Genmab and Tesaro lead first-half gainers as Endo and Infinity falter

Amid a tumultuous time on the stock markets some clear winners and losers emerged among the sector’s smaller drug makers in the first half of the year. Step forward Genmab, Hanmi and Celator; hang your heads Endo, Aegerion and Infinity.

As is often the case with companies of this size, share price shifts are driven more by the fate of individual products than the macro trends that steer their larger peers. However, among the mid-caps it does seem that the fallers were more severely punished than the risers rewarded (see tables below).

Maybe investors’ search for safe havens is also affecting this section of the industry, which naturally boasts the riskiest investment prospects. (2016 share gainers signal flight to safety, July 5, 2016).

Not that Endo can blame its dire situation on the economy. Alongside Valeant, the company has amply demonstrated the pitfalls of launching a debt-fuelled acquisition spree during a valuation bubble.

Perrigo can also perhaps be tarred with the same brush - its $4.7bn acquisition of Omega in 2014 was ultimately described by analysts as a “near disaster”.

Actelion, long pegged as a bid target, remains buoyed by its strong drug franchise even as M&A activity among speciality pharmaceutical companies has dimmed. And it is notable that Medivation represents the sole US company in the risers, but is there only thanks to a bid approach.

Mid cap ($25-5bn): top risers and fallers in 6 months
Market capitalisation ($bn) 
Top 5 risers Share price change H1 2016 6M change EP Vantage comment
Genmab (DKr) 32% 11.04 3.07 Darzalex inherits mantle as the Harvoni of 2016
Medivation ($) 25% 9.95 2.04 Sanofi’s desperation makes Medivation a must-have asset
Hanmi Pharmaceutical (KRW) 19% 7.78 1.50 Being original reaps benefits for Hanmi
Actelion (SFr) 17% 19.33 3.33 Happy Christmas for Actelion, but what about the new year?
Celltrion (KRW) 14% 96.10 1.68 US biosimilar space reaches its Inflectra point
Top 5 fallers
Endo International ($) (75%) 3.47 (10.38) Daily Market Movers: Global Majors & Industry (6 May 2016)
Ionis Pharmaceuticals ($) (62%) 2.81 (4.63) Ionis safety blow boosts Alnylam
Alkermes ($) (46%) 6.53 (5.38) Forward goes backward for Alkermes
Alnylam Pharmaceuticals ($) (41%) 4.75 (3.23) Daily Market Movers: Global Majors & Industry (3 May 2016)
Perrigo Company ($) (37%) 12.99 (8.20) What Papa might preach to Valeant

Elsewhere among the mid-caps pipeline progress or regress has provided a prompt. Genmab finally struck gold with Darzalex in multiple myeloma, partnered with Johnson & Johnson, and Hanmi is benefitting from a string of big pharma licensing deals.

Alkermes suffered a phase III failure in depression while, interestingly, both Ionis and Alnylam feature in the mid-cap fallers. The collapse of the former’s amyloidosis project should have been a boon to the latter’s rival position, however as biotech sentiment has ebbed Alnylam has struggled to keep investors engaged in its still largely unproven, albeit late-stage, RNAi pipeline.

Small caps

A couple of companies among the small caps amply demonstrate the binary nature of this end of the sector.

XBiotech, the biggest climber at June 30, just days later can no longer claim the high ground. A highly questionable analysis of a phase III trial of its lead candidate failed to convince investors about the efficacy of the drug in colorectal cancer and its shares have plunged 39% since.

Tesaro meanwhile claimed its spot a mere seven days ago, with the unquestionable success of its phase III ovarian cancer candidate, niraparib. GW Pharma, meanwhile, continues to advance on hopes for its cannabis-based epilepsy product.

The fallers represent a catalogue of failed pipelines and commercial disappointment, from the flop that is Aegerion’s Juxtapid to the demise of Infinity’s duvelisib, which has been long in the making.

Small cap ($250m-5bn): top risers and fallers in 6 months
Market capitalisation ($m) 
Top 5 risers Share price change H1 2016 6M change EP Vantage comment
XBiotech ($) 92% 677.00 327.15 Daily Market Movers: Global Majors & Industry (5 Jul 2016)
Sosei (¥) 90% 2910.00 1536.15 Sosei deal marks Allergan’s return to business as usual
TESARO ($) 61% 3853.00 1755.47 Tesaro shows that Lynparza was no fluke
Supernus Pharmaceuticals ($) 52% 1007.00 349.47 Daily Market Movers: Global Majors & Industry (5 Feb 2016)
GW Pharmaceuticals (£) 45% 2164.00 604.08 GW defies Brexit blues with second epilepsy win
Top 5 fallers
Aegerion Pharmaceuticals ($) (85%) 44.00 (248.27) QLT and Aegerion put each other out of their miseries
Infinity Pharmaceuticals ($) (83%) 66.00 (320.46) Dynamo puts Infinity into a tailspin
ProNAi Therapeutics (C$) (83%) 60.00 (269.86) Asco event analyser – 2016’s winners and losers
Northwest Biotherapeutics ($) (82%) 59.00 (247.75) Interview – Tocagen touts two-step cancer vaccine
KemPharm ($) (80%) 58.00 (229.42) Weekly Market Movers: Global Majors & Industry (to 6 May 2016)

Still, as the table below shows, even the tiniest companies are capable of beating all the odds. The $1.2bn in market cap that Celator added in the wake of its impressive leukaemia results rivals the value creation of some of the mid-caps.

These events are rare, however. Investing in this area of the market remains only for the brave.  

Notable nano/micro cap ($250m-5bn): risers in 6 months
Market capitalisation ($m) 
Share price change H1 2016 6M change EP Vantage comment
Celator Pharmaceuticals ($) 1615% 1294.00 1233.20 Hail mighty Celator, the small cap that beat long odds

To contact the writer of this story email Amy Brown or Edwin Elmhirst in London at news@epvantage.com or  follow @AmyEPVantage on Twitter.

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