With the SPDR S&P Biotech Index up 29% year to date, it's very evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.
It wasn't a particularly busy week for FDA rulings; however, don't tell that to either United Therapeutics (UTHR 0.69%) or Columbia Laboratories (NASDAQ: CBRX) which both wound up on the wrong side of the fence.
United Therapeutics received an unfavorable complete response letter from the FDA in the middle of the week denying its new drug application for oral Remodulin. Aimed to treat pulmonary arterial hypertension, a condition that causes blood vessels leading to the heart to narrow and leads to high blood pressure and currently has no cure, the FDA was unable to determine if the drug slowed the progression of the disease. Further, the FDA questioned whether further studies would even alter the results, but it did suggest United Therapeutics attempt a fixed-dosing and higher dosing regimen. Shares fell 17.5% this week.
Columbia Labs shareholders only wish they'd lost just 17.5% this week! The microcap biotechnology company, which collaborated in the development of Prochieve gel with Watson Pharmaceuticals (AGN) to prevent pre-term birth in women with short cervical length , lost a whopping 40% of its value on Friday. The reason is that the FDA denied Watson's formal dispute resolution request, leaving Procheive's status as an NDA up in limbo. For Watson, which has a diverse portfolio it's not that big of a deal; for Columbia, it's a gigantic problem.
Earnings reports from high-flying biotechs, Regeneron Pharmaceuticals (REGN -0.80%) and Alexion Pharmaceuticals (ALXN) also ushered in some big moves – although not necessarily in the same direction.
Regeneron has three FDA-approved drugs, but all eyes were squarely on sales of Eylea, its blockbuster wet age-related macular degeneration and macular thickening drug. As my Foolish colleague Brian Orelli noted on Thursday, Eylea's huge stock gains can easily be summed up by Regeneron's multiple hikes to Eylea's sales forecasts. When the year began, the midpoint forecast of sales was $150 million. After this week's earnings report, it's now $802.5 million. Wow! With Lucentis sales struggling and Roche probably unwilling to cannibalize Lucentis sales by seeking FDA approval of the cheaper Avastin to treat wet AMD, Eylea is probably going to have its way for multiple years to come.
Despite strong results from Alexion's lone drug, Soliris, which powered the company to a 44% rise in sales and a 41% jump in net income, Alexion ended the week 11.5% lower than where it began. Even with a raised projection of $1.99 to $2.04 in EPS this year, up from its previous forecast of $1.78 to $1.88, investors chose to focus in on Alexion's $0.01 EPS miss this quarter . If you recall, my primary concern with Alexion relates to its almost crutch-like reliance on Soliris to drive sales and future pipeline growth. Unless Alexion can diversify its pipeline, it may not be able to hold its premium valuation or maintain its rapid growth rate for much longer.
Clinically impressive
Just as these companies are seeking ways to revolutionize patient care, our analysts at Stock Advisor are actively seeking out new companies with game-changing technologies. In our latest special report, they highlight three companies that look ready to reap huge benefits from the introduction of a new technology. Find out the identity of these stocks, as well as the technology involved, by clicking here to get your copy of this report -- for free!
