This Week in Biotech: The Questcor Buyout and MannKind's Giant Leap to Nowhere

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With the SPDR S&P Biotech Index up 22% 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.

Mallinckrodt's unexpected buy
Sometimes buyouts come completely out of left field, which is exactly how I'd describe Monday's announcement that Mallinckrodt was going to purchase Questcor Pharmaceuticals (NASDAQ: QCOR.DL  ) , inclusive of unexpired options, for $5.6 billion. The deal, as noted by the press release, would be immediate accretive to Mallinckrodt and be substantially accretive in 2015 and each year thereafter. While it might appear that short-sellers gooses are cooked, shareholders from both sides still need to approve the deal, and there's no guarantee that will occur. In addition, an ongoing investigation by the Food and Drug Administration into the marketing practices of Quesctor over Acthar Gel, its only FDA approved product, could hinder its buyout. This has all the makings of a situation best left avoided.

One giant non-event for MannKind
This upcoming week was supposed to be the culmination of years of hard work for MannKind (NASDAQ: MNKD  ) and its shareholders. Instead, following an FDA panel meeting that overwhelmingly recommended inhaled insulin therapy Afrezza for approval, the Food and Drug Administration has decided to postpone Afrezza's PDUFA decision date three months until July 15, 2014. While that's not necessarily bad news for the therapy itself as it merely gives the FDA more time to comb over the data, it is bad news for MannKind in that it's another three-month delay in potential bringing its new product to market. This means more cash burned in the meantime. I'm still of the personal opinion that Afrezza will be approved to treat type 2 diabetes (90% of all diabetes cases are type 2), but I'm still up in the air with regard to whether or not it'll be approved as a glycemic control for type 1 diabetes. Either way, MannKind needs a resolution soon so it can turn its attention to seeking out a licensing partner.

Agios's incredible results
Sure, it was only a phase 1 study that hasn't even hit its maximum-tolerated dose yet, but Agios Pharmaceuticals' (NASDAQ: AGIO  ) AG-221 as a treatment for blood cancers is already a hit with Wall Street and biotech-savvy investors. On Monday Agios announced that its drug had met its primary endpoint of safety and tolerability in an initial phase 1 study. More importantly, though, it demonstrated impressive clinical activity including three complete clinical remissions out of seven evaluable patients. Because complete remissions are so uncommon in blood cancers this new got my head turning, no matter how early in development AG-221 current is. Agios also has a solid development partner in Celgene for AG-221; so if I were you, I'd keep a close eye on Agios moving forward.

Phase 3 glee
The transformation of Alkermes (NASDAQ: ALKS  ) into a global biopharmaceutical company focused on treating chronic diseases continued this week with it reporting positive late-stage results for aripiprazole lauroxil, a treatment for schizophrenia. According to its press release, Alkermes' phase 3 trial of once-monthly aripiprazole lauroxil met its primary endpoint and demonstrated a statistically significant reduction in the Positive and Negative Syndrome Scale total score at week 12 from baseline relative to the placebo. It also met a key secondary endpoint of improvement from baseline in the Clinical Global Impression -- Improvement Scale at week 12. Alkermes is planning to file a new drug application sometime in the next quarter which could put it in line for an FDA approval by mid-2015.

Hepatitis C of opportunity
Hepatitis C is a big market opportunity for the biopharmaceutical sector, and the latest round of positive data comes from Merck (NYSE: MRK  ) and its combo therapy MK-5172, an NS3/4A protease inhibitor, and MK-8742, an NS5A replication complex inhibitor. Late in the week Merck announced interim results from its phase 2 C-WORTHy study showing sustained virologic response rates (i.e., no detectable levels of HCV) at 12 and 18 weeks of 90% of greater in cohorts involving genotype 1 treatment-naive patients with liver cirrhosis, treatment-naïve non-cirrhotic patients with HCV and HIV co-infection, and genotype 1 patients who were prior null-responders whether or not they had liver cirrhosis. There's still a lot of data to comb through, but 90% SVRs and higher is certainly worth further research. I'd keep this HCV combo high on your radar, especially if you're a current Merck shareholder

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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 April 12, 2014, at 2:35 PM, theeseer wrote:

    How many rediculous and "weasel worded" articles must the supporters of MNKD and Afezza endure. Lets take a look at the tone and substance of this latest non event article. While its true that there is the inconvenience of a 3 month delay. The facts are that the ADCOM expert panel hired by the FDA voted 14-0 for type 2 approval and 13-1 for type 1 approval but this author is "Up in the Air" . And then after a naked attempt to attract attention with his title indicating some typ of disaster he "Weasel Words" OH it will probably be approved for type 2. Really amazing that you can agree with 14 experts! Congratulations! Next MNKD has has firms and has lined up partners most probably waiting for final approval that will certainly come. Lastly what other Biotech has a factory and inventory up and running like MNKD so time to market will be swift. But I gues you never bothered ot mention the Danbury Conn. factory because you probably haven't done your homework for this article. Or "I'm sure" you would have mentioned these facts even though they undermine your arguments. The "leap to nowhere" is this article.

  • Report this Comment On April 12, 2014, at 3:12 PM, sammievee wrote:

    Last post was surely harsh, but after reading it two times I consider it appropriate.

  • Report this Comment On April 12, 2014, at 4:54 PM, larryw101 wrote:

    Where does Motley dig up these ignorant authors? MNKD's leap to nowhere? Are you kidding?

    Is this author on drugs or what? Maybe he is by the looks of his picture.......Seriously !!

    I should know better than to read garbage journalism like this from Motley Fool.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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