With just a handful of biotech companies left to report third quarter results, focus is back on regulatory and pipeline updates. Among major news this week, Dynavax Technologies (DVAX - Free Report) finally gained FDA approval for its hepatitis B vaccine while Loxo Oncology (LOXO - Free Report) was in the news for its collaboration agreement with Bayer.
Recap of the Week’s Most Important Stories
Loxo down despite Bayer Deal worth Up To $1.55 Billion: Loxo, which is focused on the development of highly selective medicines for patients with genetically defined cancers, saw its shares lose ground despite the announcement of a collaboration agreement with Bayer that could be worth up to $1.55 billion. The companies are collaborating for the global development and commercialization of Loxo’s highly selective TRK inhibitors, larotrectinib and LOXO-195, for patients with TRK fusion cancers.
The agreement terms include a $400 million upfront payment. Loxo could receive another $450 million on the achievement of certain regulatory and commercial milestones and an additional $200 million for milestones related to LOXO-195. Development costs will be split equally by the companies. The companies will co-promote in the United States while Loxo will receive tiered, double-digit royalties on net sales, and sales milestones totaling $475 million for ex-U.S. territories. Larotrectinib is scheduled to be filed for FDA approval in late 2017/early 2018.
Loxo’s shares were down 4.1% on the news with the investment community expressing disappointment about the sharing of profits in the United States as well as the absence of an outright acquisition deal.
FDA Nod for Dynavax Hepatitis B Vaccine: It turned out to be third time lucky for Dynavax with the company finally gaining FDA approval for its hepatitis B vaccine, Heplisav-B. The regulatory action makes Heplisav-B the first new hepatitis B vaccine in the United States in more than 25 years and the only two-dose hepatitis B vaccine for adults.
Hepatitis B, a highly infectious and potentially deadly virus, affects a wide range of adults in the United States with infections on the rise given the absence of any cures. However, hepatitis B can be prevented through vaccination.
Heplisav-B is the first FDA-approved product for Dynavax and the company expects to launch the vaccine in the first quarter of 2018.
Achillion Slips on Secondary Offering News: Achillion Pharmaceuticals, Inc. (ACHN - Free Report) was down 4.2% on news that one of its shareholders, Johnson & Johnson Innovation-JJDC, Inc. ("JJDC"), is selling the whole of its equity positon in Achillion (approximately 18.4 million shares). Achillion will not receive any part of the proceeds from the offering.
We remind investors that Achillion had an agreement with Johnson & Johnson’s Janssen Pharmaceuticals for hepatitis C virus ("HCV") treatments. At the time of announcing the HCV agreement in May 2015, J&J and Achillion had also announced an equity transaction under which JJDC would invest $225 million in Achillion and get approximately 18.4 million newly issued and unregistered shares. Achillion’s shares were down significantly when the company had announced the termination of the HCV agreement in September 2017 (Read more: Achillion's HCV Partnership with J&J Terminated, Stock Falls).
Year to date, Achillion’s shares are down 10.7% compared to the industry’s 1.5% rally.
Zymeworks Inks Deal with J&J Company: Zymeworks Inc. , a clinical-stage biopharmaceutical company, announced a licensing agreement with Janssen Biotech, a J&J company, for the development and commercialization of next generation bispecific antibody therapeutics.
Under the deal, Janssen will get a worldwide, royalty-bearing license to research, develop, and commercialize up to six bispecific antibodies using Zymeworks’ Azymetric and EFECT platforms. Zymeworks is entitled to an upfront payment of $50 million plus up to $282 million in development milestones and up to $1.12 billion in commercial milestone payments, as well as tiered royalties on potential sales.
Janssen also has the option to add two more bispecific programs to the deal which would mean additional money for Zymeworks.
The deal is a boost for Zymeworks which already has partnership agreements with several other large companies like Merck, Lilly, Celgene, Glaxo and Daiichi Sankyo. Including the J&J deal, Zymeworks has the potential to earn milestones worth a total of $5.5 billion from all these agreements.
Zymeworks is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
CHMP Positive on Amgen Drugs: Amgen (AMGN - Free Report) and partner Allergan got a positive opinion from the European Union Committee for Medicinal Products for Human Use (“CHMP”) for ABP 215, their biosimilar version of Roche’s blockbuster cancer drug, Avastin (bevacizumab). ABP 215 is already approved in the United States under the trade name, Mvasi.
Amgen also got a positive opinion from the CHMP for its efforts to expand the use of Nplate in pediatric patients with chronic immune thrombocytopenic purpura (Read more: Amgen Gets Positive CHMP Opinion to Expand Nplate's Label).
CHMP Positive on Vertex’s Orkambi Label Expansion: Vertex (VRTX - Free Report) also got a positive opinion from the CHMP for the label expansion of its cystic fibrosis (“CF”) drug, Orkambi for use in children with CF in the 6-11 years age group with two copies of the F508del mutation. Approval for this age group would expand the targeted patient population by about 3,400 patients. A decision should be out within three months. Orkambi, which is already approved for this age group in the United States, is expected to bring in revenues of $1.29 billion - $1.32 billion in 2017. Meanwhile, the company expects to seek regulatory approval for the use of Orkambi in children with CF in the two to five years age group who have two copies of the F508del mutation in the first quarter of 2018 (Read more: Vertex Gets CHMP Recommendation for Orkambi Label Expansion).
Medical - Biomedical and Genetics Industry 5YR % Return
The NASDAQ Biotechnology Index declined 2.5% over the last four trading sessions. Among major biotech stocks, Regeneron lost 7.3% while Alexion was down 4.7%. Over the last six months, Vertex was up 27.2% while Celgene was down 16.9% (See the last biotech stock roundup here: Regeneron Delivers Strong Q3 Results, Cellectis Clinical Hold Lifted).
What's Next in the Biotech World?
Clinical-stage company, Ultragenyx Pharmaceutical Inc. (RARE - Free Report) , could well gain FDA approval for its first product this week with the FDA expected to give a response on November 16 about the approval status of vestronidase alpha or rhGUS for mucopolysaccharidosis 7 (MPS 7, also known as Sly syndrome). About 200 patients across the world are afflicted by this disease, which is one of the rarest forms of MPS. Currently, there are no approved treatments for MPS 7.
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