Clinical surprises drive small cap risers

This year the share price performance of the smaller drug companies once again reflected the clinical winners and the losers, with those pulling solid, or even surprising, trial results out the bag suitably or, at times, fantastically rewarded by the markets.

But what this year might be remembered for is the Lazurus-like resurrection of the some of the companies that ended up being the biggest gainers, including Human Genome Sciences and Dendreon, who a year ago had all but been written off and in the case of HGS managed to report a phenomenal 1,342% rise in its shares thanks entirely to positive phase III data for its Lupus drug Benlysta.

Additionally, similar to the annual analysis of the large cap sector, generic companies again made their presence felt in the small cap companies enjoying significant share price rises. 

Conversely those that disappointed, like GTx and Idenix Pharmaceuticals, managed to lose significantly more than half their value, thanks to negative clinical news and the lack of short-term catalysts, which included the FDA asking GTx to conduct a second phase III trial on its drug acapodene for reducing fractures in men with prostate cancer.

Small cap ($250m-$2.5bn) pharma companies: top risers and fallers in 2009
Share price (local currency) Market capitalisation ($m)
Rank Top 5 Risers 31-Dec-08 31-Dec-09 % change YE 2008 YE 2009 EP Vantage comment and analysis
1  Human Genome Sciences ($) 2.12 30.58 1,342% 288 5,520 Positive Benlysta data leaves Human Genome with new bulls
2  Dendreon ($) 4.58 26.28 474% 438 3,443 The Dendreon rollercoaster continues
3  Pharmstandard (Rb) 551 1,890 244% 671 2,305 EventAnalyzer: Daily Market Movers (16 Feb 2009)
4  PT Kalbe Farma (IRp) 400 1,300 225% 429 1,395
5  Jubilant Organosys (Rs) 115.82 334.95 189% 334 1,059 EventAnalyzer: Daily Market Movers (3 Dec 2009)
Top 5 Fallers
1  BioMS Medical (C$) 3.50 0.33 (91%) 258 28 No happy ever after for BioMS
2  GTx ($) 16.84 4.20 (75%) 613 153 FDA words not sticks and stones hurt GTx’s bone drug
3  Idenix Pharmaceuticals ($) 5.79 2.15 (63%) 327 143 EventAnalyzer: Weekly Market Movers
4  Osiris Therapeutics ($) 19.16 7.14 (63%) 626 234 Osiris left clinging to a niche after Prochymal failure
5  Genmab (DKr) 203.00 82.00 (60%) 1,646 733 Genmab cuts costs and jobs as it goes back to its roots

Micro Caps

While generics may have been the rage this year, three of the big gainers among the microcaps were companies developing branded products for specialty markets. Protalix BioTherapeutics, Active Biotech, and ChemGenex Pharmaceuticals joined Indian generic manufacturers Torrent Pharmaceuticals and Aurobindo Pharma as the top gainers in 2009.

Torrent gained a massive 447% on the year on the announcement of healthy profits, the opening of a new plant to supply insulin to Novo Nordisk, and a flood of speculation in December, denied by the company, that it is a Takeda acquisition target. Close behind was Aurobindo, with 11 generic product approvals in the United States, including a generic version of the blockbuster Alzheimer’s disease treatment Aricept, and partnerships with Pfizer to commercialise generic drugs in emerging markets.

Protalix BioTherapeutics benefited from an agreement with Pfizer to commercialise the Israeli company’s one product, a treatment for Gaucher’s disease now submitted to the FDA. Active Biotech became Scandinavia’s most valuable biotech company after it announced the results of a phase II clinical trial of its TASQ treatment for prostate cancer that met its primary endpoint. Australian company ChemGenex has submitted its treatment for chronic myeloid leukaemia, Omapro, to US and European regulators and has licensed the drug to Hospira in Europe, the Middle East and parts of Africa.

The biggest micro cap loser was Repros Therapeutics, which lost 92% of its value in the 2009. The Texas-based company suffered from safety concerns over elevated liver enzymes in a small number of women taking part in its phase III trial for Proellex, a treatment for uterine fibroids and endometriosis.

