Heading into the final quarter, the sector's leading biopharmaceutical companies once again underperformed the general market in September. Overall, the third quarter was extremely lackluster with investors showing little interest in getting involved, a situation that is likely to prevail until the end of the year. Companies will need to release strong 3Q financial reports just to tread water in the coming months. The Cowen biotechnology analysts note in their monthly Biotech Thermometer report, "Sentiment, like the stock performance, has been consistently poor. The knocks on the sector haven't changed over the past several months, so unfortunately, we have little new to report."

The value of the BioWorld Biopharmaceutical index closed 2% down, with 65% of the group members seeing their share values close in negative territory by the end of September. For the quarter, the index closed down 8.2% and is down 8% year-to-date (YTD) compared to the Dow posting a positive 1.2% and 15.4% performance, respectively, and the Nasdaq Composite essentially flat in the quarter but up 20% YTD. (See BioWorld Biopharmaceutical index, below.)

Leading decliner in the month was Sarepta Therapeutics Inc., whose shares (NASDAQ:SRPT) dropped 16.4% (31% YTD) on the basis of continuing investor reaction to the company's surprise complete response letter (CRL) from the FDA in late August. The agency did not issue a sought-after accelerated approval for the company's Duchenne muscular dystrophy (DMD) follow-on therapy, Vyondys 53 (golodirsen). (See BioWorld, Aug. 21, 2019.)

The drug candidate is designed for the treatment of people with DMD who have genetic mutations amenable to skipping exon 53 of the dystrophin gene. They account for about 8% of patients, a group not reached by Sarepta's first commercial product, Exondys 51 (eteplirsen).

The CRL raised two concerns, the company explained, the risk of infections related to I.V. infusion ports and renal toxicity seen in preclinical models of golodirsen and observed following administration of other antisense oligonucleotides.

Negative reaction to positive news

Although the Highly Specialised Technology committee of the U.K.'s National Institute of Health and Care Excellence (NICE) said it is supporting a positive recommendation for Biomarin Pharmaceutical Inc.'s Brineura (cerliponase alfa), for children with the rare and fatal neurodegenerative condition ceroid lipofuscinosis type 2, affecting between one and six babies each year in the U.K., the company's shares (NASDAQ:BMRN) drifted down 10.2% in September.

Incyte Corp.'s shares (NASDAQ:INCY) also tumbled almost 10%, even though it reported positive updated results from a phase II trial of pemigatinib, a selective fibroblast growth factor receptor (FGFR) inhibitor in patients with previously treated, advanced cholangiocarcinoma at the European Society of Medical Oncology (ESMO) conference. In patients harboring FGFR2 fusions or rearrangements (cohort A), pemigatinib monotherapy resulted in an overall response rate of 36% (primary endpoint), and median progression-free survival of 6.9 months (secondary endpoint), with a median follow-up of 15 months. The presented data support the planned submission of a new drug application to the FDA for pemigatinib before the end of the year, the company said.

Amgen Inc.'s shares (NASDAQ:AMGN) dipped more than 7% in September and are now trading essentially flat for the year. At the ESMO conference, the company announced new data from an ongoing phase I study evaluating AMG-510 in patients with previously treated KRAS G12C-mutant solid tumors. The data include the first evidence of antitumor activity reported in patients with colorectal cancer (CRC) and appendiceal cancer, as well as previously presented non-small-cell lung cancer (NSCLC) findings.

The study enrolled 76 patients with KRAS G12C-mutant solid tumors, and the data presented at ESMO included a subset of 55 evaluable patients as of the July data cutoff. Twelve patients with CRC received the target dose of 960 mg once daily and 10 remain on treatment. One patient in that dose cohort experienced a partial response and 10 had stable disease for a disease control rate of 92%. Thirteen of the evaluable patients with NSCLC received 960 mg, of which seven (54%) achieved a partial response at one or more timepoints and six (46%) achieved stable disease, for a disease control rate of 100%. Data across dosing cohorts also showed tumor responses in two evaluable patients with appendiceal cancer with one partial response and one experiencing stable disease.

Drug Developers

Although the BioWorld Drug Developers index dropped 13.5% in the third quarter and 4% in September, it still remains above water for the year. (See BioWorld Drug Developers index, below.)

It wasn't all doom and gloom for index members. San Diego-based Acadia Pharmaceuticals Inc.'s shares (NASDAQ:ACAD) climbed 30%, thanks to positive phase III trial results with Nuplazid (pimavanserin) in dementia-related psychosis (DRP). An interim look at the data found the primary endpoint has been met in DRP and the trial is stopping early. Nuplazid, which tallied what the company described as robust statistical superiority over placebo in time to relapse, could become the first FDA-approved drug in the indication. (See BioWorld, Sept. 10, 2019.)

Balancing out the increase in value of Acadia's shares was the 30% dive in the value of Boulder, Colo.-based Clovis Oncology Inc's. shares (NASDAQ:CLVS).

Late last month, the company received a downgrade from SVP Leerink and they adjusted their share price target to $10 from $22. The analyst report said it comes "on the heels of the company's announcement of an in-licensing deal, which we find ill-timed given investor concerns about the company's use of cash and solvency amidst an increasing mountain of convertible debt."

Clovis entered a global licensing and collaboration agreement with 3B Pharmaceuticals GmbH, of Berlin, to develop a peptide-targeted radionuclide therapy and imaging agent targeting fibroblast activation protein alpha (FAP). FAP is highly expressed in many epithelial cancers, including more than 90% of breast, lung, colorectal and pancreatic carcinomas, the companies noted. Clovis will conduct global clinical trials and has obtained U.S. and global rights, excluding Europe (inclusive of Russia, Turkey and Israel), where 3B retains rights. The parties have also agreed to collaborate on a discovery program directed at three additional targets for radionuclide therapy, to which Clovis will have global rights. Terms of the deal include about $12 million in up-front payments to 3B. Upon achievement of certain development and regulatory milestones, additional potential milestone payments and single- to low-double-digit commercial royalties would be paid as well.

Clovis was not alone in a share value reversal, with 75% of the companies in the index suffering the same fate in September.

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