With the SPDR S&P Biotech Index up 38% 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.
Dominating early stage data
As always, let's begin with some of the week's most positive stories. In a week dominated by early stage data, on Tuesday Lexicon Pharmaceuticals (LXRX -4.42%) reported positive proof-of-concept data for LX4211 for the treatment of type 2 diabetes in patients with renal impairment. According to Lexicon, LX4211 delivered statistically significant and meaningful reductions in glucose levels in patients, as well as an increase in GLP-1 levels, which is an important hormone that helps control glucose levels. As a revolutionary experimental therapy that inhibits both the SGLT1 and SGLT2 inhibitors, LX4211 is certainly going to be a name to watch moving forward.
Also popping on good news this week was NewLink Genetics (NLNK), which rose noticeably after reporting study results at the European Cancer Congress for its HyperAcute immunotherapy candidates. Within non-small-cell lung cancer, 31% of patients demonstrated a partial response with 25% exhibiting stable disease. In pancreatic cancer, NewLink noted that three patients exhibited durable complete responses 12 to 36 months after having progressed on previous therapies. Drug candidates that boost the body's immune response to disease are going to be a big growth opportunity moving forward, so I would also suggest keeping an eye on NewLink as well.
The divergence of big pharma pipelines
Turning now to the approval front, Roche (RHHBY -0.50%) received positive news when the Food and Drug Administration expanded Perjeta's indications to include pre-surgery treatment in patients with HER2-positive breast cancer in combination with Herceptin and chemotherapy. The approval shouldn't come as too big of a shock since Perjeta was recommended for approval by the FDA's panel last month by a vote of 13-0. Given that Perjeta delivered a pathological complete response that was 58% higher than the next highest therapy in late-stage trials, I see no reason why this shouldn't be a serious growth driver for Roche.
Although we often think of it as a large pharmaceutical company, I believe the news of Merck (MRK 0.25%) laying off 8,500 employees in order to save $2.5 billion over the next two years is worth noting. Merck has struggled in recent years with failed drugs and pipeline patent expirations, which is causing the company to get more aggressive about its cost-cutting and restructuring efforts. While this does save Merck money and potentially boost its bottom line, consider the other side of the coin that it also likely means reduced R&D output, which could put Merck at a longer-term disadvantage to its peers.
Achillion implodes
Finally, the disaster du jour of the week was Achillion Pharmaceuticals (ACHN), which imploded on Monday after providing an update on its pipeline that included an ongoing clinical hold of its lead hepatitis-C drug candidate, sovaprevir. Although Achillion's press release says the company met all of the FDA's requirements in its original clinical hold letter, the FDA simply didn't feel that removing the clinical hold was warranted. Even with additional hepatitis-C candidates in its pipeline, investors are clearly worried that Achillion has fallen way too far behind its peers to make a difference in hep-C. Shares fell a whopping 63% during just the first two days of the week.
