The sector-tracking iShares NASDAQ biotechnology ETF (IBB) took out some major levels of resistance in the Thursday trading session, catching the attention of traders in the space because it’s an initial bullish signal that the multi-month slump is coming to an end. Also of note, Gilead Sciences (GILD) came close to taking out the stock’s all-time highs this week, remarkable given that sentiment around Gilead’s hepatitis C drug, Sovaldi, played a role in triggering the march lower. We covered these sector dynamics, and what to look for, in the column.
PropThink kicked off the week revisiting Cubist Pharmaceuticals (CBST), the regulatory and legislative environments for novel antibiotic products. Investors close to the sector will recall the GAIN Act (2012), which extended exclusivity for new antibiotics and increased communication/clinical guidance between drugmakers and the FDA. It’s been manifest in several ways, most notably in the Infectious Disease Society of America’s 10 x ’20 initiative, which advocates for the approval of at least 10 new antibiotics by the year 2020. We outlined on Monday how Cubist and somesmaller development-stage companies can benefit from more regulatory efforts designed to incentivize the few remaining antibiotics companies bringing novel products to market (think improved pricing). Get the report.
Shares of Intercept Pharmaceuticals (ICPT) dropped this week when documents were released through a FOIA request that paint a picture of a management team downplaying safety issues with the company’s lead drug candidate, obeticholic acid (OCA). Although heightened cholesterol has been public knowledge for months, the documents raise questions about the real reasons for the trial’s early stop – impressive efficacy versus concerning safety – and management’s credibility. Check out our one question to ask when considering ICPT.
Keryx Biopharmaceuticals’ (KERX) opened its first quarter earnings call on May 8 with news that there were still some outstanding manufacturing issues related to lead drug candidate Zerenex, and that it was working quickly to respond to FDA questions. KERX sold off, but the stock trickled higher in the two weeks after. The FDA this week extended the approval decision date for Zerenex, not surprising, from June to September. KERX closed the week nearly flat, suggesting that the delay was largely priced into the stock following the conference call earlier this month. Click here to learn more.
One or more of PropThink contributors are long GILD, CBST, or KERX.
