Although the world-famous groundhog Punxsutawney Phil awoke to see his shadow at the beginning of the month, predicting a further six weeks of winter, thanks to President Donald Trump's vow of a major impending tax announcement, it looks as though biopharmaceutical companies will enjoy an early spring. Their stocks have surged more than 4 percent so far this month in lockstep with the bullish general markets that have hit record highs, with investors believing that the new administration's plans for tax reforms will expand the economy.
The BioWorld Biopharmaceutical Index has increased 4.3 percent in value so far this month, solidifying the sector's great start, with the index up 6 percent year-to-date (YTD). That compares to the Dow Jones Industrial Average, which is up almost 4 percent in February and the Nasdaq Composite climbing by the same amount. (See BioWorld Biopharmaceutical Index, below.)
The sector got off to a great start in the month with a positive and productive meeting of leading biopharma executives with President Trump. (See BioWorld Insight, Feb. 6, 2017.)
Since then the elite biopharmaceutical companies have in the main continued to help their cause by providing investors with strong end-of-year earnings reports.
The top biotech by market cap - Amgen Inc. - set the ball rolling with estimate-beating fourth-quarter earnings. Sales of cholesterol treatment Repatha (evolocumab) rose with its fourth-quarter sales contributing $58 million to the company's overall $5.66 billion quarterly global sales led by Enbrel (etanercept), which added about $1.6 billion to the total, followed by about $1.1 billion from Neulasta (pegfilgrastim), $526 million from Aranesp (darbepoetin alfa) and $463 million from Prolia (denosumab).
Further good news was to follow for Amgen with the FDA approval of its secondary hyperparathyroidism (SHPT) treatment, Parsabiv (etelcalcetide). (See BioWorld Today, Feb. 9, 2017.)
Amgen acquired Parsabiv in its $315 million cash buyout of San Francisco-based Kai Pharmaceuticals Inc., disclosed in April 2012. (See BioWorld Today, April 11, 2012.)
The Thousand Oaks, Calif., company also reported last week the submission of a supplemental biologics license application (sBLA) to the FDA for Blincyto (blinatumomab) to include overall survival data from the phase III TOWER study, supporting the conversion of the product's accelerated approval to full approval. The sBLA also includes new data supporting the treatment of patients with Philadelphia chromosome-positive relapsed or refractory B-cell precursor acute lymphoblastic leukemia (ALL). Blincyto marked the first FDA-approved bispecific CD19-directed CD3 T-cell engager, or BiTE, antibody, and the first single-agent immunotherapy to treat patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor ALL. Amgen's shares (NASDAQ:AMGN) closed last Thursday at $172.11, up almost 10 percent so far this month and up 16.5 percent YTD. The company's market cap is $127 billion, well ahead of Gilead Sciences Inc., which stands at $92.1 billion, a total that drops the company into third place, just a fraction behind Celgene Corp. at $92.3 billion. This is the first time that the Summit, N.J.-based company has attained the second-place ranking and looks to be on its way to joining Amgen in the $100 billion market cap club in the near future.
Gilead, on the other hand, has deeply disappointed its investors, with the result that sentiment swirling around the company currently is extremely negative. It has been a tough year for the Foster City, Calif.-based biopharma, which surrendered its market cap lead – a position it had held for about three years – to Amgen. Since then its shares have swooned to close at $70.31 Thursday, down 3 percent in February. The firm's value recovered slightly from hitting a three-year low of $65.75 after it provided 2017 guidance for its hepatitis C virus (HCV) franchise, which came in approximately $3 billion to $5 billion short of already-lowered expectations. (See BioWorld Today, Feb. 9, 2017.)
The forecast came during its fourth-quarter and year-end 2016 earnings call pegging 2017 sales of HCV products in a range of $7.5 billion to $9 billion, compared to 2016 sales of $14.8 billion in the product category.
For the year, Gilead reported $30 billion in sales, compared to $32.2 billion in 2015. On a regional basis, 2016 sales fell to $19.3 billion in the U.S. from $21.2 billion in 2015 and to $6.1 billion in Europe from $7.2 billion the previous year, but rose to $2.5 billion in Japan from $1.9 billion in 2015 and to $2.1 billion in other locations from $1.9 billion a year earlier.
Antiviral sales, including sales of HIV and HCV products, were $6.6 billion for the fourth quarter of 2016, compared to $7.9 billion for the same period in 2015. For the full year, antiviral product sales were $27.7 billion compared to $30.2 billion in 2015.
It is not the first time that Gilead has faced the wrath of investors as Evercore ISI analyst Mark Schoenebaum pointed out in an email to investors. He wrote that the "last time sentiment on Gilead's management was this bad, investors were wrong. Very wrong." He was referring to the time in November 2011 when the company pulled the trigger on an $11 billion deal to acquire Pharmasset Inc. (See BioWorld Today, Nov. 22, 2011.)
Schoenebaum wondered, "Will history repeat itself?" Certainly its long-suffering investors will be hoping so.
A major acquisition by the company would appease investors and, if it came, it could trigger a major surge in M&As this year among biopharmas.
Shares of Dublin-based Jazz Pharmaceuticals plc have also been on a tear (NASDAQ:JAZZ), gaining about 27 percent since the beginning of the year. The company has been making solid progress in product development. In January, the first patient was enrolled in a phase III trial comparing the efficacy and safety of defibrotide vs. best supportive care in the prevention of hepatic veno-occlusive disease (VOD) in adult and pediatric patients undergoing hematopoietic stem cell transplant who are at high risk or at very high risk of developing VOD.
Early this month, the company reported that the first patient has been enrolled in a phase II study evaluating JZP-110, a selective dopamine and norepinephrine reuptake inhibitor, as a potential treatment for excessive sleepiness in adult patients with Parkinson's disease. The clinical study will be conducted across approximately 15 centers in the U.S. and is expected to enroll about 50 patients.
By the numbers
The collective market cap of the 363 public biopharma companies tracked by BioWorld stood at $805 billion last Thursday, with 72 companies having market caps above $1 billion, an increase of three since the end of January.