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Good Financials Fail to Lift Biotech Sector in October

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By Peter Winter
BioWorld Insight Editor

Biotech bubbleologists will be out in force following a rough month for the sector, which saw blue-chip companies developing new medicines collectively record their first reversal for more than 18 months.

It was a brutal month after coming off such an excellent third quarter where the 54 biotech companies developing therapeutics, with market caps greater than $1 billion, collectively seeing their share prices jump by an average of 27 percent.

It was a different story in October with this market cap group recording an average 7 percent drop in share value. In fact, 60 percent of those companies recorded share price declines. What is more, several companies dropped out of that elite “club,” and by the time the markets closed last Thursday, 51 biotech companies valued at above $1 billion market cap remained.

Leading the decliners was Ariad Pharmaceuticals Inc., which saw its share price tumble a dramatic 88 percent in the month, and its market cap drop to $407 million. The company was hit by a double whammy: It suspended sales of its leukemia drug Iclusig (ponatinib) due to potential blood clot issues upon request from the FDA. The discouraging news followed the termination of Ariad’s Phase III EPIC trial in first-line chronic myelogenous leukemia (CML), and a clinical hold due to those same safety issues. (See BioWorld Today, Nov. 1, 2013).

Amarin Corp. plc didn’t fare much better with its share price plummeting 74 percent following a surprise vote by the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) recommending against approval of the firm’s marketed fish oil-derived lipid-lowering drug Vascepa in a supplemental indication. (See BioWorld Today, Oct. 18, 2013.)

However, denting the pins held by the biotech balloon theorists was the positive third quarter financials reported by Gilead Sciences Inc. and Amgen Inc. Gilead’s excellent third quarter was led by its strong HIV franchise. Truvada and Complera beat consensus estimates, bringing in $814 million and $211 million, respectively. Gilead is also hoping to strengthen its product offerings with an upcoming Dec. 8 PDUFA date set for hepatitis C virus (HCV) candidate sofosbuvir – with a very high likelihood of approval. The company’s total revenues for the third quarter were $2.78 billion, a 15 percent increase from $2.43 billion in the third quarter of 2012. Total product sales increased by 15 percent as well, from $2.36 billion in the third quarter of 2012 to $2.71 billion in the third quarter of 2013. (See BioWorld Today, Oct. 31, 2013.)

To top off what has been a truly remarkable year so far for Gilead, their market cap hit the $100 billion milestone in October and closed the month at $109 billion, and its share price recording a 13 percent increase.

Amgen’s shares also increased 4 percent in October and posted higher-than-expected third quarter earnings. Revenue for the three months ending Sept. 30 totaled $4.75 billion vs. consensus estimates of $4.61 billion. Adjusted earnings per share (EPS) totaled $1 .94, compared to the $1 .77 predicted by analysts. The company increased its revenue projections for full-year 2013 to a range of $18.3 billion to $18.5 billion and slightly raised EPS to the $7.35-to-$7.45 range.

With two months to go until the end of the year investors will be watching the sector closely and asking: “Are October’s results the start of a downward spiral, or merely a temporary aberration in biotech’s steady growth?”

BioWorld Insight will be helping to answer this question with the introduction of several indices designed to closely track the market performance of public-listed biotech companies both large and small. Watch out for these starting in next week’s issue.

Editor’s note: If you would like to read more stories like this, subscribe to BioWorld Insight. Call (in the U.S. and Canada) 800-477-6307 or (outside the U.S.) 770-810-3144 for a free trial.