Beware the ides of March?
That was good advice for Julius Caesar. But the days leading up to, including, and following the ides of March (the 15th of the month) this year turned out to be great for three biotech stocks.
Akcea Therapeutics (NASDAQ:AKCA), Arsanis (NASDAQ: ASNS), and Syndax Pharmaceuticals (NASDAQ:SNDX) soared 35% or more over the last week. What lit a fire beneath these stocks -- and are they buys now after their impressive gains? Here's what you need to know about this week's big biotech winners.
Akcea Therapeutics: A gift from a parent
Akcea Therapeutics stock skyrocketed over 60% this week. The big catalyst came as a result of a deal with its parent company, Ionis Pharmaceuticals (NASDAQ:IONS), which spun Akcea off as a separate entity last year.
On Thursday (yes -- the ides of March), Akcea and Ionis announced an agreement where Akcea will market Ionis' drugs inotersen and IONIS-TTR-LRX. The deal was enormously important for Akcea, primarily because inotersen could be a commercial success in treating hereditary transthyretin amyloidosis (hATTR). Regulatory approvals in the U.S. and Europe are expected later this year. IONIS-TTR-LRX, which is being renamed AKCEA-TTR-LRX, should enter clinical development in 2018.
Many investors had hoped Ionis would team up with a larger company to market inotersen like it did for spinal muscular atrophy drug Spinraza. However, Ionis' decision to keep the product in the family dramatically changed the dynamics for Akcea. With the addition of inotersen, Akcea could soon have its first two products on the market. An FDA decision on approval for volanesorsen for treating familial chylomicronemia syndrome (FCS) is expected by Aug. 30, 2018.
Arsanis: Patently attractive
Arsanis' share price jumped 35% this week. Why? The company announced on Wednesday that the U.S. Patent and Trademark Office (USPTO) granted a key patent to it for lead pipeline candidate ASN100, a combination of two co-administered fully human monoclonal antibodies that targets treatment of Staphylococcus aureus infections, commonly known as "staph" infections.
This wasn't the first patent win for Arsanis. The company received similar patents in Japan last year and in Europe in 2015. It was, however, the the first big news for Arsanis as a publicly traded company. Arsanis completed its initial public offering in November 2017.
For now, ASN100 is the only clinical program for Arsanis. The drug is currently being evaluated in a phase 2 study, with top-line safety and efficacy results anticipated in the second half of 2018. Arsanis also has three drugs in pre-clinical testing targeting other bacterial and viral infections.
Syndax Pharmaceuticals: Two reminders of the biotech's potential
Syndax Pharmaceuticals stock shot up nearly 40% this week. Unlike Akcea and Arsanis, though, Syndax didn't make a major announcement. So, what explained the huge spike?
It could be related to a research note published by big investment firm Morgan Stanley that maintained an overweight rating on Syndax stock with a price target of $24. What's a little surprising is that the biotech's share price didn't fall, since Morgan Stanley actually lowered its price target from $25. Keep in mind, though, that the revised price target is still more than double Syndax's share price at the beginning of this week.
Another potential driver could be the presentation by Syndax's CEO, Briggs Morrison, at the Cowen healthcare conference on Monday. His highlighting of the potential for lead candidate entinostat could have sparked interest from investors. Syndax could file for regulatory approval of the drug in treating breast cancer this year if results from a late-stage study are positive.
Are they buys?
Akcea's latest deal with parent Ionis puts the company in better shape than ever. However, I'm not convinced that either inotersen or volanesorsen will be huge hits in the marketplace. Inotersen will probably face stiff competition from Alnylam's patisiran. I think patisiran will be a much bigger winner. With Akcea's market cap now around $2 billion, my view is that the stock doesn't have as much room to run after the big gains this week.
As for Arsanis, I like the prospects for ASN100 in treating staph infection. However, it's still really early, with the drug only in phase 2 development. Arsanis is a biotech to watch closely, but my view is to hold off on buying the stock for now.
That leaves Syndax. It's possible that entinostat won't be successful in the late-stage study targeting breast cancer. On the other hand, if this study's results are positive, it opens up the possibility for the drug in other cancers, too. Syndax already plans to begin a second pivotal study of entinostat in treating melanoma.
Buying Syndax is a speculative play, to be sure. However, I kind of like the risk-reward profile for this clinical-stage biotech. In my view, adding a small position in Syndax could be a good move for investors who aren't afraid to take on significant risk.