Despite the fact that biotech companies developing biopharmaceuticals had a challenging month in October, with the 258 publicly listed companies tracked by the BioWorld Stock Report recording an average 7 percent drop in their share values, there is certainly no indication that the sector’s surge has stalled. In fact, despite predictions that biotech’s momentum has finally run out of steam, with less than two months to go until the end of the year biotech companies both large and small are still on target to post record-setting performances, a feat that has not been seen since 2000.

To more closely track which group of companies are the main driving force and are finding favor among investors we are pleased to introduce over the next several weeks a number of new and targeted tracking indices that will encompass groups of companies drawn from the universe covered by the BioWorld Stock Report.

The aim will be not only to categorize companies by traditional market cap size but also by their stage of development and main therapeutic focus. Those indicators will allow us to provide an even a deeper dive into industry trends and market sentiment that has become a staple of this publication’s reporting.

Blue Chip

BioWorld’s Blue Chip Index is a price-weighted index that includes 21 of the top biotechnology companies. In addition to having a market cap greater than $3 billion, a key hallmark of the majority of the companies in the group is that they have brought innovative medicines to the marketplace, are generating revenues and are making a profit; others have built significant market cap value as they close in on potential marketing approvals for their lead products. Interestingly, it is companies in that latter category that have seen their share prices soar, contributing to the stellar performance of the index. Year-to-date (YTD) the index has recorded a 62 percent increase in value, considerably outpacing the general markets with the Dow Jones Industrial average recording a 19 percent YTD increase and the Nasdaq Composite index a 30 percent in the same period. (See BioWorld Blue Chip Index, below.)

Leading gainers so far in our BioWorld Blue Chip Index include Isis Pharmaceuticals Inc., whose share value has jumped a remarkable 218 percent this year. The company had a market cap of $3.8 billion at the close of the third quarter with investors supporting its antisense technology and broad pipeline that includes Kynamro, an injected apolipoprotein B synthesis inhibitor, which became the first systemic antisense drug to win FDA approval for homozygous familial hypercholesterolemia (HoFH). Genzyme, a unit of Paris-based Sanofi SA licensed the drug in 2008.

Incyte Corp. of Wilmington, Del., has seen its shares jump almost 135 percent in 2013. In 2011, its lead product Jakafi (ruxolitinib) became the first JAK inhibitor approved by the FDA for the treatment of patients with intermediate or high-risk myelofibrosis. (See BioWorld Today, Nov. 17, 2011.)

The product has enjoyed steady growth since then with the company reporting net product revenues of $60.2 million for the quarter ending Sept 30, 2013, as compared to $43.7 million for the comparable period in 2012. For the nine-month period, Jakafi net product revenues were $162.6 million as compared to $92.7 million for the comparable period in 2012. The company also has a strong pipeline and recently reported positive top-line results of its Phase II trial of ruxolitinib in patients with refractory metastatic pancreatic cancer.

Taking advantage of its elevated share price, the company said it is planning to offer $350 million in convertible senior notes due 2018 and $350 million in convertible senior notes due 2020 in a private placement to institutional buyers. (See BioWorld Today, Nov. 8, 2013.)

Gilead Sciences Inc., with its market cap breaking through the $100 billion mark in October, has seen its share price jump almost 94 percent as it continues to deliver strong earnings from its HIV franchise. The company’s total revenues for the third quarter were $2.78 billion, a 15 percent increase from $2.43 billion in the third quarter of 2012. Total product sales increased by 15 percent as well, from $2.36 billion in the third quarter of 2012 to $2.71 billion in the third quarter of 2013. (See BioWorld Today, Oct. 31, 2013).

Gilead looks as though it is on target to strengthen its product offerings with an upcoming Dec. 8 PDUFA date set for hepatitis C virus (HCV) candidate sofosbuvir, which received a unanimous vote in favor from the FDA’s Antiviral Drugs Advisory Committee last month. The company is seeking approval for its use in genotype 2 and 3 HCV patients and for treatment-naïve genotype 1 and 4 patients.

Growth Companies

Our BioWorld Growth Index includes companies with market caps in the range of $1 billion to $3 billion and a resume that typically includes a strong pipeline and partnered products in late-stage clinical trials. It is this group that has seen tremendous investor enthusiasm that has propelled the index value to grow 100 percent by the end of the third quarter. (See BioWorld Growth Index, below.)

It is easy to run out of superlatives when describing share price increases exhibited by companies in the group: Acadia Pharmaceuticals Inc. (up 388 percent); Celldex Therapeutics Inc. (up 241 percent); and Clovis Oncology Inc. has seen its share valuation jump by 219 percent driven by impressive results from Phase I/II trials of its oral CO-1686, a targeted covalent (irreversible) inhibitor of mutant forms of the epidermal growth factor receptor (EGFR) in patients with initial activating EGFR mutations as well as the dominant resistance mutation T790M.

The companies appear to be carrying their momentum into the fourth quarter. For example, Celldex reported data from a Phase I study of its monoclonal antibody, CDX-1127, showing a favorable safety profile with biologic activity and signs of clinical activity in a population of patients with advanced, refractory cancer. CDX-1127 is designed to target CD27, which is involved in the activation pathway of lymphocytes. The company’s stock gained $3.26, or 15.2 percent, on that news to close last Thursday at $24.77.

Editor’s Note: We will be updating our Indices on a regular basis.