These are the best times in a long time for three small biotechs. For two of them, these are the best times ever.
Abeona Therapeutics (NASDAQ: ABEO), BeiGene (NASDAQ: BGNE), and Vanda Pharmaceuticals (NASDAQ: VNDA) stocks recently hit 52-week highs. Abeona and BeiGene set all-time record levels. What's behind their recent success? More important, are these booming biotechs smart picks for investors right now?
Breakthroughs for Abeona Therapeutics
Abeona Therapeutics specializes in developing gene therapies for treating rare diseases. The biotech stock is up more than 240% so far in 2017, thanks to a string of good news.
Earlier this year, Abeona received orphan-drug designation in Europe for several of its experimental therapies: ABO-201 in treating juvenile Batten disease, ABO-101 in treating Sanfilippo syndrome type B, and EB-101 in treating epidermolysis bullosa. The company also reported positive top-line results from its phase 1/2 trial evaluating ABO-102 in treating Sanfilippo syndrome type A.
More recently, Abeona enjoyed two boosts. First, the company announced on Aug. 29 that it had received a "breakthrough therapy" (BT) designation from the U.S. Food and Drug Administration for its EB-101 gene therapy in treating epidermolysis bullosa. Two weeks later, Abeona benefited from an RBC Capital analyst's initiating coverage of the stock, with a price target reflecting a huge premium over the current price.
A big deal for BeiGene
Chinese biotech BeiGene was having a really good year for the first six months or so of 2017, with the stock price up more than 40%. A good year turned into a great year in July, though. BeiGene stock is now up more than 170%.
The major catalyst behind BeiGene's good fortunes was an important deal with Celgene (NASDAQ: CELG). The big biotech acquired worldwide rights outside of Asia to BeiGene's PD-1 inhibitor BGB-A317. BeiGene also scored exclusive rights to market Celgene's cancer drugs Abraxane, Revlimid, and Vidaza in China. BeiGene will receive an upfront payment of $263 million. Celgene is also buying a stake in the smaller biotech worth $150 million.
This appears to be a great deal for both companies. BeiGene will enjoy a much better cash position and gets to sell one of the biggest-selling cancer drugs in the world with Revlimid. Celgene gets a partner to help it navigate the Chinese market. It also obtains rights to an immuno-oncology candidate that could be a key component in combinations with its other cancer drugs.
Vanda Pharmaceuticals stock languished for much of the year. However, things eventually turned around. Vanda stock is up close to 14% year to date, its highest point in the last 52 weeks.
There have been a couple of key developments for Vanda in recent weeks. In late August, the company announced that it had won in a patent dispute with Roxane Laboratories, which is owned by Hikma Pharmaceuticals. A court found that Roxane had infringed on two patents for Vanda's schizophrenia drug Fanapt when the company submitted a generic version of the drug for approval.
On Sept. 13, Vanda announced results from a phase 2 study of tradipitant in treating chronic pruritus (itching) in patients with atopic dermatitis. At first glance, those results seemed disappointing because tradipitant didn't meet the study's primary endpoint of statistically significant improvement in the average itch visual analog scale. However, the company attributed this miss to high placebo effect and the lack of sensitivity of the measure. Vanda pointed to other results in the study that showed clinically meaningful improvement for patients.
To buy or not to buy
All three of these biotechs have momentum, but my personal take is that none of them are stocks that I'd buy right now. I think a wait-and-see approach for all three is prudent. Abeona, BeiGene, and Vanda all have key clinical studies underway that could make or break these stocks.
If I had to choose one of them, though, I'd go with BeiGene. It says a lot that Celgene gave the Chinese company a major vote of confidence.