Last Updated on May 20, 2019 by Sultan Beardsley
The trade talks between the U.S. and Chinese officials have come and gone leaving no trade deal in place. While U.S markets were not rocked as hard as Asia’s it was a still a relatively bloody week.
The Nasdaq, DOW, and S&P 500 closed down -.83%, -.81%, and -.93% respectively. Despite a strong start to the week biotech felt the pressure too; although it’s unclear that the tariffs will affect healthcare as much. However, an all-out prolonged trade war between the worlds two largest economies would percolate into every sector eventually.
Biotech exchange-traded funds (ETFs) XBI, IBB, and FBT closed down -.12%, -.97%, and -2.47% respectively. The Health Care Select Sector SPDR Fund (XLV) finished green gaining +.07% closing at $88.91. The Direction Biotech bull index held its own but ultimately conceded -.50% while its counterpart LABD gained +.09%. I expect more volatility in the markets next week and thus will focus on fundamental value plays.
Earnings and Movers
From Tuesday through Thursday last week +200 companies reported earnings. Many healthcare companies yet to report are slated to do so Wednesday, May 15th (listed below). Large swings up or down from earnings surprises are unlikely since most of the commercial-stage companies already reported.
The biggest losers last week were Puma Biotechnology (PBYI), Catalyst Pharmaceuticals (CPRX), and FibroGen Inc. (FGEN). On the flip side Flexion Therapeutics (FLXN), ADMA Biologics (ADMA), Eyepoint Pharmaceuticals (EYPT) and uniQure N.V. (QURE) gained ground.
Losers May 6th-10th
PBYI dropped 39% on Friday to $18.42 after missing on revenue. Analysts were expecting Nerlynx (breast cancer drug) sales revenue to be around $66 million for Q1 2019 and the company only reported $46 million. This is not the first time PBYI dropped recently due to disappointing sales numbers for Nerlynx. In November 2018 PBYI fell 37% after Q3 2018 sales showed signs of weakness. It seems those concerns were well placed and makes me wonder who is Nerlynx’s market share going to?
From March to May CPRX was on a bull run charging from $3.0 to $6.0 (+100%). That all came to an end on Monday, May 6th when the FDA approved its competitors (Jacobus Pharma) drug for the treatment of Lambert-Eaton myasthenic syndrome “Ruzurgi”. Until then CPRX had a monopoly on the market. The share price dropped over 40% in response hitting a low around $2.25 before rebounding to $3.30. CPRX is a good one to watch for swing-trading next week.
FGEN fell 20% on Friday closing at $36.39. The driver was questionable safety data from a phase 3 clinical study in collaboration with AstraZeneca (NYSE: AZN) and Astellas Pharma. Roxadustat is a small molecule being developed as a first-in-class treatment for anemia associated with chronic kidney disease.
The company used confusing language regarding major adverse cardiac events (MACE) among Roxadustat treated patients vs. placebo and comparator arms of the trial. A core reason Roxadustat advanced to phase 3 was due to its assumed superior safety profile compared to other erythropoietin-stimulating agents like Amgen’s Epogen. Thus, investors reacted to the ambiguity by selling. Despite this analysts at Jefferies felt investors overreacted and anticipate the share price will recover.
Gainers May 6th-10th
Flexion Therapeutics (FLXN) finished strong gaining +30% over Thursday and Friday closing at $12.56. In Q1 2019 earnings FLXN raked in $10.6 million in sales revenue. The figure that got investors excited though was the fact that nearly half of that $10.6 million was achieved in April 2019. Investors took this as an indicator of improving sales. I’ll be looking more to see if there is merit underlying the assumption.
uniQure N.V. (QURE) jumped 7% on Friday closing at $61.10 on news of positive updated phase 2b data. AMT-061 is being developed by QURE for the treatment of severe and moderately severe hemophilia B.
ADMA Biologics (ADMA) closed down on Friday -4.26% despite announcing FDA approval of a prior approval supplement (PAS) for BIVIGAM. ADMA still gained +3% for the week. Commercial approval for BIVIGAM is a huge regulatory achievement. The fact ADMA did not spike +40% on Friday makes me suspect we could see significant price action upward next week.
The company now has three commercial-stage intravenous immunoglobulins (IVIG) products; IVIG medicine is currently experiencing a shortage in the U.S. In my opinion, ADMA is a great long-term investment. They are backed by Perceptive Advisors who is known as a successful biotech centered investment firm. With ample funding and a competent management team, the risk-reward profile is extremely favorable in my opinion.
Eyepoint Pharmaceutical (EYPT) finished the week strong gaining +7% Friday closing at $1.74. EYPT reported earnings on Wednesday which was highly anticipated since it was the first quarter of sales for their newest ophthalmology product “DEXYCU”. EYPT is another company I am bullish on in 2019 and beyond. Over the next year, analysts expect +100% revenue growth.
Wednesday, May 15th abstracts for the American Society of Clinical Oncology (ASCO) conference will be released. The cut-off date for abstract submission was February 12th, 2019 so data collected after that point will not be included. Thus, we can expect additional information to be presented at the conference itself.
Once we see the abstracts we can construct a more detailed guide for companies to watch and what to look for. Several companies on our radar already are Celldex Therapeutics (Nasdaq: CLDX), Seattle Genetics (Nasdaq: SGEN), and TG Therapeutics (Nasdaq: TGTX). Also on Thursday, May 16th abstracts will be released for the European Hematology Association (EHA) conference.
Biopharma Companies With Earnings Next Week
Monday 5/13/19: Capricor Therapeutics (CAPR), CorMedix Inc (CRMD), Catalyst Pharmaceuticals (CPRX), Sesen Bio (SESN).
Tuesday 5/14/19: BioLineRx (BLRX), Eyenovia (EYEN), Matinas BioPharma Holdings (MTNB), Onconova Therapeutics (ONTX).
Wednesday 5/15/: Achieve Life Sciences (ACHV), Edap Tms SA (EDAP), Rubius Therapeutics (RUBY), Titan Pharmaceuticals (TTNP).
Thursday 5/16/19: Zealand Pharma (ZEAL).
Friday 5/17/19: Dr. Reddy’s Laboratories (RDY)
Clinical Stage Companies With Catalysts
Monday May 13th, 2019
- Sesen Bio (SESN) $1.16- Updated phase 3 data for their product Vicinium as a treatment for non-muscle invasive bladder cancer (NMIBC).
Wednesday May 15th, 2019
- Celldex (CLDX) $3.35- Abstract for ASCO is being released. Eyes will be on the phase 2 data for CDX-3379 as a treatment for Recurrent/metastatic head and neck squamous cell cancer.
- TG-Therapeutics (TGTX) $7.56- Abstracts for ASCO are being released.
- Seattle Genetics (SGEN) $67.64-Abstracts for ASCO are being released.
Friday May 17th, 2019
- Achillion Pharmaceuticals (ACHN) $2.91- Interim phase 2 data due for ACH-4471 as a treatment for Paroxysmal nocturnal hemoglobinuria (PNH).
Best Swing Candidates
CPRX, ADMA, FGEN, CLDX
I am/we are long ADMA and EYPT.