Sometimes it helps to put things in perspective. The stock market turned in one of its strongest performances in the last several years in 2017. The S&P 500 gained over 19% last year, while the Dow Jones jumped 25%. Now consider that three biotech stocks soared more than 25% -- in just the past week.
Alder Biopharmaceuticals (ALDR), Global Blood Therapeutics (GBT), and Novavax (NVAX -0.18%) were superstar stocks over the last few days. How did they do it, and -- more importantly -- are they smart picks for investors now?
It was a fantastic week for Alder Biopharmaceuticals shareholders. The biotech stock skyrocketed nearly 40% on a couple of catalysts.
On Monday morning, Alder announced positive results from its late-stage study evaluating calcitonin gene-related peptide (CGRP) inhibitor eptinezumab in treating migraine. Patients taking the drug experienced a reduction of 8.2 monthly migraine days from baseline compared to 5.6 days for those on a placebo. In addition, eptinezumab met all the study's key secondary endpoints with very high statistical significance versus placebo.
The same morning, Alder reported that it had entered into a European patent settlement and global license agreement with Teva Pharmaceutical (TEVA -2.29%) (Teva, which had a horrible year in 2017, received some good news for a change).
Alder agreed to withdraw its appeal before the European Patent Office of Teva's patent for CGRP antagonist antibodies. The biotech also said that it would pay Teva $25 million up front, another $25 million on the first regulatory approval for eptinezumab, and additional milestone payments and royalties after the presumed commercial launch of the drug. This deal was also good news for Alder, since it removed a potential barrier from the company's path to success with eptinezumab.
Global Blood Therapeutics
Global Blood Therapeutics (GBT) stock soared more than 170% in 2017. The biotech has started the new year off with a bang, with GBT's share price vaulting over 35% this week.
The big news for GBT came on Tuesday, when the company announced that the U.S. Food and Drug Administration (FDA) had granted Breakthrough Therapy Designation to voxelotor for the treatment of sickle cell disease. The FDA gives this designation to expedite the development and review of drugs that have demonstrated clinical evidence indicating the potential for significant improvement over available therapy. Voxelotor is currently in a late-stage study for patients 12 and older with sickle cell disease. GBT is also evaluating the drug in a phase 2a study in pediatric patients (ages 6-17) with the disease.
While the Breakthrough Therapy Designation was the main catalyst for GBT, the biotech's CEO, Ted Love, also presented at the annual J.P. Morgan Healthcare Conference on Wednesday. Love was able to tout the progress the company has made with voxelotor -- and, of course, the latest good news from the FDA.
Novavax stock jumped higher than probably any small-cap biotech stock on the market this past week -- at least temporarily. By the end of day Wednesday, Novavax's share price was up around 65%. However, the initial huge gains faded, with the biotech ending the week with a gain of around 26%.
What happened? The huge spike came from Novavax providing an update for investors on Monday while the J.P. Morgan conference was under way. This update included an "informational analysis" of its experimental RSV F vaccine. The biotech said that it "wanted to ensure that the ongoing investment in the program was justified based on a high probability of a commercially viable determination of efficacy." Novavax said that the answer from this analysis indicated that its RSV F vaccine met a target efficacy threshold of at least 40% at day 90 of the study. That was enough to light a fire beneath Novavax stock.
The fire lost some heat, though, on Friday. Novavax still doesn't know anything else about the study, because the data remains blinded. An interim analysis should be completed by the fourth quarter of 2018 or, at the latest, the first quarter of 2019. That's when investors will really know whether or not the RSV F vaccine is successful.
Are they buys?
Are these biotech stocks good picks for investors? Let's start with Alder. There's an enormous unmet need in treating migraine. Even with competitors rolling out new migraine drugs, eptinezumab could eventually be a blockbuster if approved. With Alder's market cap at only $1.2 billion, the biotech stock should have room to run, in my view.
GBT's lead candidate voxelotor has even greater potential. Analysts peg peak sales for the sickle cell disease drug at $2 billion to $3 billion. GBT's market cap is around $2.6 billion. I think the stock could move higher if voxelotor is successful in its late-stage study. There is definitely more risk for voxelotor than Alder has with eptinezumab, though. I'm holding off on making a call for GBT stock as buy right now, although I'm cautiously optimistic.
That leaves Novavax. I've stated in the past that the biotech stock could double in 2018. The big headwind, though, is that the biotech will probably need to raise additional cash. And there's a real risk that Novavax stumbles with the RSV F vaccine and its promising flu vaccine NanoFlu. With its market cap of only $530 million, though, I still like the risk-reward proposition for Novavax and think the dice is worth rolling for adventurous investors.