Concerns about the escalating global spread of COVID-19 panicked the markets big time at the close of the month. With investors rushing to the sidelines, it only took five days for the Dow Jones Industrial Average to drop more than 10% from its all-time high, getting close to the 30,000 mark. This dramatic reversal brought back memories of the financial crisis of 2008, and the event writes itself into the history books as the fastest market correction of all time. Biopharmaceutical equities were also pulled down, with the BioWorld Biopharmaceutical index falling about 4% in the same period. The fall was attenuated by index members who have announced they are working on virus treatments and helped the index close out February up 3% in value compared to the Dow, which closed down 10% and the Nasdaq Biotech Index closed up slightly at 0.3%.
According to Cowen & Co. analysts writing in their monthly Biotech Thermometer report, “Such a violent reversal caught investors off guard and left them dazed and a bit shell-shocked. Most find that there are far more questions than answers about the impact of COVID-19 on health and the economy, and therefore there is a wide range of opinions with little consensus.”
Leading gainer in the month was Regeneron Pharmaceuticals Inc., which is ramping up its R&D efforts to combat the virus. Its shares (NASDAQ:REGN) closed at $444.57, up 35.5%.
Gilead Sciences Inc.’s shares (NASDAQ:GILD) have also appreciated, closing at $69.36 at the end of February, up 9.75%. Investors took note that the company’s NUC inhibitor, remdesivir, which was originally developed for Ebola, is being rushed into clinical trials. The study, expected to be completed on April 27, is a phase III randomized, double-blind, placebo-controlled, multicenter study to evaluate the efficacy and safety of remdesivir in hospitalized adult patients with mild and moderate COVID-19 infections. It will enroll 270 patients and be carried out in the China-Japan Friendship Hospital in Beijing.
As noted by Cowen analysts, “Similar to prior sell-offs, attention has moved toward the larger names as their visible earnings and strong balance sheets are thought to provide valuation support, particularly should the weakness drag on.”
That observation was clearly evident with investors liking Biogen Inc.’s licensing deal covering multiple Sangamo Therapeutics Inc. programs for $350 million up front plus up to $2.37 billion in development, regulatory and commercial milestone payments. The deal is initially focused on development of ST-501 for tauopathies, including Alzheimer’s disease, ST-502 for synucleinopathies, including Parkinson’s disease, and an undisclosed neuromuscular target. It also includes exclusive rights for nine additional undisclosed neurological targets that Biogen can elect over five years.
The collaboration is built around Sangamo’s genome regulation technology, zinc finger protein transcription factors (ZFP-TFs), delivered with adeno-associated virus vectors. It functions at the DNA level to selectively repress or activate the expression of specific genes. ST-501 is focused on suppressing tau mRNA/protein, while ST-502 is designed to suppress alpha-synuclein.
Shares of Biogen (NASDAQ:BIIB) closed the month up almost 15%.
San Rafael Calif-based Biomarin Pharmaceutical Inc. is another large cap company that bucked the market slide, with its shares (NASDAQ:BMRN) increasing just over 8% during February. Its gene therapy, Valrox (valoctocogene roxaparvovec), one of the 11 potential blockbuster drugs included in the Clarivate 2020 Cortellis Drugs to Watch analysis, is poised to reshape the treatment landscape for hemophilia A. The therapy moved one step closer to entering the U.S. market, with the company reporting that the FDA had accepted for priority review the BLA for its investigational AAV5 gene therapy for adults with hemophilia A, setting a PDUFA action date of Aug. 21, 2020. Interestingly, the agency told the company it is not currently planning to hold an advisory committee meeting to discuss the application.
The company also posted strong annual revenues that increased 14% to $1.7 billion and expects 2020 total revenue growth to be between 14% and 20%.
Jazz Pharmaceuticals plc’s shares (NASDAQ:JAZZ) took a hit in February, dropping 20% in value. Although the company reported total revenue of $2.2 billion for 2019 that was up 14% over the prior year, investors appeared to be disappointed by the fact that the company said it would be a transition year for going forward. On its earnings call Bruce C. Cozadd, the company’s chairman and CEO, said that “2020 will be a year of investments as we broaden our global biopharmaceutical presence and focus on leveraging our base business and expertise to drive long-term growth.”
For the fourth quarter, revenue totaled $581.7 million, and GAAP net come totaled $74 million, with diluted EPS of $1.29. Sales of narcolepsy drug Xyrem (sodium oxybate) oral solution reached $1.6 billion and $435 million for the year and quarter, respectively, while leukemia drug Erwinaze/Erwinase (asparaginase Erwinia chrysanthemi) had sales of $177.5 million and $55 million and veno-occlusive disease drug Defitelio (defibrotide sodium) had sales of $172.9 million and $47.8 million, respectively. As of Dec. 31, Jazz had cash, cash equivalents and investments totaling $1.1 billion.
Index member Merck & Co. Inc. experienced a 10% drop in its shares (NYSE:MRK) last month. On Feb 18, it reported it had received a complete response letter from the FDA for its supplemental BLAs seeking to update the dosing frequency for Keytruda (pembrolizumab) anti-PD-1 therapy, to include a 400-mg dose infused over 30 minutes every six weeks as an option in multiple indications. The company said it was reviewing the letter and would discuss next steps with the agency.