The Changing Landscape of Biotech Valuations (ACOR, CBST, MNKD, INCY, SGEN, ITMN, IPXL, MRX, SVNT, VPHM)
The biotech and biohealth universe is changing in size. In 2008 and 2009, partly due to mergers and partly due to market valuations, there had become a surprisingly small number of biotech stocks which had market capitalization rates of more than $1 billion. At one point there were only about 10 or 11 in our universe of biotech stocks that actually had market caps which were very far north of $1 billion, or at least out of the biotech stocks which followed at BioHealth Investor.
We have recently seen Acorda Therapeutics, Inc. (NASDAQ: ACOR), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), MannKind Corporation (NASDAQ: MNKD), Incyte Corporation (NASDAQ: INCY), Seattle Genetics, Inc. (NASDAQ: SGEN), InterMune, Inc. (NASDAQ: ITMN), Impax Laboratories Inc. (NASDAQ: IPXL), and Medicis Pharmaceutical Corporation (NYSE: MRX) either get into or get back into the $1 billion market cap club. And then we have Savient Pharmaceuticals Inc. (NASDAQ: SVNT) and ViroPharma Incorporated (NASDAQ: VPHM) that have been in the club and are currently just short of it.
Due to waves of big emerging drug news and due to strong performance we now have 16 of the biotech and related stocks (at least of those which we cover as pure biotechs) which have market caps north of $2 billion. More importantly, the biotech news flow and he bull market has suddenly helped many stocks rise or at least get back above the $1 billion mark. Many of these had been there before, but the market has helped many new names get back above the $1 billion market capitalization level. And waves of mergers in the last two and three years sort of thinned out the group.
In these we did not take into consideration revenues, earnings, and not even cash. This has largely been news-driven and momentum-driven. Below is a review of each.
More TYSABRI MS Woes, Sort Of (BIIB, ELN, ACOR)
Biogen Idec Inc. (NASDAQ: BIIB) is feeling the pain of regulatory review this morning. And Elan Corp. plc (NYSE: ELN) is feeling it even worse. The reason these are under pressure this Friday is because a European panel has begun a review of Biogen’s controversial yet effect multiple sclerosis drug TYSABRI. The review is over higher rates of PML brain infections (progressive multifocal leukoencephalopathy) than had been disclosed.
The European Medicines Agency’s Committee for Medicinal Products for Human Use showed some 23 PML cases since the launch of TYSABRI. Previous data showed that there were 13 cases since TYSABRI came back on the market in 2006 after the company voluntarily removed it to study the PML data. The European panel will discuss additional measures, if needed, to ensure a safe use of the drug and how to measure risks.
Biogen Idec is already in U.S. talks with the FDA over the TYSABRI label. Most recent data showed more than 46,000 people were taking TYSABRI, and over 13,000 patients had been taking TYSABRI for more than two years and were classified under long-term use.
It is impossible to pre-judge this situation, but personal discussions have given a personal belief here that the reason people keep taking TYSABRI is because many think it is the best MS drug on the market. As far as a 1 in a thousand risk, that is a very low incident ratio compared to other drugs that treat other diseases and many are willing to take that risk.
Biogen Idec is down 5.7% at $44.50 and Elan is down almost 17% at $5.35. Acorda Therapeutics, Inc. (NASDAQ: ACOR) has been noted this week as having an MS drug candidate pending under priority review date and that has been extended out to January 2010 by the FDA.
JON C. OGG
OCTOBER 23, 2009
New MS Drug Hits Delay (ACOR, BIIB)
Acorda Therapeutics, Inc. (NASDAQ: ACOR) announced this morning that the FDA has extended its review period of the company’s Fampridine-SR as a multiple sclerosis treatment. The PDUFA goal date was moved out to January 22, 2010 for its review of the New Drug Application. The original date for the priority review was October 22, 2009.
