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Investors Continue Their Love Affair with Biotechnology

Inside2 3-30-13

By Peter Winter
BioWorld Insight Editor

It has been a great quarter for public biotech companies as the sector continued to remain hot with investors. Large biotech companies, with market caps greater than $1 billion, collectively saw their share prices jump by an average of 21 .5 percent in the first quarter.
That performance almost doubled the Dow Jones Industrial average, which reached a new historical high last week and closed the quarter up 11 .25 percent. The S&P500 also hit an all-time high thanks to its 10 percent increase in value since the beginning of the year.
One of the leading performers in the large-cap group was Ironwood Pharmaceuticals Inc., of Cambridge, Mass., whose share value increased 65 percent in the first quarter. The company has seen strong initial demand for its constipation drug Linzess (linaclotide).
In its fourth-quarter investor update, Ironwood reported that sales of Linzess totaled $19.2 million during the period. The FDA approved the synthetic guanylate cyclase C agonist in August 2012 ahead of its PDUFA date, as a treatment for irritable bowel syndrome with constipation and for chronic constipation. Ironwood reported a net loss $43.9 million, or 41 cents per share, because of sales and administrative costs that rose to $33.3 million from $13.9 million. The firm ended 2012 with $168 million in cash, cash equivalents and available-for-sale securities. (See BioWorld Today, Jan. 16, 2013.)
To help support the commercial launch of Linzess, the company completed a debt offering of $175 million at the beginning of the year.
OPKO Health Inc., of Miami, also closed a private offering of $175 million in 3 percent convertible senior notes due 2033. The company’s share value mirrored that of Ironwood’s, jumping 61 percent since the beginning of the year.
OPKO completed its acquisition of Ontario, Canada-based Cytochroma Ltd., whose lead products include CTAP101 capsules, a vitamin D prohormone to treat secondary hyperparathyroidism in patients with Stage III or IV chronic kidney disease (CKD) and vitamin D insufficiency, and Fermagate tablets, described as a new and potent non-absorbed phosphate binder to treat hyperphosphatemia in CKD patients on chronic hemodialysis. Financial terms were not disclosed. (See BioWorld Today, March 6, 2013.)
Aegerion Pharmaceuticals Inc., of Cambridge, Mass., also took advantage of its growing share value to price a public offering of about 2.7 million shares of stock at $26.64 per share, that generated net proceeds of about $67.9 million.
The company is using the funds to support activities directed at the commercial launch of Juxtapid (lomitapide), pursue approval of a marketing authorization application and commercial activities in Europe, and expand operations in certain countries to pursue approval of lomitapide.
Aegerion won FDA approval in December for lomitapide as an adjunct to a low-fat diet and other lipid-lowering treatments for reducing low-density lipoprotein cholesterol, total cholesterol, apolipoprotein B and nonhigh-density lipoprotein cholesterol in patients with homozygous familial hypercholesterolemia. Shares of Aegerion have gained a whopping $14.98 to close the first quarter at $40.34, up 59 percent.
The share values of the leading two companies by market cap, Thousand Oaks-based Amgen Inc. and Gilead Sciences Inc., of Foster City, Calif., also had great quarters, with share prices jumping 19 percent and 33 percent, respectively. Although Gilead saw its market cap vault into the number one position briefly in March, Amgen regained the top spot, closing the month with a market cap of $76.7 billion just ahead of Gilead at $74.5 billion. 
Editor’s note: Check out our detailed financial analysis of the first quarter in next week’s issue.