By Nancy Volkers
Special to BioWorld Financial Watch
Biotech news, both good and bad, sends stocks soaring or plummeting usually in the short term, but occasionally such news can send a stock on a tear or a long-term dive. Lately, as investors begin turning away from Internet ventures, biotech has regained some of the spotlight, and stocks show it.
The Nasdaq, on an upswing since October, rose from below 1500 to hit nearly 2900 in July, before leveling off near 2500. The Nasdaq biotech index has gone from 247 to 590 in the past year, and now hovers near its 52-week high, at about 565. After rising above 500 in early July, it hasn't looked back, rising steadily over the past month.
The AMEX and BioWorld biotech indices have followed suit. Pharma stocks also are strong.
"Right now the pharma stocks, when they've made acquisitions in biotech, they've at least not had negative reactions," said Jay Silverman, senior analyst at BancBoston Robertson Stephens Inc. in New York. "[Johnson & Johnson] can dilute itself with a $5 billion acquisition" of Malvern, Pa.-based Centocor Inc., announced July 21 "and still have its stock go up. For the most part, we're seeing activity across the board."
Some recent trial results and approvals have clustered in the area of colds and flu. Last month, the FDA approved Relenza (zanamivir), developed by Biota Holdings Inc., of Melbourne, Australia, and licensed to Glaxo Wellcome plc, of Middlesex, UK. Relenza is an inhalation therapy for influenza A and B. The approval came despite the Antiviral Drugs Advisory Committee's recommendation against approval as it cited one pivotal trial that failed to show statistically significant benefit to flu sufferers.
The drug, for people aged 12 and older, inhibits neuraminidase, an enzyme that normally detaches new viral particles from an infected cell, allowing them to infect other cells. The dosage is 10 mg twice a day for five days. The drug reduces the severity of fever, cough, weakness and loss of appetite.
Relenza's approval sent Glaxo stock up $5 from below $51, only to drop into the low $40s since then, a 52-week low for the company. The announcement of Relenza's approval produced the heaviest trading since last September for Glaxo, whose stock had a 52-week high of $76.187 near the first of the year, and has been slowly dropping since.
The direct and indirect costs of the flu weigh in at about $12 billion. That's more than asthma ($6.2 billion), but much less than many other conditions such as stroke, with expenses of $43.3 billion. Considering that it's an acute, transient disease, however, flu takes a large economic toll.
Flu vaccines have been on the market for some time now, and each year, those at highest risk of flu and flu-related complications are urged to get vaccinated. FluMist, the nasal vaccine in trials at Aviron, has had some rough going; the company received a "not approvable" letter last September because the FDA wanted more production data on the product.
Last month, Aviron released results of a Phase III trial in more than 4,500 people. Data showed FluMist reduced the days of upper respiratory tract illness by nearly 25 percent, days of febrile illness by 23 percent and days of severe febrile illness by 27 percent. Vaccinated patients made 41 percent fewer physician visits, used fewer antibiotics and over-the-counter medications, and missed 28 percent fewer workdays, compared with patients receiving placebo. Data were published in a July issue of the Journal of the American Medical Association.
Aviron's trial results pushed its stock up more than $5. Since then the stock (NASDAQ: AVIR) has bounced around in the high $20s. At the end of July, the company reported a narrower-than-expected second-quarter net loss of $15.1 million, or 96 cents a share. In the year-ago quarter, Aviron posted a net loss of $13.1 million, or 84 cents a share. Last September, when the FDA informed the Mountain View, Calif.-based company that its FluMist submission was not acceptable for filing, the stock lost more than 42 percent in value (from $21.688 to $12.50 per share, a 52-week low).
Aviron plans to file a biologics license application in the fall. The company shares U.S. marketing rights with Wyeth-Lederle Vaccines, a subsidiary of Radnor, Pa.-based Wyeth Ayerst Laboratories.
On July 30, Chiron Corp. (NASDAQ:CHIR), of Emeryville, Calif., announced that it received approval to market its subunit influenza vaccine, Agrippal, in most Western European countries. In addition to Agrippal, which is currently marketed in Italy and other countries worldwide, Chiron markets three other flu vaccines: Fluad in Italy; Begrivac in Germany and other countries worldwide, and Influpozzi in Italy. In the fall, Chiron plans to introduce the first preservative-free flu vaccine, a new formulation of Begrivac.
Chiron's announcement sent its stock up 2.5 percent, to close at $25.6875 that day.
The common cold is under attack as well. Last month ViroPharma Inc. announced results of a Phase II program of pleconaril, its antiviral already in Phase III trials for viral meningitis. The program tested pleconaril's effectiveness against viral respiratory infection, a severe form of the common cold.
A study involving more than 1,000 people compared 400 mg of pleconaril two or three times daily with placebo. In patients randomized to pleconaril, the median time to elimination of symptoms was 11 days, compared with 14 days in patients receiving placebo. A smaller study also showed positive results. The company said there were no differences in side-effect profiles between patients receiving pleconaril and those receiving placebo.
Pleconaril, given orally as a liquid, inhibits enzymes responsible for viral replication.
When ViroPharma's Phase II results were announced, the stock (NASDAQ:VPHM) of the Exton, Pa.-based company more than doubled from $9.25 to about $22 over a two-day span. Two days later, the stock had dropped below $15, and remains in the $13 to $15 range.
Last month also had its share of bad news non-approvable letters, stopped trials, non-significant results and the like. A trial of Interneuron Pharmaceuticals Inc. and Incara Pharmaceuticals Corp.'s Bextra was halted July 29 after a recommendation by the trial's data and safety monitoring board. Bextra, a beta blocker, was showing no significant survival advantage. Lexington, Mass.-based Interneuron and Incara of Research Triangle Park, N.C., had Bextra in Phase III trials since 1995 for the treatment of congestive heart failure. Interneuron's stock (NASDAQ:IPIC) fell 28 percent at the news, from $3.75 to $2.687. Incara, which owned 35 percent of Bextra, saw its stock (NASDAQ:INCR) drop 72 percent, closing at $1.312.
Similarly, when the FDA issued a non-approvable letter July 26 to Magainin Pharmaceuticals Inc. for its Locilex cream, Magainin's stock (NASDAQ:MAGN) dropped from $3.50 to nearly $1.50, with trading of more than 1 million shares. In late June, when Magainin announced it would begin Phase II trials of squalamine an angiogenesis inhibitor derived from the dogfish shark the company's stock doubled to $4, then remained above $3 until the news of the FDA decision. Since then, the stock hasn't recovered, staying below $1.50.
Two Phase II trials with non-significant results sent Sibia Neurosciences Inc.'s stock down 7 percent, or 37.5 cents a share. In early August, the announcement that Merck & Co. Inc. was acquiring Sibia, based in La Jolla, Calif., sent the stock (NASDAQ:SIBI) from near $5 to $8.343, though Merck shares lost 25 cents on the news. Sibia's stock is now close to $10.
Finally, when San Diego-based Neurocrine Biosciences Inc. announced July 20 that a Phase II study of the multiple sclerosis drug MSP771 was halted as a result of several systemic hypersensitivity reactions Neurocrine's stock (NASDAQ:NBIX) dropped 16 percent, closing at $4.312, on the stock's heaviest trading volume in the past year. With some fluctuation, the stock has remained near that day's close. *