Following the Peripheral and Central Nervous System Drugs Advisory Committee meeting, Acorda said that it has submitted additional information on its proposed risk evaluation and mitigation strategy program. It further noted that the FDA accepted this submission as a solicited major amendment to the new drug application.
The FDA can extend the PDUFA goal date when a sponsor submits a major amendment that provides a substantial amount of new data not previously reviewed by the FDA.
The good news for Acorda is that this does not appear to derail the ultimate approval. This one has been very volatile based upon an FDA comment period followed by a panel recommendation that gave the stock its mojo back.
As a reminder, Biogen Idec Inc. (NASDAQ: BIIB) is the multiple sclerosis benchmark company in the sector. Any real delays or ultimate changes to an application policy allow Biogen’s Avonex and TYSABRI that much more leading time.
JON C. OGG
OCTOBER 22, 2009
Acorda Therapeutics (ACOR) Up 50% On Trial News
Acorda Therapeutics (NASDAQ:ACOR) is up 50% to $25.20 on news that the U.S. Food and Drug Administration (FDA) Peripheral and Central Nervous System Drugs (PCNSD) Advisory Committee voted 12 to 1 that clinical data on Fampridine-SR 10 mg twice daily demonstrated substantial evidence of effectiveness as a treatment to improve walking in people with multiple sclerosis (MS) and voted 10 to 2 (1 abstention) that it is clinically meaningful and can be safe for use.
The news is promising but ACOR now has a market cap of $960 million. The company had revenue of $12.5 million and a loss of $23.3 million last quarter. Maybe the revenue from Fampridine-SR will start to kick in soon.
Douglas A. McIntyre
Acorda Spends FDA Review Day in Penalty Box (ACOR, BIIB)
Acorda Therapeutics, Inc. (NASDAQ: ACOR) is going to be in the penalty box all day even if it did not catch a penalty. Shares are going to be halted all day as the FDA Advisory Committee is reviewing Acorda’s Fampridine-SR for improvement of walking ability in people with multiple sclerosis. The FDA Peripheral and Central Nervous System Drugs Advisory Committee is meeting today in order to review and discuss Acorda’s New Drug Application.
While we do not know what the review outcome is yet, this one was hit hard last week after the FDA issued a negative opinion that questioned the safety and efficacy of Acorda’s multiple sclerosis drug. Shares were above $22.00 last week and traded to under $17.00 on the FDA note last week. And the stock went briefly under $16.00 yesterday before closing at $16.74.
Needless to say, with a whopping $12.5 million in quarterly revenues and a $637 million market cap, today could be the make-it or break-it day. The company does have over $200 million in cash and liquidity.
Today’s big announcement from the panel will also highlight shares of Biogen Idec Inc. (NASDAQ: BIIB) as it has both AVONEX and TYSABRI as the leading MS treatments.
JON C. OGG
Friday’s Top BioHealth Movers (ACOR, AVNR, CXM, LXRX, SVNT, SQNM, SPPI)
This has been a quiet trading day, but not in the land of biotech and medical technologies that comprise the BioHealth sector. These are this morning’s top movers in the group:
Acorda Therapeutics, Inc. (NASDAQ: ACOR) is down over 15% after the FDA made public the background material over Acorda’s Fampridine. Full data can be found at:
AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) is up 6.5% at $2.45 and it was one of the top gainers this morning, but has since come off of highs of $2.68. The company announced additional detailed results from the confirmatory double-blind Phase III STAR trial evaluating two doses of the investigational drug Zenvia™ in the treatment of pseudobulbar affect among patients with underlying multiple sclerosis (MS) or amyotrophic lateral sclerosis (ALS). Zenvia met the primary efficacy endpoint by reducing PBA episode rates by an incremental 11.9% beyond placebo. The lower dose Zenvia group did not achieve a statistically significant reduction in PBA episode rates compared to placebo.
