pfizer (PFE)

10/16/2018

Breast cancer with a germline BRCA mutation

Xofluza

Shionogi (OTCPK:SGIOY), Genentech (OTCQX:RHHBY)

10/24/2018

Influenza

Novel MOA

Lorbrena

Pfizer (PFE)

11/2/2018

Anaplastic lymphoma kinase-positive metastatic non-small cell lung cancer

OD, BT, AA

Yupelri

Theravance Biophama (TBPH)

11/8/2018

Chronic obstructive pulmonary disease

Aemcolo

Cosmo Pharmceuticals (OTC:CMOPF)

11/16/2018

Travelers’ diarrhea

Antibiotic

Gamifant

Swedish Orphan Biovitrum (OTCPK:SWTUY)

11/20/2018

Primary hemophagocytic lymphohistiocytosis

Novel MOA

OD, BT

Daurismo

Pfizer (PFE)

11/21/2018

Acute myeloid leukemia

OD

Vitrakvi

Loxo Oncology (LOXO)

11/26/2018

NTRK gene fusion-positive solid tumors

Novel MOA

OD, BT, AA

Firdapse

Catalyst Pharmaceuticals (CBIO)

11/28/2018

Lambert-Eaton myasthenic syndrome

OD, BT

Xospata

Astellas Pharma (OTCPK:ALPMF)

11/28/2018

Acute myeloid leukemia

OD

Motegrity

Shire (SHPG)

12/14/2018

Chronic idiopathic constipation

Asparlas

Servier Pharmecuticals (private)

12/20/2018

Acute lymphoblastic leukemia in children and young adult

OD

Elzonris

Stemline Therapeutics (STML)

12/21/2018

Blastic plasmacytoid dendritic cell neoplasm

Novel MOA

OD, BT

Ultomiris

Alexion Pharmaceuticals (ALXN)

12/21/2018

Paroxysmal nocturnal hemoglobinuria

OD

Sources: US Food and Drug Administration; Chemical & Engineering News. Note*: MOA=Mechanism of Action, OD=Orphan Drug, BT=Breakthrough Therapy, AA=Accelerated Approval.

Among them: there are 16 new cancer treatments; 19 drugs have novel mechanisms of action; 14 breakthrough therapies; 34 orphan drugs; 4 accelerated approvals; 5 new antibiotic drugs (this includes some drugs with multiple designations).

Some notables: from ABBV, the first new drug for endometriosis in more than a decade; from GWPH, the first marijuana-extracted drug to treat rare forms of childhood epilepsy; from ALNY, Onpattro is the first treatment to act by RNA interference; from FOLD, a Fabry treatment that is a small molecule drug, not an enzyme; from LOXO, a novel cancer treatment, the first small molecule drug that treats cancer patients according to their genetic profiles. LLY's $8B offer recently to acquire LOXO, highlights the tremendous value LLY has placed on such an innovation.

There are four diseases that have more than one drug approved (i.e. more treatment options for the patients): for Acute myeloid leukemia from AGIO, PFE, ALPMF; for Polyneuropathy from ALNY, AKCA/IONS; for Thrombocytopenia in adults with chronic liver disease from SGIOY, DOVA; and for Migrane prevention from AMGN, LLY.

AZN, LLY, ARRY, SHPG, SGIOY, PRTK each had two approvals and PFE had four.

Of these drug makers that trade on US exchanges, 4 are mega cap, 16 big cap, 10 mid cap, 5 small cap, 6 micro cap.

Stock performance of the makers of 2018 new drugs

Although an FDA approval is a definite achievement for all the companies, their stock performances varied a great deal.

The four charts below show the top five gainers and bottom five losers.

1. On the day of approval.

Sources: Yahoo Finance: Close prices used adjusted for dividends and splits.

2. Since approval to Feb, 1, 2019

Sources: Yahoo Finance: Close prices used adjusted for dividends and splits.

3. One year performance

Sources: Yahoo Finance: Close prices used adjusted for dividends and splits.

To put the % of change in context, the below chart shows one year performance of the bench marks (SPY +0.83%; IBB +035%; XBI -7.75%)

one year chart of spy ibb xbi Source: Seeking Alpha

4. Five year performance

Sources: Yahoo Finance: Close prices used adjusted for dividends and splits.

Note: For LOXO, the adjusted close price of $13 on Aug 1, 2014 and for DOVA, $19.81 on June 29, 2017 (the earliest data points on Yahoo Finance for these two stocks) were used.

Again, the five year performance of the bench marks for comparison (SPY +46.76%; IBB +28.47%; XBI +62.08%).

5 year chart for spy ibb xbi

Source: Seeking Alpha

Concluding thoughts

It was a great year for all the patients who will be helped by these 59 new drugs of 2018.

For investors, especially those of small/micro cap companies, it may be a more mixed story. SIGA, RIGL, TTPH, PRTK are among the top gainers on the day of the approval news, but only SIGA has still held on to its gain since approval. Antibiotic developers, AKAO, TTPH, PRTK did poorly in 2018, in spite of completing the regulatory process. DOVA's drug has no special designations and the stock struggled in all the time frames discussed here. Perhaps being a micro cap company entered a space dominated by big players contribute to the difficulty.

It's noted that the FDA approval news is a non-event for the mega cap companies. Pfizer has the most approvals, 4 new drugs, and its stock does not come into the picture at any time frame.

Four mid cap companies (LOXO, FOLD, ARRY, AKCA) dominated the 5 year chart with 4 top gainers. All of them have novel mechanisms of action and orphan drug status. Additionally LOXO (a breakthrough therapy) and FOLD treatments received accelerated approval.

LOXO is a definite winner of 2018 new drugs' makers, with its impressive and sustained gains, completed by a Buy-out ( probably the dream of every investor of biotech start-ups). Many congratulations to all LOXO longs!

LOXO Source: Google Finance

Many thanks for taking the time to read this article. All the best in your investing in the pharma/biotech stocks!

Disclosure: I am/we are long PFSCF. 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.