We are almost half way through 2017 and the biotech sector, which had a rough and challenging 2016, has been showing signs of recovery despite some ups and downs. Year-to-date (YTD), the NASDAQ Biotechnology Index is up 10.4% providing a glimmer of hope to biotech investors who saw the Index sliding 19.1% in 2016.
While the drug pricing issue remains a headline risk this year as well, confidence in the sector has been boosted by strong results, R&D success and innovation, FDA approvals, ramp up in new product sales and continued strong performance from legacy products. There is also a lot of hope that M&As will pick up this year.
Moreover, so far into 2017, the FDA has approved more drugs than it did during the same period last year. Till the end of Jun 2016, the agency had approved 14 new drugs while so far this year, 21 new drugs have gained FDA approval. In fact, the total tally for the whole of 2016 was 22.
With President Trump saying that the FDA will be streamlined and the drug approval process will be much faster, expectations are that there will be more innovation in the sector and, maybe, a surge in new drug approvals.
However, the sector does face some challenges -- additional competition, high profile pipeline setbacks, slowdown in growth of mature products and loss of exclusivity for certain key drugs.
Keeping all this in mind, here is a look at three biotech stocks that more than doubled YTD.
FDA Advisory Panel Vote Boosts Puma
Los Angeles, CA-based Puma Biotechnology, Inc. (PBYI - Free Report) got a huge boost last month with the company getting support from the FDA’s Oncologic Drugs Advisory Committee for its experimental breast cancer treatment, neratinib. The panel voted 12 - 4 in favor of approving neratinib for the extended adjuvant treatment of HER2-positive early stage breast cancer based on a favorable risk-benefit profile. Given the positive vote, chances of gaining FDA approval look pretty high. While the FDA is not required to follow the advice of its advisory panels, it usually does so. With Puma being a development-stage company, neratinib’s approval would be a major milestone for the stock.
Puma’s shares are up 153.5% YTD, outperforming the Zacks-categorized Medical-Biomedical/Genetics industry which is up 2% so far in 2017.
Sangamo Skyrockets on Deal with Pfizer
Sangamo Therapeutics, Inc. (SGMO - Free Report) , another California-based company, saw its shares shoot up this year on the signing of a deal with pharma major Pfizer (PFE - Free Report) . The companies are collaborating for the development and commercialization of gene therapy programs for hemophilia A. The exclusive, worldwide collaboration and license agreement covers SB-525, one of Sangamo’s four lead pipeline candidates. The agreement will see Pfizer pooling its expertise in rare disease, gene therapy, and hemophilia with Sangamo’s deep knowledge in genomic therapies. Sangamo will not only get an upfront payment of $70 million, it could get milestone payments of up to $475 million, including up to $300 million related to SB-525 and up to $175 million for additional hemophilia A gene therapy candidates that may be developed under the collaboration. Tiered double-digit royalties on net sales also form a part of the deal.
Sangamo has fast track status in the U.S. for SB-525. As per data from the Centers for Disease Control and Prevention, hemophilia occurs in about one of every 5,000 male births, with about 20,000 males in the U.S. living with the disorder.
The Pfizer collaboration could prove to be a transformational deal for the clinical-stage biotech company which is focused on translating ground-breaking science into genomic therapies. Sangamo’s shares are up 144.9% YTD.
Celyad Gets a Boost with Novartis Licensing Deal
Belgian biotech company, Celyad , which is focused on the discovery and development of cell therapies, saw its shares moving up following the announcement of a non-exclusive license agreement with Novartis (NVS - Free Report) for the company’s U.S. patents for the production of allogeneic CAR-T cells. The agreement covers two targets being developed by Novartis.
Under the deal, Celyad could earn up to $96 million -- this includes an upfront payment as well as success based clinical, regulatory and commercial milestone payments. Celyad will also get single digit royalties based on net sales of the licensed target associated products.
Celyad’s shares are up 163.2% so far in 2017.
While Puma, Sangamo and Celyad are all Zacks Rank #3 (Hold) stocks, you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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