Cardium Therapeutics Inc. (AMEX: CXM) is one of the top winners of all stocks today with a 19% gain to $1.82. This one is set to make a presentation soon, but the move today appears to be based upon a positive recommendation from a boutique firm called Skymark Research.
Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) is getting tooled after a secondary offering. The company sold some 33,333,333 shares of common stock at $1.50 per share after a $1.77 close yesterday. We have shares down about 13% at $1.53. It turns out that 19,894,076 shares are being offered through the underwriters and 13,439,257 shares are being offered to Invus, L.P., Lexicon’s largest stockholder.
Savient Pharmaceuticals, Inc. (NASDAQ: SVNT) is seeing a surprise 7% gain to $14.28 this morning. This is surprising considering that its secondary offering of 4.3 million shares priced at $13.29. One item helping more is that this stock was also Raised to Outperform over at Oppenheimer.
Sequenom Inc. (NASDAQ: SQNM) is running again on no news and is up another 9.8% at $3.67 today. Traders keep touting that there may be no intentional wrongdoing from management and the recently fired staffers. This is still very much an at-risk company, although making any predictions at this point would be based entirely upon incomplete data that still has many unknowns.
Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is down some 17% at $5.12 after it received a complete response letter from FDA for FUSILEV in advanced metastatic colorectal cancer noting that it did not demonstrate that FUSILEV is non-inferior to leucovorin. The response also recommended that it meet with them to discuss options for continuing to seek approval of FUSILEV in advanced metastatic colorectal cancer.
JON C. OGG
Why Acorda shares are sinking after seemingly positive development news (ACOR, BIIB)
A co-development deal under which Acorda Therapeutics Inc. (Nasdaq: ACOR) gets $110 million in cash upfront to comercialize its multiple sclerosis drug outside the United States has decreased takeover speculation in the stock, amid a potentially increased chance of more FDA scrutiny.
Piper Jaffray downgraded Acorda shares following its development deal with Biogen Idec (Nasdaq: BIIB) outside the U.S. The research firm ackknowledged that some investors that were looking for a near-term acquisition from Biogen may be disappointed.
In addition, Piper suggested it’s possible that an FDA advisory committee meeting scheduled for September might spend some time focusing on the safety profile of Acorda’s MS drug.
And an advisory committee meeting might possibly represent a delay in getting the drug to market. The company’s MS drug Fampridine-SR was granted priority review status, with a FDA action date of October 22, 2009.
Given that Acorda’s shares have nearly doubled since December from around $15 to nearly $28, it’s possible the market already expects FDA approval on or before that October date.
On a conference call, this morning, Acorda said it will not be giving any additional guidance at this point, primarily because the company need to get clarity around the regulatory pathway in the U.S. for Fampridine. It says once it has that, it will be in a better position to give guidance.
Acorda Scores Great Phase III Data (ACOR)
Acorda Therapeutics Inc. (NASDAQ: ACOR) has announced positive data from a second Phase III study of its Fampridine-SR for patients’ walking abilities who suffer from multiple sclerosis. As a result, shares surged at the open.
The company noted that a greater proportion of people taking Fampridine-SR in the Phase III trial had a consistent improvement in walking speed compared to people taking placebo with rates being 42.9% versus 9.3%. These results were measured by a timed 25-Foot walk, which is the standard of that measurement. This even showed an improvement in the secondary outcome measured in leg strength versus the placebo. The company says that this will also be sufficient to submit a new drug application with the FDA in the first quarter of 2009, and it plans to submit a priority review as well.
There is unfortunately still no cure nor any prevention/vaccine for MS. But any drugs that can mitigate the effects of MS all have blockbuster potential of more than $1 Billion in annual sales.
Acorda is gapping up significantly at the open and doing so on strong volume. Right after the open, it saw trading volume of 1,390,024. It usually trades 570,000 shares per day. It closed at $21.56 on Friday and shares just opened at $26.13. Its 52-week trading range is $15.80 to $28.14.
Jon Ogg
June 2, 2008
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