Biopharmaceutical equities were dragged down in May in lockstep with the general markets, with investors heading for the sidelines due to economic concerns over contentious trade issues and the prospect of tariff wars. As a result, the BioWorld Biopharmaceutical index dropped 5% in the month and is now trading down 6.4% for the year, the same year-to-date performance so far recorded by the Dow Jones Industrial Average. (See BioWorld Biopharmaceutical Index, below.)
According to Cowen & Co. analysts writing in their monthly biotechnology thermometer report, "Investors are contemplating what, if anything, can turn the sector around during the remainder of 2019."
Although the sector has seen a modest 3% recovery so far in June, investors are still wondering if this rally can be sustained. "Most investors appear pessimistic about the prospects for a sustained, market-beating rally," the report adds.
Going forward, it is hard to see any major catalysts on the horizon that will help kickstart the sector's fortunes on the capital markets.
It was mostly red figures for all members of the index group in May. Tarrytown, N.Y.-based Regeneron Pharmaceuticals Inc., for example, saw its shares (NASDAQ:REGN) fall 12%. The company's equities have been on a downward trajectory for most of the year, trading down almost 20% as of mid-June.
The company did report positive news at the American Society of Clinical Oncology (ASCO) meeting earlier this month. Along with its partner, Sanofi SA, it disclosed positive updated data for Libtayo (cemiplimab-rwlc), a fully human monoclonal antibody targeting the immune checkpoint receptor PD-1, in locally advanced and metastatic cutaneous squamous cell carcinoma (CSCC).
Those data, from the pivotal phase II EMPOWER-CSCC-1 trial, included the primary analysis for the locally advanced CSCC group and longer-term data from the metastatic CSCC group. Together, the company reported, they provide updated Libtayo efficacy and safety outcomes following the drug's FDA approval in September last year and include more than double the patients previously reported. The median overall survival still had not been reached with a median follow-up of up to 17 months.
Amgen Inc.'s shares (NASDAQ:AMGN) dipped 7% in May, bringing the company's market cap very close to losing its longtime $100 billion valuation status. For the year, its shares are trading down 14% in value.
They have since recovered some of the loss, jumping 5% in June. The company made a $167 million cash offer for Nuevolution AB. The deal brings Amgen ownership of Nuevolution's DNA-encoded chemical library, Chemetics, which comprises billions of drug-like fragments covalently linked to oligonucleotide tags. It allows for rapid screening of very large areas of chemical space, which increases the likelihood of finding hits against difficult targets. (See BioWorld, May 23, 2019.)
New York-based Pfizer Inc. was one of the few companies in the group to record a small gain, thanks to a positive flow of news. At the beginning of May, the company reported it was acquiring rare disease firm Therachon AG for $340 million up front with a further $470 million reserved for development and commercial milestones linked to the progress of Therachon's achondroplasia therapy, TA-46. (See BioWorld, May 7, 2019.)
The drug has completed a phase I trial and is undergoing an observational study, which will feed into a forthcoming phase II trial.
In addition, along with Merck KGaA's biopharmaceutical business, EMD Serono, the company announced that the FDA had approved Bavencio (avelumab) in combination with Inlyta (axitinib) for the first-line treatment of patients with advanced renal cell carcinoma.
It was a similar picture for drug developers, with the BioWorld Drug Developers index recording an almost 8% loss in value in May, taking the gloss off what had proved to be a strong start to the year for the group. The index, however, remains up almost 18% for the year. (See BioWorld Drug Developers Index, below.)
It appears, despite the uncertain economic environment, that investors still have a soft spot for small and midsized biopharma companies working in hot areas such as cell and gene therapies and immuno-oncology. For example, Arrowhead Pharmaceuticals Inc.'s shares (NASDAQ:ARWR) have been surging, posting a 31% increase in May and contributing to a 90% jump for the year. The company has a strong pipeline of products based on RNA chemistries. It will be starting an adaptive phase II/III trial, now called Sequoia, with the second-generation RNAi therapeutic ARO-AAT that will be tested in a rare genetic liver disease associated with alpha-1 antitrypsin deficiency. In its second quarter financial report, the company said it also began dosing in a phase I single- and multiple-dose study of ARO-ANG3, a subcutaneously administered RNAi therapeutic targeting angiopoietin like protein 3, being developed as a potential treatment for patients with dyslipidemias and metabolic diseases. A phase I study of ARO-APOC3, a subcutaneously administered RNAi therapeutic targeting apolipoprotein C-III, being developed as a potential treatment for patients with hypertriglyceridemia, is also underway.
Although shares of Cambridge, Mass.-based Moderna Inc. (NASDAQ:MRNA) dipped 20% in May, they remain up 36% for the year. The company is developing messenger RNA (mRNA) therapeutics and vaccines and at ASCO 2019 it reported interim data from an ongoing phase I study in patients with both resected (adjuvant) and unresected (advanced) solid tumors. The data showed that the mRNA personalized cancer vaccine mRNA-4157, given alone or in combination with Keytruda (pembrolizumab), was well-tolerated at all doses tested and elicited neoantigen-specific T-cell responses. The safety, tolerability and immunogenicity data and the initial clinical activity observed support a randomized phase II study investigating pembrolizumab in combination with a 1-mg dose of mRNA-4157, compared to pembrolizumab alone, for the treatment of high-risk adjuvant melanoma, the company said.
Of the index group members, 66% saw their shares lose value in May, reflecting the prevailing negative environment for biopharma equities as a whole.