Micro cap ($100m-$250m) pharma companies: top risers and fallers in 2009
Share price (local currency) Market capitalisation ($m)
Rank Top 5 Risers 31-Dec-08 31-Dec-09 % change YE 2008 YE 2009 EP Vantage comment and analysis
1  Torrent Pharmaceuticals (Rs) 72.05 394.40 447% 119 715
2  Aurobindo Pharma (Rs) 167.80 914.00 445% 194 1,057 EventAnalyzer: Daily Market Movers (23 Nov 2009)
3  Protalix BioTherapeutics ($) 1.84 6.62 260% 139 512 Protalix brings on Pfizer as fight for Gaucher patients looms
4  Active Biotech (SKr) 31.00 100.75 225% 198 928 Active Biotech climbs the ranks as expectations surge
5  ChemGenex Pharmaceuticals (AUS$) 0.47 0.99 112% 119 253
Top 5 Fallers
1  Repros Therapeutics ($) 10.52 0.80 (92%) 160 20 EventAnalyzer: Weekly Market Movers
2  MiddleBrook Pharmaceuticals ($) 1.50 0.51 (66%) 130 44 MiddleBrook fears appear to be materialising
3  Addex Pharmaceuticals (SFr) 38.00 13.80 (64%) 195 79 Addex left reeling by liver safety scare
4  Ark Therapeutics (£) 0.39 0.15 (63%) 120 49 Ark sinking after EU rejection
5  LifeCycle Pharma (DKr) 11.10 5.20 (53%) 113 59

Nano Caps

As per usual with our analysis of the nano cap sector, companies whose share prices are extremely volatile are usually omitted or those that had a market cap of less than $25m at the start of 2009. This does, however, mean that the analysis can miss companies who have had a sterling year.

One company conspicuous by its absence in this 12 month review is Vanda Pharmaceuticals, the group started the year with a market cap of a mere $13m and there were concerns it would see the end of 2009. However, the surprise approval of schizophrenia drug, Fanapt, in May meant that Vanda saw its shares rise by 2,150% in the year to give a market cap of $308m (Vanda shares rocket after surprise Fanapt approval, May 7, 2009). Titan, which hangs on to Vanda’s coat tails and has enjoyed a phenomenal share price accent thanks to the royalties it is due on Fanapt sales, is also absent.

Another tiddler too small to make the grade last year was Norwegian company Algeta, placing it among this year’s missing successes. The group has, however, assured its place in the small caps for next year thanks to a $800m licensing deal with Bayer for alpharadin, that saw it finish the year with a share price of NKr68.25 and a market cap of $476m (Algeta aiming for transformation with Bayer deal, September 3, 2009).

Clavis Pharma’s licensing deal with Clovis Oncology for its phase II pancreatic cancer drug, CP-4126, ensured that the group will at least make it into the micro caps, as its market cap has moved from a tiny $16m to an impressive $238m (Clavis calls on experience of newcomer Clovis in cancer deal, November 24, 2009). 

Nano cap ($25m-$100m) pharma companies: top risers and fallers in 2009
Share price (local currency) Market capitalisation ($m)
Rank Top 5 Risers 31-Dec-08 31-Dec-09 % change YE 2008 YE 2009 EP Vantage comment and analysis
1  Cell Therapeutics ($) 0.14 1.14 714% 26 669 ASCO EventAnalyzer - 2009's winners and losers
2  Biota (AUS$) 0.32 2.41 653% 45 391 EP Vantage Interview – Biota surfing the Relenza wave
3  OncoGenex Pharmaceuticals ($) 3.00 22.28 643% 33 134 Teva deal a reality check for OncoGenex
4  Targacept ($) 3.56 20.90 487% 89 579 AstraZeneca gives late stage pipeline another boost
5  Hi-Tech Pharmacal ($) 5.54 28.05 406% 63 339 EventAnalyzer: Daily Market Movers (17 Dec 2009)
Top 5 Fallers
1  Cortex Pharmaceuticals ($) 0.57 0.10 (82%) 27 7
2  La Jolla Pharmaceutical ($) 0.58 0.17 (71%) 32 11 La Jolla drug failure leaves few options
3  Catalyst Pharmaceutical Partners ($) 1.80 0.63 (65%) 25 11
4  RegeneRx Biopharmaceuticals ($) 1.18 0.55 (53%) 63 33 EventAnalyzer: Daily Market Movers (9 Jan 2009)
5  Biotec Pharmacon (NOK) 10.75 5.10 (53%) 36 21 EventAnalyzer: Daily Market Movers (23 Nov 2009)

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