With the SPDR S&P Biotech Index up 20% over the trailing-12-month period, it's 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.
If the biotech sector was to make a movie, I'd have suggested the title be "The Good, the Bad, and the Intriguing" following this week's action.
The good
Leading to the plus column was biotech cancer drug developer Onyx Pharmaceuticals (NASDAQ: ONXX) which soared 57% on the week (nearly $50 a share!) after receiving a buyout bid from Amgen for what amounted to $120 a share. Onyx quickly rebuffed the offer price as too low but did note it was actively looking for strategic alternatives that would properly value Onyx and its pipeline. Earlier in the week I took a deeper dive into Onyx and pegged its fair value at $145 a share. Although I favor the potential of its pipeline, I'm starting to see little upside left in shares at these levels.
RNAi therapeutics expert Alnylam Phrmaceuticals (ALNY 2.15%) also delivered big gains this week to the tune of 22% after reporting very encouraging mid-stage data for ALN-TTR02, its treatment targeting TTR-mediated amyloidosis. Its experimental drug ALN-TTR02 delivered a 93% reduction in TTR rates in patients, which is perfectly consistent with its early stage results that demonstrated a reduction in TTR rates of 94%. Peak sales estimates, should the drug be approved, range from $800 million to up to $2 billion, but I'd caution investors keep a level head on their shoulders in the meantime.
The bad
Don't say I didn't tell you so, but Insmed (INSM 4.20%) shares sank like a stone after reporting late-stage results for Arikace, its experimental treatment for non-tuberculosis mycobacterial lung infections. Although Arikace met its primary endpoint of being non-inferior to the current standard of treatment, TOBI, which is made by Novartis, the results didn't exactly wow analysts who now see limited upside even if it's approved by the FDA. Simply put, without any measurable differentiation, Insmed could have a hard time gaining sales traction and is still quite the long shot to be profitable.
The latest hepatitis-C nightmare came from Achillion Pharmaceuticals (ACHN +0.00%) which plunged 24% on the week after the FDA placed a clinical hold on its lead compound, sovaprevir (previously known as ACH-1625) because of a worrisome drug-to-drug interaction noted in early stage trials. According to Achillion's update, sovaprevir, when studied with atazanavir, was associated with elevated ALT enzymes in the liver, although no serious adverse events were documented. Even though the FDA is allowing Achillion to continue studying sovaprevir in its mid-stage trial with ACH-3102, it's just another setback for Achillion which is miles behind Gilead Sciences and AbbVie in terms of time it will take to bring a new hepatitis-C therapy to market.
The intriguing
While largely an under the radar story, I can't let the week end without mentioning the exciting potential news for patients with HIV. According to a report by Bloomberg, GlaxoSmithKline (GSK 2.89%) and Johnson & Johnson are testing a new vaccination (GSK 744 and TMC278) that could allow HIV patients the convenience of taking a shot once a month or once a quarter instead of popping pills every day for the rest of their life. In a 40-person HIV-negative study, researchers noted that the level needed to suppress progression or slow down the infection was adequate throughout the month and lasted for up to four months after the last injection.This is an exciting development worth keeping a close eye on!
