This Week in Biotech: Actions Speak Louder Than Words

Regulatory actions provided the impetus to big moves for these five biotech stocks.

Jun 14, 2014 at 11:20AM

With the SPDR S&P Biotech Index up 39% 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.

Normally we look at five or six of the biggest stories of the past week. With earnings reports out of the way the floodgates opened and 11 (yes, eleven!) important events transpired this week, and we're going to cover them all.

In part one of "This Week in Biotech" we'll look at how regulatory actions shaped the week for a handful of companies, while part two will focus on a number of clinical actions and a major buyout that sent some stocks soaring and others reeling during the past week.

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Source: Pan American Health Organization, Flickr.

Given the green light
It's a rare week when even one biopharmaceutical company has a clinical hold lifted by the Food and Drug Administration. This week, we had two!

Perhaps no company saw a greater benefit from its clinical hold being lifted than Achillion Pharmaceuticals (NASDAQ:ACHN) whose shares essentially tripled at one point this week following the OK to resume trials for lead compound sovaprevir. If you recall, sovaprevir was placed on clinical hold almost a year ago after elevated ALT liver enzyme levels were discovered in phase 1 patients. The resumption of this study could put the company on the fast path to being the next biotech buyout with big pharma looking at all avenues of growth in the hepatitis C market. I would, however, suggest that investors exercise extreme caution as Achillion has yet to advance any of its studies beyond phase 2, and by the time sovaprevir makes it to market (if it's even approved) both of its major peers will have likely established themselves as blockbuster players with most of the market share.

Also joining the green light crowd, at least partially, was clinical-stage biopharma Geron (NASDAQ:GERN) which was advised by the FDA that its investigator sponsored trial involving imetelstat for myelofibrosis would be allowed to continue. Imetelstat was placed on partial clinical hold in its IST by the FDA in March following concerns with regard to the reversibility of patient liver damage. After the Mayo Clinic's lead investigator provided the FDA with additional information the regulatory agency gave its OK to continue with its study. On one hand, Geron's imetelstat is extremely intriguing in that it's the first investigational therapy to show clinical benefits in treating myelofibrosis and delivering partial responses in its IST rather than simply mitigating symptoms. However, Geron's pipeline lacks depth, and its full clinical hold pertaining to its in-house studies for polycythemia vera and multiple myeloma remains in place. It's another stock I'm perfectly happy to watch from afar.

Go for launch
Small-cap Navidea Biopharmaceuticals (NYSEMKT:NAVB) waited until the end of the week, but the fireworks certainly hit the skies on Friday with more than 6 million shares trading hands after it announced the FDA approval of its supplemental new drug application for Lymphoseek as a sentinel lymph node biopsy radiopharmaceutical agent for squamous cell carcinoma of the oral cavity. In English, this just means physicians have a better way of diagnosing cancer-positive lymph nodes in early stage oral squamous cell carcinoma as opposed to surgical biopsies and excisions. The approval should help improve Lymphoseek's sales potential and will hopefully move Navidea closer to profitability, which I suspect is still a few years off.

Get out of jail free card
Also waiting until the end of the week to dole out good news was Nektar Therapeutics (NASDAQ:NKTR) which on Friday confirmed that the FDA's Anesthetic and Analgesic Drug Products Advisory Committee voted against a proposal that would have required all opioid-induced chronic constipation drug developers to run long and expense cardiovascular outcomes trials on their respective therapy. Nektar's investigational drug Movantik is part of the OIC constipation crowd, and the FDA panel's vote against a full-length CV study clears a path for its potential approval (it's under review in the US, EU, and Canada at the moment). With an extensive clinical, preclinical, and royalty-based product pipeline, Nektar is the type of hedge bet that biotech-savvy investors should really dig a bit deeper into.

Red light
Lastly, Orexigen Therapeutics' (NASDAQ:OREX) shareholders ducked and covered this week after the FDA announced a three-month extension to its PDUFA decision date for Contrave to Sept. 11. The reasoning behind the extension was to allow Orexigen time to complete the post-marketing obligations tied to its 8,900-person cardiovascular outcomes study known as the Light Study. In an interim analysis late last year the Light Study demonstrated no abnormal adverse events from the Contrave intent-to-treat arm compared to the control arm, which may give the company a clean path for approval, assuming it can indeed provide the data the FDA wants to see in time. With neither of its weight control management peers performing well in the early going investors are anxiously waiting to discover what will happen with Contrave's second go-around in front of the FDA. Orexigen's shares fell 10% for the week.

Stay tuned for Part 2 of "This Week in Biotech," where we'll look at five clinical studies and a surprising buyout that made waves within the sector last week.

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Sean Williams has no material interest in any 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 has no position in any of the stocks mentioned. 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.

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