As the month draws to a close, the biopharma sector appears to be holding its own during a period of political instability in Washington that threatens to delay the implementation of long-awaited tax and health care reforms. Although those dramatic developments in the nation's capital would usually reinforce the traditional trading mantra advising investors to sell their stock holdings in May to avoid a seasonal decline in the equity markets, it appears that this year they have not followed that advice when it comes to biotechnology. One of the reasons that could account for that is the fact that public biopharma companies have maintained a strong start to the year, reinforced by positive first-quarter financial results. In addition, companies are reporting a very bullish drug sales outlook for the rest of the year.
Above the waterline
At market close Thursday, the BioWorld Biopharmaceutical Index was just above water, with a 0.7 percent uptick in its valuation, mirroring the monthly performance of the Dow Jones Industrial Average but behind the pace set by the Nasdaq Composite index, which closed up 2.6 percent. Five months into the year, the Biopharmaceutical index remains up a healthy 14 percent, the same as the Nasdaq's year-to-date increase, and both indices are well ahead of the Dow, which was up 6.4 percent. (See BioWorld Biopharmaceutical Index, below.)
The gainers in the group just beat out the decliners. However, the Biopharmaceutical index didn't get much help from the top four biopharmaceutical companies by market cap. Amgen Inc.'s shares (NASDAQ:AMGN) dipped approximately 5 percent in May, mainly in reaction to its clinical trial news. Along with partner UCB SA, Amgen reported on the 4,100-patient phase III ARCH study with bone-forming agent Evenity (romosozumab).
Although the trial met both primary endpoints and the key secondary endpoint, data revealed cardiovascular (CV) events in the Evenity group. Specifically, at the primary analysis, while treatment with the drug for 12 months followed by Fosamax (alendronate, Merck & Co. Inc.) significantly reduced the incidence of new vertebral fractures through 24 months, there was an imbalance in positively adjudicated CV serious adverse events that amounted to 2.5 percent with Evenity vs. 1.9 percent for alendronate at 12 months. (See BioWorld Today, May 23, 2017.)
Amgen's share value, despite the loss in May, remains up 5 percent for the year.
Celgene Corp., whose market cap stands at about $91 billion, ranking it second behind Amgen's market cap, saw its shares (NASDAQ:CELG) dip almost 6 percent in the period. That came despite the Summit, N.J.-based company reporting that its phase III RADIANCE trial, evaluating the efficacy and safety of ozanimod, an investigational oral, selective S1P 1 and 5 receptor modulator, in patients with relapsing multiple sclerosis, met the primary endpoint in reducing annualized relapse rate (ARR), compared to weekly interferon beta-1a (Avonex, Biogen Inc.).
In the trial, two doses (0.5 mg and 1 mg) of oral ozanimod were evaluated in 1,313 patients who were treated for two years. Both doses demonstrated statistically significant and clinically meaningful reductions in the primary endpoint of ARR and the key secondary endpoints of the number of new or enlarging T2 MRI lesions over 24 months of treatment compared to Avonex and the number of gadolinium-enhancing MRI lesions at 24 months of treatment compared to Avonex.
Investors, however, tended to focus on a pre-specified pooled analysis of the time to confirmed disability progression in both the RADIANCE and SUNBEAM phase III trials. Here it was found that a very low rate of disability progression was observed across three treatment groups, and ozanimod did not reach statistical significance compared to Avonex.
Gilead Sciences Inc.'s shares (NASDAQ:GILD) also dived almost 6 percent. The Foster City, Calif.-based biopharma reported revenues of $6.5 billion for the first quarter of 2017, compared to $7.8 billion for the same period in 2016. Net income was $2.7 billion, or $2.05 per diluted share, for the three months ending March 31, compared to $3.6 billion, or $2.53 per diluted share, for the same period in 2016. (See BioWorld Today, May 3, 2017.)
Its product sales of $6.4 billion represented a decline of 17 percent year-over-year and 12 percent sequentially and were about $100 million below consensus. The U.S. accounted for $4.5 billion in first-quarter sales, up 2 percent year-over-year and down 10 percent sequentially.
JP Morgan analyst Cory Kasimov noted that the top- and bottom-line misses, "while certainly not encouraging, aren't all that surprising and also aren't telling us anything all that new, in our opinion. Until GILD can change the narrative and/or there is a trough that is apparent, we think it will be difficult for shares to work in the short term."
Gilead's shares are down 10.5 percent year to date.
Biogen Inc.'s shares (NASDAQ:BIIB) slipped about 7 percent, despite reporting a significant business development transaction in the period. The company is boosting its research and development activities by investing $120 million up front for an asset purchase of Remedy Pharmaceuticals Inc.'s phase III candidate, Cirara, indicated for large hemispheric infarction, a severe form of ischemic stroke in which brain swelling often leads to a disproportionately large share of stroke-related morbidity and mortality.
Cory Kasimov said the deal brings Biogen a later-stage asset that fits within the firm's neurology focus.
Thanks to the FDA approval for the rheumatoid arthritis (RA) therapy sarilumab, Regeneron Pharmaceuticals Inc. claimed the leading gainer monthly prize, seeing its shares (NASDAQ:REGN) jump 17.3 percent. Its interleukin-6 inhibitor, co-developed with Sanofi SA, will be marketed as Kevzara. It's approved for the treatment of moderate to severe RA in patients who aren't responding to or are intolerant of disease-modifying antirheumatic drugs (DMARDs). (See BioWorld Today, May 24, 2017.)
The approval was based on data from about 2,900 adults with moderately to severely active RA who had an inadequate response to previous treatment regimens. In two phase III trials, subcutaneous Kevzara plus background DMARDs demonstrated statistically significant, clinically meaningful improvements in patients with moderately to severely active RA.
The value of the BioWorld Drug Developers index slipped 4 percent in May, with most members of the group returning red figures. The index still remains up a healthy 20 percent for the year. (See BioWorld Drug Developers Index, below.)
One bright note was Sangamo Therapeutics Inc., whose shares (NASDAQ:SGMO) vaulted up more than 62 percent this month. The catalyst was a lucrative deal with Pfizer Inc. Sangamo reported that a number of companies expressed interest in its hemophilia A program, but the New York-based big pharma won out with a transaction that could total more than $500 million for the gene therapy SB-525 as well as potentially other candidates. Sangamo pocketed a $70 million up-front payment and will be responsible for conducting a SB-525 phase I/II study, along with certain manufacturing activities before passing along the program to Pfizer for later-stage development. (See BioWorld Today, May 12, 2017.)