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.
Leading to the plus column was biotech cancer drug developer Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) which soared 57% on the week (nearly $50 a share!) after receiving a buyout bid from Amgen, Inc. (NASDAQ:AMGN) for what amounted to $120 a share. Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) quickly rebuffed the offer price as too low but did note it was actively looking for strategic alternatives that would properly value Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) and its pipeline. Earlier in the week I took a deeper dive into Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) 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 Pharmaceuticals, Inc. (NASDAQ:ALNY) 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.
Don’t say I didn’t tell you so, but Insmed Incorporated (NASDAQ:INSM) 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 AG (ADR) (NYSE:NVS), 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 Incorporated (NASDAQ:INSM) 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, Inc. (NASDAQ:ACHN) 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.