The NASDAQ Biotech Index (NBI) ended the week on a low note – just 2 percentage points from giving back the entirety of its gains in 2015. The S&P gave that up over a month ago.
Briefly, let’s list of all the extraneous events impacting sentiment for equities lately, and more specifically, the healthcare/biotech sectors.
- The Federal Reserve decided against raising the federal funds rate last week, injecting more uncertainty into the market. Investors were forced to ask: what does the Fed know about the global economy that we don’t?
- Slow-down in emerging market economic growth, namely China, has investors skittish about the pace of recovery globally.
- Federal Reserve Chair Janet Yellen then outlined in a speech this past Thursday evening that the FOMC still expects to raise its rate by the end of the year. That was applauded in early trading Friday.
- The potential for a U.S. government shutdown, and the surprise move by Speaker John Boehner Friday to give up his House seat at the end of October, just as Congress tries to avert another shutdown.
- Turing Pharmaceuticals’ Daraprim price hike, which re-ignited the debate over drug prices in the U.S. In conjunction, presidential contender Hillary Clinton outlined her own plan to curb drug prices.
Investors simply don’t have to look far for reasons to sell. We wrote about these and a number of our recent ideas this week at PropThink, including bluebird bio (BLUE) and Oncothyreon (ONTY). Read the latest here.
Long-time PropThink readers will be aware of our ongoing interest in uniQure (QURE), an oft-overlooked developer of gene therapies. This past weekend, a uniQure collaborator presented new data from one of the company’s early development programs, AMT-110, at a medical conference in Europe. The drug candidate is an AAV5 vector carrying a therapeutic NaGlu (α-N-acetylglucosaminidase) gene, designed for use in young patients with the lysosomal storage disorder Sanfilippo B.
Mr. Zack Fink outlined his expectations two weeks ago, prior to the event.
According to uniQure’s press release, in the four patients treated with AMT-110, catalytic activity of the NaGlu protein in the cerebrospinal fluid (CSF) moved from 0% at baseline up to 14-17% of normal at 3 months. This persisted in all patients through 12 months, indicating successful transduction. The therapy was well-tolerated and no safety issues were reported.
Details regarding the neurocognitive endpoints and individual NaGlu results were not made public as uniQure negotiates the acquisition of this data from Institute Pasteur, but a conference call for investors provided a little more perspective. The youngest child in the study (20 months at entrance) continued to gain cognitive skills at about 80% of normal; two children in the middle age group continued to gain skills at about half the level of normal; and the oldest child (53 months at entrance) gained skills at a lower rate than normal but was still gaining at 12 months.
QURE has pulled back from new highs in conjunction with the data release last weekend, but our view is that the results were encouraging, and Mr. Fink’s analysis was spot-on. He wrote in advance, “It’s likely much too early for a robust efficacy signal on the cognitive assessments. Biomarkers are a much more appropriate outcome to asses, such as glycosaminoglycan (GAG) accumulation and NaGlu expression. These may offer validation that the AAV5 vector has successfully transfected cells in the CNS and are functionally active . . . Put directly, I don’t expect a robust cognition efficacy signal at the 52-week follow-up. I would, however, be satisfied with these results suggesting CNS disease stabilization, as seen in the SAF-301 trial.”
Later this year uniQure will present initial results from an ongoing study of its Hemophilia gene therapy program. For new investors, it’s worth catching up on the story. You can read our take on the latest results here.
Arrowhead Research (ARWR) hosted an R&D day in New York this week. Arrowhead is known for their lead product candidate, ARC-520, an RNA interference therapeutic directed at the Hepatitis B Virus.
ARWR has had a tumultuous two years, massively disappointing investors last October when ARC-520 missed the company’s own bar for success in its first human proof-of-concept study. A year later, the company has made intriguing progress not only with the drug candidate but in the understanding of HBV, and how treatment is likely to evolve. We’ve been saying for quite some time in relation to Arbutus (ABUS) that combination regimens are the likely answer to HBV, and Arrowhead’s event confirmed that, indicating some entirely new paradigms in how HBV suppresses the immune system. For anyone with an interest in the space — HBV is an immense unmet need, much like Hepatitis C a decade ago — Arrowhead’s presentation is worth a listen.
A final note on biotech’s recent performance: the NBI this week crashed through its 50-week moving average, which has acted as the bottom to the bull trend for more than 3 years. Without a major rally next week to recover this level, traders will accept that biotech is going through a real rotation.
