The biotech industry's summer doldrums are finally over and a handful of stocks recently posted some big gains for different reasons.
Should we expect more gains ahead from these drugmakers or have they reached a peak? Let's look at what drove these biotech stocks higher during the week ended Friday, Sept. 13 to see if they can continue climbing in the weeks and years ahead.
|Company (Symbol)||Stock Gain During Week Ended Sept. 13, 2019||Market Cap|
|Acadia Pharmaceuticals (NASDAQ:ACAD)||70%||$5.8 billion|
|Mesoblast (NASDAQ:MESO)||43%||$715 million|
|Kodiak Sciences (NASDAQ:KOD)||29%||$554 million|
1. Acadia Pharmaceuticals: A big expansion
This biotech stock has been rocketing higher since announcing better-than-expected second-quarter sales of its atypical antipsychotic drug, Nuplazid. Last week, the stock rocketed 70% higher in response to a pivotal trial success that could expand Nuplazid's addressable patient population many times over.
At the moment, Nuplazid is approved to treat a small population of patients experiencing debilitating delusions and hallucinations caused by Parkinson's disease-driven dementia. The recently successful Harmony trial included patients with several forms of dementia, including Alzheimer's disease.
If the FDA expands Nuplazid's label to treat all forms of dementia-related psychosis, sales could explode higher because there are around 1.2 million patients in the U.S. who fit the description. Before getting too excited, though, it's important to understand that Acadia's a $5.8 billion company that lost $140 million during the first half of 2019.
With near-term commercial success for a larger patient population already represented in the company's market cap, the stock will fall hard if anything threatens to delay Nuplazid's expansion. We haven't seen results from the Harmony trial, and neither has the FDA, which means there's still a lot that can go wrong for Acadia.
2. Mesoblast: Stem cells for back pain
Shares of this drugmaker shot up thanks to a generous offer from Grunenthal, a privately held German pharmaceutical company. Grunenthal and Mesoblast are now partners in the development and potential sale of MPC-06-ID, a vertebral injection for low back pain caused by degenerative discs.
In return for rights to market MPC-06-ID in Europe and Latin America, Grunenthal handed Mesoblast $15 million up front and promises for $135 million more if MPC-06-ID passes certain milestones. Mesoblast is also entitled to a tiered royalty percentage in the double digits, and additional milestone payments if the drug succeeds during phase 3 studies.
The MPC-06-ID program targets millions of potential patients with low back pain caused by deteriorating disks between lumbar vertebrae. During phase 2, 46.6% of patients injected with MPC-06-ID reported a pain relief response after 12 months, compared to just 15% of the group injected with a saline placebo.
Mesoblast is already running a phase 3 trial with MPC-06-ID and low-back pain patients in the U.S., and 24-month results should be ready in the middle of 2020. The company is also developing bone marrow stem cells for patients with graft versus host disease and heart failure patients.
Nobody's exactly sure why Mesoblast's cells seem to work for a variety of different conditions, but it's the data that matters. If Mesoblast's candidates continue producing evidence of a benefit, this stock could more than double in 2020.
3. Kodiak Sciences: No longer a concept
Kodiak Sciences is built around a neat idea for developing better drugs to prevent age-related macular degeneration (AMD) and other causes of vision loss in older adults. This clinical-stage biotech made its stock market debut last October, and the company is moving its lead candidate through development stages at top speed.
Vision loss prevention is a hotly contested niche dominated by anti-VEGF drugs that restrict the formation of new blood vessels responsible for the disease's progression. The leading anti-VEGF used to halt AMD progression, Regeneron's Eylea, is on pace to generate at least $7 billion in annual sales.
Kodiak is developing an anti-VEGF antibody called KSI-301 that's attached to long chains of phosphorylcholine, the same biopolymer used to coat thousands of stents that have been inserted into clogged coronary arteries around the world.
Many patients continue to lose their vision because of spotty treatment schedules that leave them exposed to the progression of AMD. Kodiak is betting that KSI-301's sheer girth will allow it to remain active longer than the market-leading anti-VEGF therapies.
The stock recently soared thanks to human proof-of-concept data that suggests Kodiak's really on to something. Patients with AMD and two other causes of vision loss showed significant improvements during an ongoing trial.
It's going to take time for Kodiak to show just how durable its treatment is, but that won't stop the company from beginning a pivotal study with about 400 treatment-naive AMD patients in the third quarter. Patients enrolled in the pivotal study, named Dazzle, will receive injections of Eylea or KSI-301 for a year.
It will be another year before we know if Kodiak has a giant slayer in its pipeline. If we find out it does, this could be the best-performing biotech in 2020.
Most likely to succeed?
While there's a chance for Acadia and Mesoblast to continue climbing, I'd feel best about placing a bet on Kodiak Sciences. The stock may be a lot younger, but there isn't a lot of success already baked into its recent price. That gives it plenty of room to grow.