Why Oncotheryeon, Inc., OncoMed Pharmaceuticals, Inc., and Array BioPharma Inc. Stocks Jumped Today

Three biotechs climb after a competitor's trial success boosts hope across the HER-2 breast cancer treatment market

Dan Carroll
Dan Carroll
Jul 23, 2014 at 2:22PM
Health Care

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Oncothyreon (NASDAQ:ONTY.DL), a developmental biotech, climbed more than 13% today, while fellow biotech stocks OncoMed (NASDAQ:OMED) and Array BioPharma (NASDAQ:ARRY) roared higher by as much as 10% and 16.4%, respectively, following a positive trial result from Puma Biotechnology's HER2-positive breast cancer therapy neratinib.

So What: Neratinib's astronomical success in a phase 3 trial for increasing disease-free survival in early stage HER2-positive breast cancer by 33 % as compared to a placebo as sent shock waves throughout the biotech industry. Wall Street's pushed stocks of fellow clinical-stage HER2-positive breast cancer drug developers higher on the day in light of the positive trial data. Array and Oncothyreon collaborate on ARRY-380, a phase 1 candidate for treating the disease, while OncoMed is developing vantictumab, which last year launched a phase 1b trial targeting HER2-positive breast cancer. OncoMed did

Now What: Puma might be looking to file for approval next year for neratinib after the success, but OncoMed, Oncothyreon, and Array are in much earlier-stage trials for their own HER2-positive cancer treatments. Still, the strong showing by neratinib has lifted confidence across the biotech sector that agents specifically targeting the HER2 growth factor have a major place as a lucrative adjuvant treatment.

While OncoMed, Oncothyreon, and Array still have a long way to go to showing similar gains from their own therapies, this is a market worth pursuing: Analysts have pegged neratinib as racking up $4 billion or more in peak sales if cleared by the FDA, with an 85% chance at regulatory approval.