This Week in Biotech: Putting On a Clinic

In part one of This Week in Biotech we're looking at four encouraging clinical trials, including a company that gained 545%, as well as an announced collaboration and a buyout.

Jan 11, 2014 at 11:40AM

With the SPDR S&P Biotech Index up 61% 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.

To say that the start of 2014 has gone to the biotech sector might be a drastic understatement with biotech stocks soaring and flopping at will over the first two weeks. Today we're going to look at 12 (yes, twelve!) important biotech stories that made news this week and decipher why they're important for investors.

In Part 1, we're going to tackle all of the clinical data that moved companies this week, as well as examine a new collaborative pact as well as a fresh purchase. Part 2 of "This Week in Biotech" will focus on FDA, EU, and Department of Justice rulings and actions which dominated the headlines for the week. So let's get started.

Setting the record straight ... up!
I'm not sure how any discussion can begin without mentioning the historic run in Intercept Pharmaceuticals (NASDAQ:ICPT) this week. Intercept, a company that develops therapies to treat chronic liver disease, advanced 545% for the week (that's really not a misprint), or $376.66 per share, after reporting that its mid-stage study of obeticholic acid for nonalcoholic steathohepatitis, or NASH, had been stopped early because of statistically significant efficacy. The data safety monitoring board made its recommendation after reviewing about half of all trial patients and determining that the primary endpoint of the trial -- a decrease in NAFLD Activity Score of at least 2 points with no worsening liver fibrosis -- was met. In response, Intercept has seen price target upgrades galore, including a fresh $872 price target from Bank of America/Merrill Lynch. To put this in context, Intercept began the week below $70 a share. Although Bank of America/Merrill Lynch is forecasting $4 billion in peak sales and there's clearly a huge market to treat serious cases of NASH (perhaps 6 million people), I'm concerned that this run-up has come way too far, too fast.

This company "only" doubled
Normally, a company that doubles in one week will get a lot of attention. For clinical-stage drug developer Epizyme (NASDAQ:EPZM), which advanced 99.4% this week, its gains tracked largely under the radar because of Intercept -- but its results were no less encouraging. Epizyme on Monday reported that its DOT1L inhibitor to treat acute leukemias, EPZ-5676, reached its proof-of-concept milestone in early stage trials. This achievement, which was triggered by objective responses with regard to translocations of the MLL gene in study patients, necessitates a $25 million payment from development partner Celgene. To make matters better, Epizyme also alerted investors to a separate $4 million milestone achievement from a collaboration with GlaxoSmithKline, which cumulatively allowed it to boost its year-end cash projection to $145 million from previous estimates of $115 million. As for me, I'd much prefer to wait for later-stage data before drooling over EPZ-5676's potential.

A "Resonating" success
In a week of early trial stoppages, Pharmacyclics (NASDAQ:PCYC) and Johnson & Johnson's phase 3 Resonate trial involving Imbruvica for the treatment of relapsed/refractory chronic lymphocytic leukemia, or CLL, and small lymphocytic lymphoma was also stopped early because of statistically significant efficacy. The stoppage, based on the recommendation of the independent data-monitoring committee, wasn't a big surprise given how impressively Imbruvica outperformed the placebo in previous trials. This is, however, the most crucial of all trials for Imbruvica, since CLL is the most common of all adult blood cancers. As of now, Imbruvica appears to be on track to claim its blockbuster status by 2015.

Oh, yeah, this company nearly doubled, too ...
No joke -- we had three companies pretty much vault higher by triple digits on the week, with Neurocrine Biosciences (NASDAQ:NBIX) being the third. With a gain of 98% for the week, Neurocrine advanced after announcing positive mid-stage results for its VMAT2 inhibitor known as NBI-98854 for the treatment of tardive dyskinesia, a disorder characterized by abnormal and involuntary muscle movements. The trial data revealed a 2.6-point reduction in the Abnormal Involuntary Movement Scale, compared with just a 0.2-point reduction in the control arm. There was also a 49% responder rate in the NBI-98854 intent-to-treat group, and 67% of patients were deemed "much improved" or "very much improved" at the six-week mark. An initial peek at its 12-week results, released yesterday, showed that the responder rate improved to 54%. If you recall, Neurocrine tanked just months ago on weak results from NBI-98854, but dose escalation studies were still ongoing. This is why it's always important for biotech-savvy investors to wait for dose escalation studies to be complete before placing their bets.

Buddying up
In addition to clinical data, we also saw a collaborative partnership struck between Sangamo Biosciences (NASDAQ:SGMO) and Biogen Idec on Thursday. The deal, which sent Sangamo shares higher by 41% on the week, allows Biogen Idec access to Sangamo's proprietary gene-altering technology platform in return for a $20 million upfront cash payment and the potential to earn up to $300 million in additional milestone and development payments. The two companies will focus their research on sickle-cell disease and beta-thalassemia, with Biogen Idec also covering all external and internal trial costs. While shareholders are clearly excited that Sangamo landed a mammoth partner, I'm more excited for Biogen, which landed a unique technology platform for a very inexpensive price.

Patent cliff no more!
Finally, Forest Laboratories (NYSE:FRX) addressed the question to investors of how it would solve its patent cliff issue when Alzheimer's disease drug Namenda goes off patent in 2015. The answer: Buy its way out! On Wednesday, Forest Labs announced the $2.9 billion all-cash purchase of Aptalis, a maker of cystic fibrosis and gastrointestinal drugs, from TPG Capital. The deal, which Forest will fund with $1 billion in cash on hand and $1.9 billion raised through debt offerings, will add $700 million in revenue by 2015, could reduce costs through synergies by $125 million in 2016, and should add an adjusted $0.78 in EPS by 2015, the same year Forest will lose its exclusivity on Namenda. While shares soared this week and its pipeline is no longer among the most perilous, its valuation is a bit high to warrant a look here based on what's remaining in its pipeline.

Stay tuned for "This Week in Biotech Part 2," which covers all of the FDA, EU, and Department of Justice actions which rocked the biotech sector this week.

Can this top stock keep pace with Intercept's red hot gains in 2014?
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Sean Williams owns shares of Bank of America, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Bank of America and Johnson & Johnson. It also recommends Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information