Which stock in your portfolio gained the most this week? There's a pretty good chance that it didn't perform as well as three biotech stocks did over the last few days.
The stocks of AveXis (NASDAQ: AVXS), Abeona Therapeutics (NASDAQ:ABEO), and Spectrum Pharmaceuticals (NASDAQ:SPPI) soared by 34% or more this week. What lit a fire beneath them? And are they smart picks for investors after the huge gains? Here's what you need to know about AveXis, Abeona, and Spectrum.
AveXis: It's nice to be wanted
AveXis stock skyrocketed more than 80% this week. That kind of performance tends to happen when a huge drugmaker makes an acquisition offer that represents an 88% premium to the stock's closing price at the end of the previous week.
On Monday, AveXis announced that it would be acquired by Novartis (NYSE:NVS) for $8.7 billion. The deal is expected to close in mid-2018. Novartis was attracted by the potential for AveXis' initial candidate, AVXS-101, a gene therapy targeting treatment of spinal muscular atrophy (SMA).
Novartis already has an experimental SMA drug in its pipeline with branaplam. However, AVXS-101 has a clear head start over Novartis' drug. AveXis plans to file for regulatory approval of AVXS-101 in the second half of 2018, positioning the biotech to go head-to-head against Biogen's SMA drug Spinraza.
Abeona Therapeutics: What's good for the goose is good for the gander
Abeona Therapeutics' share price vaulted more than 40% higher this week. But Abeona didn't report any news at all in recent days. The last announcement from the clinical-stage biotech came on April 2, when Abeona named former Alexion Pharmaceuticals executive Carsten Thiel as its new CEO.
So what was the catalyst for Abeona? You might remember the old saying that, "What's good for the goose is good for the gander." Like AveXis, Abeona focuses on gene therapy for treating rare diseases. Novartis' decision to pay a hefty price tag to buy AveXis apparently caused investors to suspect that Abeona could become an acquisition target for another big drugmaker.
Abeona's lead gene therapy candidate, EB-101, should advance to a pivotal late-stage clinical study this year for treating recessive dystrophic epidermolysis bullosa (RDEB), a rare genetic skin disease. The company also has two other gene therapies in early stage clinical studies -- ABO-101 and ABO-102 -- targeting Sanfilippo syndrome types A and B. Sanfilippo syndrome is a rare inherited disease where the body can't break down long chains of certain sugar molecules.
Spectrum Pharmaceuticals: More results are in
Spectrum Pharmaceuticals wasn't far behind Abeona, with its stock jumping 34%. The big gain stemmed from great additional results announced by Spectrum on Tuesday from a phase 2 clinical study of its experimental drug poziotinib.
This study was conducted by University of Texas MD Anderson Cancer Center, one of the nation's leading cancer hospitals. MD Anderson reported a confirmed objective response rate of 64% in the first 11 patients with EGFR exon 20 mutant non-small cell lung cancer (NSCLC). Researchers were initially hoping to see objective response rates between 20% and 30%. This update followed encouraging preliminary data for poziotinib announced last year.
Unlike AveXis and Abeona, Spectrum isn't a clinical-stage biotech. The company has six hematology/oncology drugs already on the market. Another could be on the way: Spectrum hopes to file for approval in Q4 for Rolontis in the management of chemotherapy-induced neutropenia.
Are they buys?
It's easy to make a decision on whether or not to buy one of this week's biggest biotech winners. Anyone wanting to make a lot of money on AveXis has missed their chance. AveXis stock should hover around its current level until the Novartis acquisition is finalized.
As for Abeona, my take is that it makes sense to wait for preliminary late-stage results for EB-101. I suspect that potential acquirers will want to wait, also, but there's certainly a chance that Abeona could be bought out sooner rather than later.
What about Spectrum? The company's current drugs haven't been monster moneymakers so far. I think that Rolontis could carve out a niche for itself in the neutropenia market, but I don't see it becoming a blockbuster success. Poziotinib, though, is a wild card. If more clinical studies confirm what MD Anderson found in the phase 2 study of the drug in treating NSCLC, Spectrum will likely have its biggest winner of all.
Again, though, it's still early going for poziotinib. I think Spectrum is a stock to keep on your watch list, but my view is to hold off buying the stock for now.