This Week in Biotech

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With the SPDR S&P Biotech Index up 20% over the trailing-12-month period, it's evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.

If the biotech sector was to make a movie, I'd have suggested the title be "The Good, the Bad, and the Intriguing" following this week's action.

The good
Leading to the plus column was biotech cancer drug developer Onyx Pharmaceuticals (UNKNOWN: ONXX.DL  ) which soared 57% on the week (nearly $50 a share!) after receiving a buyout bid from Amgen for what amounted to $120 a share. Onyx quickly rebuffed the offer price as too low but did note it was actively looking for strategic alternatives that would properly value Onyx and its pipeline. Earlier in the week I took a deeper dive into Onyx and pegged its fair value at $145 a share. Although I favor the potential of its pipeline, I'm starting to see little upside left in shares at these levels.

RNAi therapeutics expert Alnylam Phrmaceuticals (NASDAQ: ALNY  ) also delivered big gains this week to the tune of 22% after reporting very encouraging mid-stage data for ALN-TTR02, its treatment targeting TTR-mediated amyloidosis. Its experimental drug ALN-TTR02 delivered a 93% reduction in TTR rates in patients, which is perfectly consistent with its early stage results that demonstrated a reduction in TTR rates of 94%. Peak sales estimates, should the drug be approved, range from $800 million to up to $2 billion, but I'd caution investors keep a level head on their shoulders in the meantime.

The bad
Don't say I didn't tell you so, but Insmed (NASDAQ: INSM  ) shares sank like a stone after reporting late-stage results for Arikace, its experimental treatment for non-tuberculosis mycobacterial lung infections. Although Arikace met its primary endpoint of being non-inferior to the current standard of treatment, TOBI, which is made by Novartis, the results didn't exactly wow analysts who now see limited upside even if it's approved by the FDA. Simply put, without any measurable differentiation, Insmed could have a hard time gaining sales traction and is still quite the long shot to be profitable.

The latest hepatitis-C nightmare came from Achillion Pharmaceuticals (NASDAQ: ACHN  ) which plunged 24% on the week after the FDA placed a clinical hold on its lead compound, sovaprevir (previously known as ACH-1625) because of a worrisome drug-to-drug interaction noted in early stage trials. According to Achillion's update, sovaprevir, when studied with atazanavir, was associated with elevated ALT enzymes in the liver, although no serious adverse events were documented. Even though the FDA is allowing Achillion to continue studying sovaprevir in its mid-stage trial with ACH-3102, it's just another setback for Achillion which is miles behind Gilead Sciences and AbbVie in terms of time it will take to bring a new hepatitis-C therapy to market.

The intriguing
While largely an under the radar story, I can't let the week end without mentioning the exciting potential news for patients with HIV. According to a report by Bloomberg, GlaxoSmithKline (NYSE: GSK  ) and Johnson & Johnson are testing a new vaccination (GSK 744 and TMC278) that could allow HIV patients the convenience of taking a shot once a month or once a quarter instead of popping pills every day for the rest of their life. In a 40-person HIV-negative study, researchers noted that the level needed to suppress progression or slow down the infection was adequate throughout the month and lasted for up to four months after the last injection.This is an exciting development worth keeping a close eye on!

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Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 06, 2013, at 8:15 PM, jad9000 wrote:

    You seem to have left out that six analysts either maintained or upgraded Insmed after the results, that the sp has moved back up three days in a row, that Arikace was deemed to be comparable to TOBI, that Arikace is a once a day dosing vs twice per day for TOBI and that TOBI users fail to dose twice per day at a rate of 30% to 40%. In their comparison trial TOBI users were forced to dose twice per day. The trial was not reflective of actual use but optimum use - and they were head to head anyway. In addition the beneficial effects of Arikace grew stronger over time while the beneficial effect of TOBI dropped to zero. The Company also announces that the U.S. Food and Drug Administration (FDA) designated ARIKACE as a Qualified Infectious Disease Product (QIDP) for the treatment of Non-Tuberculous Mycobacteria (NTM) lung infections. Additionally, the FDA granted Fast Track designation to ARIKACE for the treatment of NTM. There is no other treatment for NTM in existence today. You might want to consider publishing the entire story rather than this half ass analysis. We'll see you at $25 per share by yearend or sooner. Then you can eat crow publicly.

  • Report this Comment On July 07, 2013, at 11:05 PM, tomd728 wrote:

    JAD when did these boards become a place to demonstrate just how rude a respondent can be ?

  • Report this Comment On July 08, 2013, at 10:29 AM, checksurshorts wrote:

    Tomd -- I think Jad may have been a bit too kind. In both articles the author failed to even mention Cystic Fibrosis which is what these positive (if you do some research) results were for. A separate trial for NTM (for which there is no competition) is still underway at this time as mentioned by Jad.

    Is this an attempt at manipulation? I don't know. But if the number of comments is any indication of this author's readership, I don't think Insmed investors should be too worried.

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