Biotech Stock Roundup: GILD Letter Triggers Major Selloff - Analyst Blog

There were quite a few updates last week from biotech companies, but all this was overshadowed by the biotech selloff at the end of the week. The biotech sector, which has had an incredibly good run over the last two years, tumbled on Friday with the trigger being a letter issued to Gilead GILD by lawmakers.

The letter basically questions Gilead's pricing of its recently approved hepatitis C virus (HCV) treatment, Sovaldi. The $84k price tag for a 12-week treatment period is considered too expensive and has come under heavy criticism. Gilead's shares were down 4.6%.

Sovaldi is a very important product in Gilead's portfolio and has multi-billion dollar sales potential. Gilead has until Apr 3 to submit a response to the letter. We believe Gilead will provide strong data supporting Sovaldi's efficacy as well as the cost.

Meanwhile, the selloff that started with the weakness in Gilead was fueled further by speculation about a biotech bubble. While NASDAQ Biotechnology was down 4.4%, the NYSE ARCA Biotech Index was down 3.9% on Friday.

Biotech ETFs were also severely affected with individual stocks like Celgene (down 3.7%), Biogen (down 8.2%), Alexion (down 7.9%), Amgen (down 3.2%) and Regeneron (down 5.4%) declining on Friday. Companies like Biogen and Alexion were worst hit as they have drugs like Tecfidera and Soliris, respectively, which could come under the same pricing scrutiny.

Amgen Scores with Evolucumab… Again: Amgen shares were up about 2.9% on positive data on its PCSK9 inhibitor, evolocumab.

Evolocumab lowered bad cholesterol in patients suffering from homozygous familial hypercholesterolemia (HoFH), a rare genetic disease characterized by significantly high LDL-C levels which increase cardiovascular risk in these patients, who are mostly affected from an early age. These are the first phase III data on a PCSK9 Inhibitor in HoFH patients. PCSK9 inhibitors work by inhibiting PCSK9, a protein that reduces the liver's ability to remove "bad" cholesterol from the blood.

The race to bring the first PCSK9 inhibitor to market is heating up with companies like Sanofi, Regeneron and Pfizer involved in the development of these drugs. But sometime back, the FDA had raised concerns about neurocognitive adverse events in the PCSK9 inhibitor class. These are events that are also associated with the use of statins. Amgen is looking to file for approval of evolocumab this year. The FDA will most likely ask all these companies to evaluate neurocognitive adverse events in long-term studies.

Endocyte ECYT Soars on Vynfinit News: Endocyte's investors had a lot to cheer about as the company provided two positive updates on its key experimental drug, Vynfinit. The first good news came from the EU with the experimental drug receiving a positive opinion regarding its conditional approval for a type of ovarian cancer.

Not just Vynfinit, a couple of companion imaging agents, Folcepri and Neocepri, which will help identify patients suitable for treatment with Vynfinit, also received a positive recommendation. So, Endocyte could well be looking at its first product approval in the coming months.

The second set of good news was positive data on Vynfinit from a mid-stage study on non-small cell lung cancer (NSCLC) patients. Both news validate the company's small molecule drug conjugates (SMDC) platform. Shares were up a whopping 92.4%.

FDA Approves Celgene Blockbuster Hopeful: Celgene gained FDA approval for Otezla for the treatment of active psoriatic arthritis. With this approval, Otezla will be entering a market dominated by products like Humira, Enbrel, Remicade and Simponi among others. But Otezla comes with an edge as it is the first oral treatment to be approved for this indication.

That being said, the main potential of the drug is linked to the broader psoriasis indication – a response from the FDA should be out by September.

Agenus AGEN Hit by Glaxo Setback: Agenus shares were down 11.6% on news that GlaxoSmithKline's MAGE-A3 failed to meet the primary endpoint in a phase III study for non-small cell lung cancer. Agenus' QS-21 Stimulon adjuvant was used for the experimental cancer vaccine.

Five Prime FPRX Cuts $350M Deal with Bristol-Myers BMY: Five Prime Therapeutics saw it shares soar 22.6% on its collaboration agreement with Bristol-Myers for the discovery, development and commercialization of immuno-oncology treatments, a hot therapeutic area.

Five Prime gets an upfront payment of $20 million as well as research funding to the tune of up to $9.5 million. That's not all – Bristol-Myers will acquire 4.9% of Five Prime's stock for about $21 million (a 30% premium) and also pay up to $300 million on the achievement of development, regulatory and sales based milestones. Moreover, Five Prime will receive mid-single-digit to low-double-digit tiered royalty payments on sales of products commercialized under this agreement.

Immuno-oncology has been attracting a lot of interest with several companies pursuing treatments in this area.

Biogen Faces Delay in Plegridy Approval Date: Biogen, well known for its strong presence in the multiple sclerosis MS market, is facing a delay in the approval process for its experimental MS drug, Plegridy. The FDA has extended the review period by three months. This means that a response from the FDA should now be out in the second half of the year instead of mid-14 as had been expected earlier.

The delay in Plegridy's approval date should not be a matter of major concern. The important thing is that the FDA has not asked for additional studies to be conducted.

Other Developments:

What's Up with Intercept ICPT? Intercept, which saw its shares skyrocketing 281% earlier this year, seems to be on a rollercoaster ride with shares first declining 11.9% at the beginning of last week and then regaining 6.8%. Share price movement was driven by negative and positive updates on the company's lead pipeline candidate, obeticholic acid (OCA).

First the bad news: Intercept disclosed that adverse cardiac events were observed in the mid-stage FLINT study which was conducted to evaluate OCA for the treatment of nonalcoholic steatohepatitis (NASH) -- a serious chronic liver disease caused by excessive fat accumulation in the liver. This is the same study that was halted earlier this year by a Data Safety Monitoring Board as the primary endpoint was met.

According to the latest update from the company, the DSMB expressed concerns regarding hyperlipidemia and the occurrence of serious cardiovascular events, both of which were higher in patients receiving OCA compared to placebo though not statistically significantly different. Shares were down 11.9% on this update.

Then came the good news that OCA met the primary endpoint in a phase III study (POISE) that was conducted in patients with primary biliary cirrhosis (PBC). Investors reacted positively to this news and sent the shares up 6.8%.

Medivation MDVN Files for Chemo-Naïve Population: Medivation and partner Astellas are looking to get the label for their prostate cancer treatment, Xtandi, expanded into the chemo-naïve patient population.

Expansion into the pre-chemo setting will be a major positive for Medivation. The 17-month delay in the time to initiation of chemotherapy should help Xtandi gain share once it is approved for the pre-chemo patient population.

Geron's GERN Woes Continue: Geron, which saw its shares sinking on a full clinical hold being placed by the FDA on its sole pipeline candidate, imetelstat, said that the FDA has now placed a partial clinical hold on an investigator-sponsored study on imetelstat. This means that new patients cannot be enrolled in the study which is being conducted by Mayo Clinic.

Biogen BIIB Backs out of AVEO Collaboration: Biogen returned rights to experimental cancer drug, AV-203, to AVEO Oncology. Biogen, which had rights to territories outside North America, is not the first company to terminate its agreement with AVEO. Last month, Astellas backed out of its agreement with AVEO for the development of another oncology candidate, tivozanib.

Coming Up:

The next few days will be pretty busy with several FDA advisory panels scheduled to review experimental drugs like MannKind's MNKD Afrezza (type I or type II diabetes) and Cubist's CBST antibiotic tedizolid.

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