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.
Top 2010 Established Biotech Stock Picks for Upside (MNKD, THRX, DNDN, INCY, ILMN, ALNY, GILD, SVNT, AMGN, ONXX, PDLI, OSIP, CELG)
BioHealthInvestor.com wanted to put together a list of key biotech and BioHealth-related stocks that had the most upside for 2010 according to consensus analyst price targets. This is of course no exact science for many reasons, but getting a lot of consensus price targets together is often a sign of at least where to start when looking for upward price targets in stocks. And we all know that BioHealth and biotech stocks often offer the upside of the century as these companies all hold a bit of your own personal lottery ticket in all of their share prices.
After taking a look at our normal universe of biotech and biohealth related stocks. it was obvious that MannKind Corp. (NASDAQ: MNKD) still has the most upside from the consensus price targets IF it is hit. Then in order of expected share price appreciation comes Theravance Inc. (NASDAQ: THRX), Dendreon Corp. (NASDAQ: DNDN), Incyte Corporation (NASDAQ: INCY), and then came Illumina Inc. (NASDAQ: ILMN), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), and Gilead Sciences Inc. (NASDAQ: GILD).
The stocks above all had upside of over 25%. The other stocks here are the ‘lower rung’ of upside expectations but are all still offering over 20% upside to the consensus analyst price targets (again IF they are hit). Of the 13 stocks with markets caps of $750 million (or almost $750 million) which we cover, these still had upside of over 20% except a few: Savient Pharmaceuticals, Inc. (NASDAQ: SVNT), Amgen Inc. (NASDAQ: AMGN), Onyx Pharmaceuticals Inc. (NASDAQ: ONXX), PDL BioPharma, Inc. (NASDAQ: PDLI), OSI Pharmaceuticals Inc. (NASDAQ: OSIP), and Celgene Corporation (NASDAQ: CELG).
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Bill Gates, Small Biotech's New Biggest Investor (ALTH, AMAG, RDEA, ARYX, AUXL, BMRN, ETRM, INCY, ITMN, MAPP, OREX, VRUS, REGN, SGEN, VRTX, XNPT)
Late yesterday came the 13-F quarterly filing from the Bill & Melinda Gates Foundation Trust. Bill and Melinda have invested in drugs and research before, as well as dug companies, but there was a slew of biotech stocks in their quarterly holdings. Some of these are cancer winners, while others may seem random. Below we have broken these out by company and size of the position in dollars (M for million; K for thousand) as well as the number of shares.
ALLOS THERAPEUTICS INC. (NASDAQ: ALTH) $3.090M; 500,000 shares
AMAG PHARMACEUTICALS INC. (NASDAQ: AMAG) $1.839M; 50,000 shares
ARDEA BIOSCIENCES INC. (NASDAQ: RDEA) $2.165M; 210,386 shares
ARYX THERAPEUTICS INC. (NASDAQ: ARYX) $1.635M; 480,799 shares
AUXILIUM PHARMACEUTICALS INC. (NASDAQ: AUXL) $2.062M; 74,400 shares
BIOMARIN PHARMACEUTICAL INC. (NASDAQ: BMRN) $1.295M; 104,856 shares
ENTEROMEDICS INC. (NASDAQ: ETRM) $81K; 59,700 shares
INCYTE CORP. (NASDAQ: INCY) $1.02M; 435,700 shares
INTERMUNE INC. (NASDAQ: ITMN) $1.807M; 109,900 shares
MAP PHARMACEUTICALS INC. (NASDAQ: MAPP) $98K; 46,524 shares
OREXIGEN THERAPEUTICS INC. (NASDAQ: OREX) $36K; 13,900 shares
PHARMASSET INC. (NASDAQ: VRUS) $821K; 83,641 shares
REGENERON PHARMACEUTICALS (NASDAQ: REGN) $492K; 35,500 shares
SEATTLE GENETICS INC. (NASDAQ: SGEN) $34.718M; 3,521,088 shares
VERTEX PHARMACEUTICALS INC. (NASDAQ: VRTX) $2.729M; 95,000 shares
XENOPORT INC. (NASDAQ: XNPT) $2.517M; 130,000 shares
Biotech Winners & Losers
It doesn’t matter if it’s a bull market or a bear market for biotechs, well at at least for the most part. Every day there are select winners and losers. A bull market won’t save a one-hope wonder that fails Phase III trials, and a bear market won’t keep down the company that ends up with the new budding cancer cure. He are some from today:
BIOTECH WINNERS
- SGX PHARMACEUTICALS (SGXP) +125.55%
- BIOHEART, INC. (BHRT) +11.51%
- COMPUGEN LTD (CGEN) +9.43%
- DARA BIOSCIENCES (DARA) +8.03%
- SUNESIS PHARMACEUTIC (SNSS) +7.68%
- CHELSEA THERAPEUTICS (CHTP) +7.00%
- PLURISTEM THERAPEUTC (PSTI) +6.84%
- INCYTE CORP (INCY) +6.44%
BIOTECH LOSERS
- NEUROBIOLGL TECH INC (NTII) -19.23%
- HEMISPHERX BIOPHARMA (HEB) -13.08%
- REXAHN PHARMACEUTICL (RNN) -13.04%
- HESKA CORPORATION (HSKA) -9.76%
- IDENIX PHARMACEUT (IDIX) -8.96%
Jon Ogg
July 9, 2008
Solid Developments for Rheumatoid Arthritis (ABT, ARRY, LLY, INCY, JNJ, SGP, RHHBY)
If you have followed the news on arthritis and rheumatoid arthritis (“RA”) for very long, this was a good week for the possible treatments of the disease. The annual congress of the European League Against Rheumatism in Paris, France took place and this was the venue for many study announcements. This is only a snippet of the data and a snippet of the companies presenting, but some of the companies were Abbott Laboratories, Array, Eli Lilly, Incyte, J&J, Schering-Plough, and Roche. This is a very debilitating condition that affects millions in the US and globally as our populations are all aging.
