Japan continues to dominate small cap risers but US biotech muscles in

US biotech might have dominated the big cap share price risers in the first half of the year, but among the smaller life science firms Japanese companies are still on top (Biotech continues to reward investors in first half, July 3, 2013).

Signs are emerging though that the Japanese bubble is deflating. In contrast to the first quarter when 13 out of the 15 top risers hailed from Japan, in this half-year analysis only six have made the cut (Japan dominates small cap stock price rises in Q1, April 8, 2013). In the US the appetite for biotech remains insatiable, and two US drug makers have managed to claim the top spots among the small caps: Clovis Oncology and Acadia, both of which have seen their market values grow fourfold so far this year (see tables).

Small cap ($250m-2.5bn) pharma companies: top risers and fallers in H1
Share price (local currency) Market capitalisation ($m)
Top 5 risers YE 2012 H1 2013 Change YE 2012 H1 2013 EP Vantage comment and analysis
1 Clovis Oncology $16.00 $66.98 319% 418 1,979 Asco Event Analyzer – 2013’s winners and losers
2 ACADIA Pharmaceuticals $4.65 $18.15 290% 263 1,575 Possibility of earlier pimavanserin approval boosts Acadia
3 Takara Bio ¥722 ¥2,310 220% 1,033 2,689
4 MannKind $2.31 $6.51 182% 568 1,892
5 Isis Pharmaceuticals $10.44 $26.87 157% 1,057 3,001 ADA - Knockdown result boosts Isis and antisense alike
Top 5 fallers
1 Affymax $18.99 $1.03 -95% 706 39 Affymax faces extinction after Omontys debacle
2 Pharmaxis AUS$1.24 AUS$0.14 -89% 394 45 Weekly Market Movers (to 1 Feb 2013)
3 Celsion $8.19 $1.02 -88% 287 62 Celsion bereft after ThermoDox failure
4 AVEO Oncology $8.05 $2.50 -69% 352 130 Aveo reveals fallout of tivozanib failure
5 Dynavax Technologies $2.85 $1.10 -61% 509 201 Hard times for Dynavax as the FDA says no means no

Takara Bio represents the only Japanese small cap riser, but among the more diminutive cohorts of micro and nano caps several other companies from this region can be found, including J-Tec and Shin Nippon. Spurred by a nobel prize for medicine and a promise from the government of a big funding boost for stem cell research, retail investors have piled into life science companies in Japan across the board (When will Japanese biotech come off the boil?, March 12, 2013). If this analysis, compared with that of the first quarter, is anything to go by, the situation might be calming down. Nonetheless the sector remains highly active.

Leading the pack of the small caps is Clovis; encouraging early data on two assets – the kinase inhibitor CO-1686 and Parp inhibitor rucaparib – at the Asco cancer conference prompted shares in the company to almost double. It was the former molecule that was mostly responsible for the leap in value, however.

This is an irreversible inhibitor of a specific lung cancer mutation that drives resistance to EGFR inhibitors like Tarceva and Iressa, called T790M+; the data raised hopes that, thanks to its very specific nature, the project will be able to get to market more quickly than normal.

Hopes for early approval also boosted Acadia. News that the FDA would accept data from an ongoing trial of its Parkinson's psychosis candidate pimavanserin allowed the company to shelve plans for a confirmatory study and could permit the project's approval a year earlier than expected, towards the end of 2015.

Isis meanwhile appears to be on the road to recovery after years trying to convince investors that its antisense approach had a future. Positive data from a tiny phase II study of ISIS-APOCIIIRx gave the antisense field a boost and validated ApoC-III as a target for lowering triglycerides, as well as presenting a partnering opportunity for the company.

Mannkind is the most surprising entrant in the risers. The company’s share price has been climbing ahead of the release of phase III data on its inhaled insulin project Afrezza. Trials were demanded by the FDA after an initial rejection two years ago. After spending $1.5bn on the project over the last decade, the company needs more than clinical success to make a return on its investment.

