We’re closing in on the end of the week, and it’s time to take a look at which of the companies in the biotech space have moved the most, and what’s driving the action behind the volatility.
One thing in particular pushed the sector higher today, and so before we get going on the specific entities, it’s worth addressing. Specifically, he election of Donald Trump to the White House. There has been huge pressure on the sector as a whole over the last two years (perhaps a little less) based on the potential for price reform.
Those shouting loudest about said reform were Democrats, with Hilary Clinton starting the debate with her now infamous (in the sector) Tweet in Summer 2015, and more recently, similar pressure initiated by Bernie Sanders’ comments on Twitter pressed on sentiment. Basically, markets were expecting a Democratic win, and an investigation into the pricing strategy of some of the industry’s biggest names to follow.
As it turned out, Trump won, and the chances of this sort of investigation coming around (at least, that is, the chances of it happening soon) are now slim. The weight on sentiment has lifted, and the biotech sector has boosted across the last couple of sessions as a result. Investors will be hard pushed to find a biotech that didn’t have a specific downside catalyst yesterday or today that will close on Thursday lower than it closed on Monday. The SPDR S&P Biotech (ETF) (NYSEARCA:XBI) is up more than 10%, while the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) is up close to 9%.
So, with that out of the way, let’s look at a couple of companies that have moved not just on the back of wider market sentiment, but by way of some specific catalyst. The two companies in focus are Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR) and Kite Pharma Inc (NASDAQ:KITE).
We’ll start with Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR).
This one has gone against wider markets, and taken a hit based on an update to its clinical program. For those not familiar with the company, it’s a development stage biotech with a focus on the treatment of chronic hepatitis B virus (HBV) infection. It’s lead candidate, and the underpinning of the majority of its valuation, is a drug called ARC-520, and it’s currently under investigation in the above mentioned HBV indication as part of a phase II clinical trial called, Heparc-2004. It’s this trial that has caused the trouble.
The company just announced that the FDA had placed a clinical hold on the phase II study based on results recorded as part of an ongoing extension of a primate study. Basically, a larger than expected number of primates have dies, and that these deaths have occurred on the back of administration of the highest dose of the drug.
This one’s a bit of an uncertain play. The company is down circa 30%, and we often point out that markets overreact to a clinical hold and that – in turn – they sometimes represent opportunities to load up at a discount.
When it comes to deaths, however, albeit primate, especially when these deaths seem to be dosage linked, it often spells trouble. We’re keeping an eye on it, but tread carefully.
The second company, is a little more straightforward, and a lot more positive.
The company just put out its latest earnings report, and as we so often point out in these situations, the operational update that accompanied the report has initiated a reaction in the markets. Specifically, Kite Pharma Inc (NASDAQ:KITE) management noted that the company expects to kick off a rolling submission for its Biologics License Application (BLA) for its lead development candidate, KTE-C19, by the end of December 2016.
For those not familiar with this one, KTE-C19 is a CAR-T asset currently under investigation as part of a pivotal trial for the treatment of refractory, aggressive non-Hodgkin Lymphoma (NHL). This is a tough target to go after, and data to date has proven supportive of both efficacy and safety. It’s a BLA, which can also be tough, but the rolling submission should make things a little simpler, and if the company’s latest update is to be believed (and we’ve no reason to think otherwise) it should be a smooth ride. Kite Pharma Inc (NASDAQ:KITE) expects to complete the submission by the end of the first quarter of next year, meaning the total rolling submission period should extend no longer than three months.
Note: This article is written by Mark Collins and was originally published at Market Exclusive.