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, 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.
The bad
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.
