This Week in Biotech: Is This the Return of Big M&A?

With the SPDR S&P Biotech Index up 18% 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.

M&A mania
Perhaps no story stood out as more this week than the incredible amount of merger and acquisition rumors and deals within the health-care sector. While I'll leave the rumor mill on the sidelines for now -- although we discussed one of the bigger rumors earlier in the week -- all eyes were on the transformative deal announced by Novartis (NYSE: NVS  ) . Under the terms of its multiple deals, Novartis agreed to acquire GlaxoSmithKline's (NYSE: GSK  ) oncology unit for $14.5 billion, with an additional $1.5 billion in milestone and royalties payable if certain clinical trial goals are reached. In return, GlaxoSmithKline is purchasing Novartis' vaccine unit for $7.1 billion. And to round out the house cleaning, Eli Lilly is purchasing Novartis' animal health division for $5.4 billion. 

This is clearly big news for all companies involved. This will solidify Novartis' position as an oncology powerhouse that could potentially rival Roche, while it'll allow GlaxoSmithKline to focus on its growing respiratory segment and add scalability to its current vaccine program. For Eli Lilly, the deal is crucial to giving it sustainable cash flow in the wake of key patent losses over the past couple of years.

Sarepta in the fast lane
About face. Forward, march!

That was the mantra for Sarepta Therapeutics (NASDAQ: SRPT  ) shareholders this week after the company announced that the FDA would allow Sarepta to file for a new drug application for Duchenne muscular dystrophy drug eteplirsen before the end of the year. This earlier-than-expected NDA filing has investors excited that Sarepta may burn through less of its cash. I would, however, caution that the FDA clearly requested, and Sarepta blatantly put in its press release, that it would need "additional data to support the efficacy and safety of eteplirsen for the treatment of DMD." In other words, there's still work to be done and Sarepta is in no way off the hook, but the path to approval may have gotten just a bit easier. Whether that ease is worth a 50% one-week rise is an entirely different debate.

Sitting pretty
Shareholders of clinical-stage biotech company Revance Therapeutics (NASDAQ: RVNC  ) are also sitting pretty this week after it reported positive results from a phase 1/2 study involving RT002 as a treatment for moderate-to-severe frown lines. According to the results, 94% of patients in this study were rated as having "none" or "mild" frown lines at maximum frown just four weeks after treatment. Perhaps more impressive was RT002's median duration of response of 29.4 weeks, or better than seven months. Needless to say, RT002 met both its primary and secondary endpoints and looks poised for success, at least early on. Investors, though, may want to contain their optimism as we're talking about a wholly clinical-stage company with a whopping $640 million valuation. Much of that optimism appears to already be baked into Revance's share price.  

Cytokinetics swings and misses
Not everyone could be a winner this week, just ask shareholders of clinical-stage biopharmaceutical company Cytokinetics (NASDAQ: CYTK  ) , this week's disaster du jour. Shares absolutely imploded, losing 65% on Friday, after the company announced that its midstage BENEFIT-ALS study involving tirasemtiv didn't meet its primary efficacy endpoint of a mean change from baseline in ALS Functional Rating Scale. Furthermore, its secondary endpoints, which included respiratory and skeletal function measures, were mixed. Long story short, it doesn't look as if there's much future for Lou Gehrig's disease therapy tirasemtiv, and shareholders should instead turn their focus toward experimental acute heart failure drug omecamtiv mecarbil which is currently in phase 2b trials.

Could this be the next trillion dollar revolution in the health care sector?
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion-dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and it's ability to make life-changing medical solutions never thought possible.  To learn how you can invest in this unbelievable new technology, click here now to see our free report.

Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2931667, ~/Articles/ArticleHandler.aspx, 8/31/2015 5:52:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

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.

Today's Market

updated Moments ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 3:59 PM
CYTK $6.92 Down -0.08 -1.14%
Cytokinetics, Inc. CAPS Rating: ***
GSK $40.93 Down -0.32 -0.78%
GlaxoSmithKline CAPS Rating: ****
NVS $97.22 Down -1.13 -1.15%
Novartis CAPS Rating: ****
RVNC $30.26 Down -0.24 -0.79%
Revance Therapeuti… CAPS Rating: *****
SRPT $35.70 Down -0.99 -2.70%
Sarepta Therapeuti… CAPS Rating: ***