The financial markets were delivered a one-two punch March 9 – a plunge in oil prices along with fears that the coronavirus is continuing to spread unabated. As a result, the Dow Jones Industrial Average cratered 1,500 points in early trading after a brief halt with market circuit breakers kicking in. Biopharma equities did not escape the carnage, with the BioWorld Biopharmaceutical index trading down about 4% by market close, with the Dow closing down 7.8%.
The market meltdown put a damper on what appeared to be the start of a market recovery for biopharma equities, as by market close on Friday, the Biopharmaceutical index was up over 5% in value. That inflection reflected the fact that investors believed that biopharma blue chip companies offered some safety during these turbulent times.
That view was confirmed by RBC Capital Markets analyst Randall Stanicky, who noted that the industry’s “strong balance sheets, product/geographic diversification, and notably high dividend yields (in low interest environment) make this the ‘safest’ sector we cover.”
The 4% drop in value of the BioWorld Drug Developers index in February demonstrated that investors believe small and midcap biopharma companies are riskier in this environment.
Although, many of the index members lost share value during the month, investors gravitated to those companies developing compounds that could prove effective against COVID-19. Cambridge, Mass.-based Moderna Inc.’s shares (NASDAQ:MRNA) closed up 26.4%. It is developing messenger RNA (mRNA) therapeutics and vaccines and reported it had released the first batch of mRNA-1273, which encodes viral spike (S) protein, its vaccine against the coronavirus, for human use. Vials of the vaccine were shipped to the National Institute of Allergy and Infectious Diseases to be used in a planned U.S. phase I study.
Sangamo Therapeutics Inc.’s shares (NASDAQ:SGMO) also got an almost 16% boost in February, catalyzed by news that Biogen Inc. was licensing multiple Sangamo programs for $350 million up front (comprising $125 million in the form of a license fee and $225 million in proceeds from the purchase of about 24 million shares of Sangamo stock at a price of $9.21 per share) 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 (AD), 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. As of December 2019, INDs were planned for both candidates, with submission planned in 2021 for ST-501 and in 2022 for ST-502, according to Cortellis.
Cambridge, Mass.-based Momenta Pharmaceutical Inc., whose shares (NASDAQ:MNTA) initially rocketed by more than 61% in January on promising interim data for its M-254 program in idiopathic thrombocytopenic purpura (ITP), with additional data expected in the second quarter, has managed to hold on to most of those gains, closing up 43% year-to-date.
The BioWorld Drug Developers index finished the trading day down 8%.