It looked briefly at mid-week like the biotech sector’s correction might be a comical 48-hour event, but investors are in a tizzy over the emerging markets and the Fed’s announcement to continue withdrawing monetary stimulus – the markets ended the week on a low note. There are always outliers, and in healthcare some high-flying IPOs took center stage this week.
Ultragenyx Pharmaceuticals (RARE) and Dicerna (DRNA) both IPO’d to gangbuster demand. RARE, led by former BioMarin (BMRN) CMO Emil Kakkis, develops treatments for orphan and ultra-rare diseases – Mr. King outlined on Thursday why the name is one to stalk in 2014. The company originally set out to sell 4.8M shares at a range of $14-17. That was increased to $19-20 mid-week, and on Friday the company revealed that it’s selling 5.76M shares at $21. What would have originally been a $75M IPO turned into a $120M IPO. The stock opened its first day of trading at $45.80 before losing steam to close the week at $42.25. We recommended that PropThink Premium members not chase the new listing, but suggested an alternative on Friday morning. At $45, RARE is a $1.5B+ company, steep (in our view) for an early-to-mid stage drug developer.
On Friday morning, Enanta Pharmaceuticals (ENTA) released results from the PEARL-II, PEARL-III, PEARL-IV and TURQUOISE-II studies, the remaining of six phase 3 trials being conducted by AbbVie (ABBV) for the treatment of genotype 1 hepatitis C virus (HCV) infection using a regimen containing Enanta’s protease inhibitor, ABT-450. The results were great, with sustained virologic response rates 12 weeks after treatment (SVR12) of 90% and up across the four latest studies. Perhaps more important, ABBV disclosed that the company is on track to begin regulatory submissions early in the second quarter. That’s news for investors, and suggests that with Breakthrough Designation the regimen could be on the market by the end of the year. Gilead (GILD) has posted impressive sales figures on its recently approved HCV regimen, which has clear read-throughs for ABBV and ENTA. ENTA closed the day up another 13%. Click here to catch up on PropThink’s previous coverage.
Phase 2 results from Progenics (PGNX) this week proved a disappointment, taking PGNX down by almost 25% into Friday’s close. The company presented data from an open-label phase 2 study of its PSMA ADC in metastatic castrate resistant prostate cancer at ASCO’s Genitourinary Cancers Symposium on Thursday. PGNX was a nice trade ahead of the event, and although we let only a small portion of our position ride through the data release, it would have done better to simply heed our own misgivings and preserve all of that profit. While the company appears to be pushing ahead with development, ho-hum data – on efficacy and safety – have us pessimistic about the program. We’ll update PropThink Premium members next week on why we’re cautious, with insight on where we think the stock goes next.
With the release of 2013 and Q4 financials on Thursday, Alexion Pharmaceuticals (ALXN) beat on both earnings and revenue, guiding for 2014 revenue and EPS to be even higher than consensus Wall Street expectations. You can read PropThink’s most recent coverage of Alexion here. But Alexion’s performance on Thursday was in-part a result of an improved tax rate following its corporate relocation to Ireland, which at a 12.5% corporate tax rate has become a go-to haven for profit-generating pharma. PropThink wrote about these tax-incentivized strategies extensively in relation to Endo Pharmaceuticals (ENDP) – here – and most recently in relation to QLT Inc. (QLTI), here. We outlined a few more considerations on Thursday.
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In connection with BMRN, ENTA, PGNX, ALXN, and QLTI, PropThink has taken a long position.
