Login to Your Account



Biotech Sector Continues Its Torrid Pace in Third Quarter

By Peter Winter
BioWorld Insight Editor

It wasn’t all that long ago that Amgen Inc. and Genentech Inc., prior to its acquisition by Basel, Switzerland-based Roche AG, both commanded impressive $100 billion market caps. Since that milestone was reached, valuations of the public biotech companies have declined, until recently that is. As the curtain comes down on the third quarter this week, the incredible performances that biotech companies have been exhibiting on the capital markets during the past 18 months have served to drive the sector to lofty new heights.

Although Genentech no longer factors into the industry’s current performance statistics, Amgen and Foster City, Calif.-based Gilead Sciences Inc. are closing back in on the prestigious $100 billion market capitalization.

At the close of the markets on Sept. 26, Gilead recorded a market cap of $96 billion and Amgen sported a market cap of $86 billion. Not too far behind are companies such as Celgene Corp., of Summit, N.J., ($62 billion) and Biogen Idec Inc. ($58 billion).

The amazing run that biotech has enjoyed to date, which shows no signs of slowing down, means that valuations of “blue chip” biotech companies are growing larger almost daily.

According to BioWorld Insight’s ongoing analysis, the 53 large biotech companies, with market caps greater than $1 billion, have seen their share prices jump by an average of 27 percent so far in the third quarter and by an incredible 92 percent year to date. Equally remarkable is the fact that 25 percent of those companies have seen their share prices jump by more than 100 percent and more so far. In contrast, the Dow Jones Industrial average recorded a 3 percent increase in the third quarter and a 17 percent increase year to date. The Nasdaq Composite index is up 11 percent and 25 percent in the same periods.

Large-Cap Companies

Among the group of large-cap companies there have been some impressive individual performances. Clovis Oncology Inc., for example, has seen its share valuation jump by more than 300 percent year to date, driven by impressive results from Phase I/II trials of its oral CO-1686, which were reported at ASCO 2013.

Analysts, inspecting early stage data, hailed the “paradigm-changing” potential in the treatment of at least one set of non-small-cell lung cancer (NSCLC) patients. (See BioWorld Today, June 4, 2013.)

The experimental therapy CO-1686, a targeted covalent (irreversible) inhibitor of mutant forms of the epidermal growth factor receptor (EGFR) in patients with initial activating EGFR mutations as well as the dominant resistance mutation T790M, garnered four confirmed partial responses (PRs) in heavily pre-treated patients, and “may not yet even be close to the maximum tolerated dose (MTD),” commented J.P. Morgan analyst Cory Kasimov in a research report.

Investors have also been impressed with Celldex Therapeutics Inc. The Needham, Mass.-based firm is working on a Precision Targeted Immunotherapy Platform, a portfolio of monoclonal antibodies, antibody-targeted vaccines and immunomodulators that it’s mixing and matching for combination regimens. It has generated buzz with its lead program, rindopepimut, an immunotherapy targeting epidermal growth factor variant III, in pivotal testing in glioblastoma multiforme (GBM). (See BioWorld Today, Aug. 13, 2013.)

The company’s shares have rocketed 400 percent so far this year – driven in part by its plans to seek approval in front-line and recurrent GBM. Three completed Phase II trials of rindopepimut – ACTIVATE, ACT II and ACT III – in newly diagnosed EGFRvIII-positive GBM showed consistent improvements in overall survival and median progression-free survival.

Several other companies in that group also have seen their share prices increase dramatically. Alnylam Pharmaceuticals Inc., of Cambridge, Mass., has had a great year with its shares shooting up 246 percent.

The company has provided investors a steady diet of positive news, including teaming up with The Medicines Co. for its RNA interference (RNAi) approach to blocking proprotein convertase subtilisin/kexin type 9 (PCSK9), receiving $25 million up front plus a further $180 million in potential milestone payments. In July, robust Phase I findings for ALN-TTRsc, a subcutaneously administered RNAi therapy targeting transthyretin (TTR) in TTR-mediated amyloidosis, propelled the company’s stock value as investors gain confidence in the RNAi space once again. (See BioWorld Today, July 12, 2013.)

Capital Market Performance

The statistics are equally impressive for all of the 256 public biotechnology companies that are developing biotherapeutics. According to the BioWorld Stock Report that tracks those companies, they have collectively recorded an average 30 percent share price increase in the quarter and a 45 percent increase since the beginning of the year.

The universe of public biotech companies also is expanding thanks to the number of U.S. biotech IPOs flying off the runway. So far this year, BioWorld Snapshots has recorded that 29 companies successfully went public, with 11 in the latest quarter alone. The amount raised from those IPOs is approximately $2.2 billion.

Emphasizing the hot biotech market was Ophthotech Inc. the latest company to price, which more than doubled its targeted take from its IPO. The company raised $167 million by selling 7.6 million shares at $22 each for ongoing Phase III work with Fovista (formerly E10030), an antiplatelet-derived growth factor agent that would be used with anti-VEGF therapy in wet age-related macular degeneration. (See BioWorld Today, Sept. 26, 2013.)

Deal Flow

Approximately $900 million has been raised from 45 venture capital deals that disclosed financial terms in the third quarter to date. That compares to the $940 million that was raised from 38 deals in the same quarter last year.

Follow-on offerings were also robust as companies took advantage of higher stock valuations and welcoming capital markets to raise capital for their operations. In the current period, 24 deals were concluded generating a total of almost $1 billion. However, since most of those transactions were for less than $100 million, the total fell well short of the more than $2.8 billion that was raised through public offerings in the third quarter of 2012 from just 17 deals. However, padding the total last year was Celgene Corp., which priced two series of senior unsecured notes for an aggregate principal amount of $1.5 billion. (See BioWorld Insight, Oct. 8, 2012.) n

[Editor’s note: An in-depth analysis on the capital raised in the third quarter and deal flow during the period will be published in our next issue.]