Abbott Laboratories (NYSE: ABT) announced that its long-term data from a study of 1,469 patients showed its drug Humira, in combination with a common treatment used to treat a type of arthritis pain, led to remission of the disease for up to seven years. After six months of therapy, patients’ symptoms improved, with additional improvements seen after two or more years.
Array BioPharma Inc. (NASDAQ: ARRY) reported on some additional positive results of its Phase I clinical trial of ARRY-162, its novel small molecule MEK inhibitor; and it reported positive results from a Phase I trial of ARRY-797, its modulator of inflammatory mediators in blood. The four-week study of ARRY-162 in patients with stable RA receiving continued doses, showed that ARRY-162 was well tolerated and with no patients that discontinued the study due to an adverse event. Its activity was predictable with no drug/drug interactions with ARRY-162 and methotrexate. ARRY-162 suppressed production of IL-1, IL-6 and TNF, suggesting that this treatment has the potential to reduce inflammation mediated by these cytokines in patients with RA.
Eli Lilly & Co. (NYSE: LLY) presented new data that suggests patients with osteoarthritis pain of the knee treated with 60 mg and 120 mg Cymbalta once daily experienced significant pain reduction. Patients taking duloxetine reported significant pain improvement compared to placebo within the first week of treatment that lasted throughout the 13-week trial. The results from a study of 231 patients were presented at the annual congress of the European League Against Rheumatism in Paris, France.
Incyte Corporation (NASDAQ: INCY) showed clinical results from a 28-day Phase IIa trial of INCB18424, its janus-associated kinase inhibitor, in patients with RA. Results from the first of four treatment groups demonstrated that the 15 mg twice-daily dose of INCB18424 was well tolerated and provided ACR20/50/70/90 response rates of 75%/50%/25%/17%, respectively, with responses seen as early as 1 week. These results suggest that INCB18424 has the potential to be more effective than currently available RA therapies.
J&J’s (NYSE: JNJ) Centocor and Schering-Plough Corporation (NYSE: SGP) showed data in their Phase III human anti-TNF-alpha monoclonal antibody study for an anti-TNF-alpha biologic therapy. Findings from two new Phase III studies showed that patients receiving every four-week injections of golimumab 50 mg and 100 mg and weekly methotrexate experienced significant improvements in the signs and symptoms of RA as well as in physical function and disease activity, with some patients achieving remission as measured by Disease Activity Score.
Roche Holding AG (OTC: RHHBY) said that it expects to increase sales of MabThera in 2008 compared to 2007 in the rheumatoid arthritis indication at the European League Against Rheumatism congress in Paris. Roche also noted that about 30% percent of rheumatoid arthritis patients who failed prior attempts to respond adequately to anti-TNF therapy saw some remission from the disease with Actemra. Rituximab results provide continued inhibition of structural damage after 2 years in patients with rheumatoid arthritis who had an inadequate response to tumor necrosis factor inhibition
And the best news is potentially for boozers. Scandinavian researchers conducted two studies, involving 2,750 people who drink alcohol regularly showing that it may reduce the risk of developing rheumatoid arthritis by up to 50%. This assessed environmental and genetic risk factors for rheumatoid arthritis; and 1,650 participants had the disease, and were questioned about their smoking and drinking habits. By the way, blowing out your liver isn’t a good substitute.
Jon Ogg
June 13, 2008
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