It has been a roller-coaster ride for the biotech sector so far this year, after a dismal 2018. While 2019 started with a bang with the announcement of the mega-merger of Bristol-Myers BMY and Celgene that significantly perked up prices of quite a few stocks, these gains were partially offset due to the overall weakness in the global market. Nevertheless, the sector has again picked up in the past couple of months, primarily owing to the recent spree of mergers and acquisitions and positive pipeline readouts.
Overall, the NASDAQ Biotechnology Index has risen 24.7% year to date.
The sector has been in the spotlight since the onset of the year as a slowdown in mature products due to increasing competition and rise of biosimilars forced most pharma/biotech behemoths to target lucrative buyouts in the space to bolster their pipelines. In particular, the biotechs (both small and big), which have a dominant position in the lesser competitive arena of rare diseases, gene therapy and NASH and are well-equipped with path-breaking technology, are acquisition targets. A slew of licensing and buyout deals is struck by most companies eyeing smaller entities with impressive pipelines. Novartis recently announced that it will acquire The Medicines Company and add a potentially transformational investigational cholesterol-lowering therapy to its portfolio. Roche is finally set to acquire Spark Therapeutics after a prolonged delay, while Japanese company Astellas Pharma is taking over gene therapy company Audentes Therapeutics, Inc.
Meanwhile, new drug approvals and label expansions of blockbuster drugs boosted investor sentiment. Key approvals include Vyondys 53, Oxbryta, Givlaari, Reblozyl, Trikafta, Inrebic, Vyleesi and Evenity, among others.
Quite a few biotech companies have done well in 2019 so far. Moreover, the Zacks Biomedical and Genetics industry is placed among the top 22 of the 256 Zacks-ranked industries. Approval of a key drug, positive data readouts, encouraging pipeline progress and favorable regulatory updates can lead to a massive surge in the share price of a biotech company. Given the recent wave of the ongoing consolidation in the pharma/biotech sector, companies with attractive portfolio/pipelines witnessed a significant rally in their share prices.
As the year is coming to an end, let’s do a quick recap of the outperformers in the biotech sector. Here we list five companies, which have seen their prices double over the year. These stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ACADIA Pharmaceuticals Inc. ACAD is a biopharmaceutical company focused on the development and commercialization of drugs for nervous system disorders. The company’s lead drug, Nuplazid, is approved by the FDA for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis. The company recently presented positive top-line results from its phase III HARMONY study, which evaluated pimavanserin for the treatment of dementia-related psychosis. ACADIA is planning to meet the FDA in the first half of 2020 regarding a supplemental NDA submission. A potential approval will boost the growth prospects further.
Shares have surged 184.8% year to date compared with the industry’s growth of 7.2%.
Epizyme, Inc. EPZM is a late-stage biopharmaceutical company developing drugs for oncology and other serious diseases through novel epigenetic medicines. The company is developing tazemetostat, an oral, first-in-class EZH2 inhibitor, in a broad clinical development program through company-sponsored studies and collaborations. This program is evaluating the drug as both a monotherapy and a combination treatment in hematological malignancies and solid tumors for late and early lines of treatment. The company’s progress with this candidate has been impressive in 2019, with key updates expected shortly.
Shares have soared 197.7% in the year so far.
uniQure N.V. QURE is a company focusing on developing a pipeline of innovative gene therapies for hemophilia B and Huntington’s disease. Etranacogene dezaparvovec is its lead gene therapy candidate and includes an AAV5 vector incorporating the Factor IX-Padua variant. The company is currently conducting a pivotal study in patients with severe and moderately-severe hemophilia B. In September, it completed patient enrollment in the HOPE-B pivotal study of etranacogene dezaparvovec in this indication. Gene therapy is set to become one of the most vital spaces with high prospects in the volatile biotech sector and uniQure is expected to significantly benefit from the same.
Shares have skyrocketed 154.6% so far this year.
Compugen Ltd. CGEN is another company, which saw its share price more than double in the year. It is a clinical-stage cancer immunotherapy company with an impressive pipeline, which consists of immuno-oncology programs against novel drug targets it has discovered computationally, including T cell immune checkpoints, and other early-stage immune-oncology programs focused largely on myeloid targets.
Shares have gained 166.4% year to date.
Cue Biopharma CUE is another company to have witnessed a stellar performance this year, with its share price surging 220.6% year to date. The company is developing a novel class of injectable biologics to selectively engage and modulate targeted T cells within the body to transform the treatment of cancer and autoimmune diseases. Its proprietary Immuno-STAT™ (Selective Targeting and Alteration of T cells) platform is designed to harness the body’s intrinsic immune system without the need for ex vivo manipulation. The company has made significant progress with its pipeline in the year.
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