The fallers list is mired in clinical failure. The withdrawal of its only product due to safety concerns could still spell the end for Affymax; Pharmaxis was hit by a negative US review of its cystic fibrosis therapy Bronchitol; Celsion suffered the phase III failure of ThermoDox in liver cancer; Aveo finally admitted that the game was up for tivozanib in renal cell carcinoma; Dynavax made a similar admission for its hepatitis B vaccine Heplisav, after the FDA confirmed that its initial no to marketing approval really did mean no; and, among the micro cap fallers, a second clinical failure for its HDL boosting therapy did for Resverlogix.

Micro cap ($100-250m)  pharma companies: top risers and fallers in H1
Share price (local currency) Market capitalisation ($m)
Top 5 risers YE 2012 H1 2013 Change YE 2012 H1 2013 EP Vantage comment and analysis
1 Japan Tissue Engineering (J-TEC) ¥72,500 ¥360,500 397% 168 676 Japan dominates small cap stock price rises in Q1
2 Shin Nippon Biomedical Laboratories ¥313 ¥1,283 310% 136 451
3 MEDINET ¥16,110 ¥57,000 254% 149 509
4 Cytokinetics $3.96 $11.57 192% 94 311 Amgen’s global ambitions for omecamtiv spark renewed interest in Cytokinetics
5 Keryx Biopharmaceuticals $2.62 $7.47 185% 188 610 Zerenex data heralds a tricky future for Keryx
Top 5 fallers
1 Resverlogix C$1.60 C$0.23 -86% 120 17 Resverlogix doomed by second failure
2 Bioton PLN0.1 PLN0.03 -70% 265 79
3 Trimel Pharmaceuticals C$1.91 C$0.72 -62% 176 105 Daily Market Movers (20 Mar 2013)
4 Enzon Pharmaceuticals $4.43 $2.00 -55% 197 87 Daily Market Movers (5 Jun 2013)
5 Pernix Therapeutics $7.75 $3.61 -53% 226 136 Daily Market Movers (18 Mar 2013)

Alongside Resverlogix in the micro cap fallers financial issues were largely to blame for the share price declines, with Pernix struggling to meet analysts’ earnings estimates, Enzon seeing investors exit after paying a substantial special dividend and Trimel prompting a selloff with news of a fund raising.

And among the success stories alongside the Japanese companies, Cytokinetics has made an entrance thanks to a big jump in value in June. An expanded deal with Amgen over its heart failure treatment omecamtiv to include Japan and news that data from a large phase IIb study testing the drug had been chosen as a late breaker at the European Society of Cardiology Congress prompted sudden interest in the stock.

Keryx, meanwhile, has phase III success for its kidney disease therapy Zerenex to thank for its share price rise.

Standing out among the tiny nano cap Japanese companies is K-V Pharmaceuticals, long a controversial and volatile stock that last year set out a plan to emerge from Chapter 11 bankruptcy protection. And among the fallers, struggling NeurogesX announced a deal to sell assets including its commercial flop Qutenza to Acorda, in what looks like the beginning of the end of the company while Myrexis is in the process of liquidating itself.

Nano cap (<$100m) pharma companies: top risers and fallers in H1
Share price (local currency) Market capitalisation ($m)
Top 5 risers YE 2012 H1 2013 Change YE 2012 H1 2013
1 K-V Pharmaceutical Company $0.06 $0.43 629% 3 25
2 D. Western Therapeutics Institute ¥129 ¥773 499% 30 164
3 Champions Oncology $0.30 $1.10 267% 14 73
4 CellSeed ¥661 ¥2,160 227% 48 154
5 Evocutis 0.77 2.50 225% 2 7
Top 5 fallers
1 Myrexis $2.83 $0.8 -97% 76 3
2 SCOLR Pharma $0.04 $0.00 -96% 2 0
3 NeurogesX $0.24 $0.01 -94% 8 0
4 Genesis Biopharma $0.22 $0.02 -92% 17 1
5 China Botanic Pharmaceutical $0.47 $0.04 -91% 17 1

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

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