Shares of Intrexon (NYSE:XON), a biotech company focused on regulating genes to generate positive biologic effects in the body, jumped 12% during the month of November according to S&P Global Market Intelligence. Two factors appear to be most responsible for Intrexon's surging stock price.
The biggest catalyst for Intrexon in November, along with a majority of drug developers, was the surprising election of Donald Trump as our 45th president.
Trump's opponent, Hillary Clinton, had taken a pretty staunch stance with drug developers, with the intention of reducing their pricing power. Clinton had proposed shortening patent-protection periods and reducing the amount consumers could spend out-of-pocket for certain drugs each month.
Trump also shared Clinton's view that prescription drugs in the U.S. are overpriced, but he has bigger problems to contend with entering office. In other words, prescription drug reform isn't out of the question with Trump in office, but it's probably going to be pushed further down the line, thus giving specialty drugmakers like Intrexon some breathing room when it comes to pricing their products.
Clinical data was also a catalyst for Intrexon in November. Clinical partner Ziopharm Oncology (NASDAQ:ZIOP) announced on Nov. 15, via a data release in the Proceedings of the National Academy of Sciences, that its "genetically modified T cells preserved stem-cell memory by co-expressing the chimeric antigen receptor with a fusion variant of IL-15." This T-cell persistence specifically targeted CD-19. Researchers believe that, by incorporating membrane-bound IL-15 and enhancing the length of T-cell survival, it could make for an attractive candidate to incorporate with immunotherapies.
Though it was a good month for Intrexon, another key driver for the company may begin weighing on its valuation. Intrexon is one of the leading companies behind the push to cure Zika, the virus that has been linked with increased instances of microcephaly in newborns and Guillain-Barre syndrome in adults. Aside from the fact that the Zika threat has relaxed now that we're out of the warming season, Intrexon's solution -- the genetic modification of male Aedes mosquitos to disrupt reproduction -- continues to run into regulatory hurdles. What looked like a possible $200 million to $400 million commercially viable solution continues to be dormant for Intrexon.
As I've said before and I'll say again, Intrexon's best path to prosperity is going to come from its CAR-T collaboration with Ziopharm. In November, Ziopharm and Intrexon -- which supplies the gene-regulating technology -- announced positive clinical data for Ad-RTS-HIL-12 in patients with recurrent brain cancer. At the date of data collection in mid-October, median overall survival was 12.8 months in the phase 1 study. Comparatively, recurrent brain cancer often has a median overall survival of just six or seven months.
The better Ad-RTS-hIL-12 does in clinical studies, the brighter Intrexon's future. However, given Intrexon's lofty $3.3 billion valuation, I'm inclined to suggest investors monitor its progress from the sidelines for the time being.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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