Biotech investors can get ready for a busy month full of stock-moving binary events. All of these companies are waiting for the FDA to make some very important approval decisions.
Here's what you should know about three of the most important approval decisions expected over the next several weeks.
|Company (Symbol)||Market Cap||Drug/Candidate Under FDA Review|
|GW Pharmaceuticals (NASDAQ:GWPH)||$4.2 billion||Epidiolex|
|Galapagos NV (NASDAQ:GLPG)||$13.3 billion||filgotinib|
|BioMarin Pharmaceutical (NASDAQ:BMRN)||$23.1 billion||valoctocogene roxaparvovec|
1. GW Pharmaceuticals: Epidiolex for tuberous sclerosis complex
This company's waiting for the FDA to expand the addressable patient population of its lead drug, Epidiolex, a CBD tincture the FDA approved in 2018 to treat two rare forms of childhood-onset epilepsy.
Earlier this year, the FDA agreed to give Epidiolex a priority review for the treatment of tuberous sclerosis complex (TSC) with an action date of July 31, 2020. This is a rare condition that affects around 50,000 in the U.S. and perhaps 1 million worldwide. That means a green light to treat TSC would roughly double Epidiolex's addressable population overnight.
As a treatment limited to its currently approved indications, Epidiolex sales burst out of the gate at the beginning of the drug's launch, but they appear to be tapering off. First-quarter Epidiolex sales that reached $116.1 million were only 11% higher than during the previous three month period.
GW Pharmaceuticals could use a boost from the TSC population. The company has nearly turned the profitability corner, but operations still reported a $6.2 million loss during the first three months of 2020.
2. Galapagos NV: Filgotinib for rheumatoid arthritis
This biotech from Belgium and its Californian partner, Gilead Sciences (NASDAQ:GILD), are eagerly awaiting an approval decision regarding filgotinib, an easy-to-swallow tablet that could become the next blockbuster treatment for rheumatoid arthritis. Neither partner has had anything to say about filgotinib's New Drug Application since they submitted it in December. Since the partners included a priority review voucher, the FDA's expected to issue an approval decision on or before Aug. 21, 2020.
In the EU, the European Medicines Agency (EMA) recently recommended the European Commission (EC) grant marketing authorization to filgotinib under the brand name Jyseleca. The EC doesn't necessarily need to follow the EMA's recommendation, but it usually does.
At the moment, Galapagos is a clinical-stage biotech without any products to sell. If filgotinib earns FDA approval, Galapagos will receive a tiered royalty percentage that tops out at 30% of sales as Gilead handles commercialization in the U.S. on its own.
3. BioMarin: Roctavian for hemophilia A
This company's focus on rare-disease drugs could take an interesting new turn with a once-and-done gene therapy for hemophilia A patients to be marketed under the brand name Roctavian. Formerly known as valoctocogene roxaparvovec, Roctavian helps people born with this rare bleeding disorder reduce their reliance on frequent infusions of a clotting factor by inserting a functional copy of the gene they lack.
A single administration of Roctavian helps patients produce their own clotting factor for a long time. During their fourth year following treatment, six out of seven patients were free from dangerous bleeding events without any of them receiving prophylactic clotting factor infusions. Before treatment with Roctavian, these same patients required an average of 130 infusions per year to manage their disease at an enormous expense.
BioMarin's already a large company with six marketed products that drove first-quarter revenue 25% higher year over year to $502 million. If approved, sales of Roctavian are expected to add $1 billion annually to the company's top line by 2024.
Think further ahead
While FDA approvals could push these stocks up over the next several weeks, trying to chase short-term movements is a good way to underperform. While it's important to understand events that can move biotech stocks overnight, investors need to think in decades, not weeks.