With the SPDR S&P Biotech Index up 28% 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.
You are approved!
Sorry Suzy Orman, I'm stealing your line! Shareholders in Anacor Pharmaceuticals (NASDAQ: ANAC ) awoke to positive news Tuesday morning as the Food and Drug Administration approved Kerydin, its topical solution meant to treat onychomycosis of the toenail and nail bed. Anacor's CEO Paul Berns noted that whether or not the company is able to find a partner for its newly approved drug it remains on track for a launch as early as the end of the third quarter.
Before you get too excited, though, keep in mind that investors would probably much prefer Anacor find a partner as it'd likely mean a substantial upfront licensing payment and the probability of more bountiful long-term sales with a more experienced sales partner. It's also not as if Anacor's shares didn't more than double leading up to this approval. All in all this is a watchlist worthy name, but I'd need to see consistent profitability before I'd even consider throwing my investing money at Anacor.
Hitting the brakes in the fast lane
On the other hand Zogenix (NASDAQ: ZGNX ) shareholders had a week to forget after the FDA granted privately held Purdue Pharma's investigational abuse-resistant chronic pain tablet a priority review. This is potentially worrisome because the FDA has previously stated this if a more abuse-resistant chronic pain medication came to market than Zogenix's FDA-approved Zohydro ER, it's possible that Zohydro could be pulled from market.
The good news is that Zogenix is taking steps to develop new more abuse-resistant formulations of Zohydro ER. As the company noted in the previous week, it'll likely have a new drug application filed for Zohydro capsules by October and could have a tablet version available to be filed in 2016. Still, Purdue's priority review lops at least four months off the review process and could get it to market three months or more before Zogenix's reformulated abuse-resistant capsules. As I stated earlier this week, Zogenix shareholders may have to kiss their hopes of full-year profitability by fiscal 2015 goodbye.
Say hello to opdivo
I generally don't pay a lot of credence to biologics license application filings, but on Thursday we saw a possible landmark one from Bristol-Myers Squibb (NYSE: BMY ) which announced its intentions to file a BLA in the third quarter for opdivo (previously known as nivolumab) as a therapy for previously treated advanced melanoma.
Opdivo is among one of the most promising immuno-oncology drugs. Known as an anti-PD-1 inhibitor, it's postulated that inhibition of the checkpoint receptor PD-1 expressed on activated T-cells could allow a person's immune system to recognize and attack cancer cells. The investigational drug leaped onto the scene in May of last year right before the American Society of Clinical Oncology's annual meeting with the combination of Yervoy (developed by Bristol-Myers) and opdivo (nivolumab) producing an astounding 40% overall response rate in previously treated melanoma patients. If approved, this combination therapy could have blockbuster potential.
In the deal that won't die, AbbVie (NYSE: ABBV ) made yet another swipe in its attempt to purchase Irish-based Shire (NASDAQ: SHPG ) , this time pitching its offer directly to Shire's largest shareholders. AbbVie is offering to boost its offer price by 11% to $51.3 billion with the cash component of the offer price jumping by 10%. Although the offer isn't official yet, AbbVie CEO Richard Gonzalez would be willing to move quickly on a purchase if Shire's shareholders were in favor of the buyout pitch.
AbbVie has stated on numerous occasions that the research and development synergies and financial clout of the two companies would create immediate and long-term benefits for shareholders. However, the big allure of this deal is the prospect of corporate tax inversion whereby AbbVie could benefit by relocating its headquarters from the U.S., with its 40% corporate tax rate, to Ireland, which has a corporate tax rate of just 12.5%. The tax savings here would be in the hundreds of millions. This is a developing deal worth keeping your eyes on.
Ask shareholders of BioDelivery Sciences (NASDAQ: BDSI ) and they'll tell you it was an exceptional week, with shares finishing higher by 17% after the company on Monday delivered positive phase 3 results for BEMA buprenorphine, its chronic pain medication for patients that had previously been treated with opioid-based drugs. BioDelivery Sciences and its partner Endo Pharmaceuticals, a subsidiary of Endo Health Solutions, noted that BEMA met its primary endpoint of a statistically significant reduction in pain over a 12-week period relative to the placebo based on the daily average pain numerical rating scale. In addition, BEMA also met a number of important secondary endpoints. The duo is expected to meet with the FDA and file for an NDA soon.
While this is undeniably great news for BioDelivery Sciences, investors would still be wise to keep in mind that the chronic pain market is a highly competitive field, and BioDelivery isn't guaranteed success even if the FDA ultimately approves its drug. I'd much prefer to stick to the sidelines in the meantime and allow BioDelivery to get a few quarters of sales (assuming approval) under its belt before committing to this stock.
It's not an illness you hear about too often in the U.S., but dengue, a flu-like illness that can result in a number of other complications, has no cure or vaccine, and infects between 50 million and 100 million people on an annual basis, may have partially met its match. The good news is that it appears Sanofi (NYSE: SNY ) may have developed a vaccine that is moderately effective in treating three out of four strains of the disease.
According to a Bloomberg report released yesterday, in a clinical trial that involved more than 10,000 children in Southeastern Asia Sanofi's dengue vaccine reduced the risk of infection by 56.5% and the chance of severe complications by 88.5% based on data published in The Lancet. Unfortunately, its vaccine only worked on three out of four viruses and was the least effective in the youngest children, who, in turn, happen to be in the most affected by dengue fever and its possible complications. With nothing currently available on the market to treat dengue fever this is a big step in the right direction for Sanofi, and barring the results from its larger clinical trial in Latin America Sanofi intends to seek regulatory approval for its vaccine next year in most countries.
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