Lively M&A scene keeps biotech shares buoyant in Q3

The protracted takeover battle for Medivation and a healthy M&A scene elsewhere helped keep shares in small and mid cap drug developers buoyant in the third quarter. The likes of Actelion, Seattle Genetics and Exelixis have added billions in value so far this year.

There have also been some substantial fallers, of course. The decline of Endo continues, crushed by its debt pile, while clinical setbacks mean Ionis, Alkermes and Infinity rank as some of the sectors biggest share price disappointments.

Mid-caps

Pfizer’s $14bn acquisition of Medivation had a knock-on effect on Seattle Genetics and Actelion, raising hopes that the similarly sized biotechs might also be bought out. A spending spree by Allergan, which has been enthusiastically consolidating some early-stage bets since its merger with Pfizer fell through, has also helped drive M&A hopes throughout the sector.

Meanwhile, Celltrion benefited from the rise in biosimilars, with Inflectra, its version of Johnson & Johnson’s antirheumatic antibody Remicade, reaching the US in April, making it the second biosimilar approved there.

Mid cap ($25-5bn): top risers and fallers in 9 months
Market capitalisation ($bn) 
Top 5 risers SP change Q3 2016 9-mth change EP Vantage comment 
Medivation ($) 68% 13.52 5.60 Pfizer pays up
Celltrion (KRW) 26% 10.86 2.78 US biosimilar space reaches its Inflectra point
Genmab (DKr) 23% 10.12 2.15 Daily Market Movers: Global Majors & Industry (26 Jul 2016)
Actelion (SFr) 20% 18.44 2.44 Actelion re-awakens research on sleep medicine
Seattle Genetics ($) 20% 7.59 1.33 Who’s next after Medivation?
Top 5 fallers
Endo International ($) (67%) 4.49 (9.36) Daily Market Movers: Global Majors & Industry (6 May 2016) 
Ionis Pharmaceuticals ($) (41%) 4.43 (3.01) Ionis safety blow boosts Alnylam 
Alkermes ($) (41%) 7.13 (4.78) Forward goes backward for Alkermes
Perrigo Company ($) (36%) 13.23 (7.96) What Papa might preach to Valeant
Juno Therapeutics ($) (32%) 3.17 (1.49) Is Juno’s hold a CAR crash or just a speed bump?
Neurotoxicity only short-term toxic to Juno stock

The biggest mid-cap fallers have all been the victims of either clinical setbacks or strategic disruptions.

Endo International saw its valuation tumble as its Valeant-like strategy of debt fuelled acquisition fell out of favour with investors. Perrigo, meanwhile, has seen its chief executive defect to rival Valeant.

On the clinical side,  Ionis has suffered from a safety concern over amyloidosis project IONS –TTRRx, as has Juno with its CAR-T project JCAR015. Alkermes saw its big pipeline hope, depression drug ALKS 5461, stumble in a phase III trial.

Small-caps

Exelixis takes the top spot among the smaller players partly thanks to positive data on its renal cell carcinoma treatment Cometriq.

Indivior’s shares have climbed after the group won a crucial legal battle in the US over its Suboxone film. A pivotal trial hit for its follow-on asset RBP-6000 also helped the company. 

Meanwhile GW Pharma is still gaining ground with its cannabis-based product Epidiolex. Since June 30 the anti-epilepsy drug has performed well in two trials for the rare disorder Lennox-Gestaut syndrome, fanning the flames of acquisition rumours.

Among the small-cap fallers, clinical setbacks were mostly responsible for share price collapses, with the demise of Infinity’s duvelisib, and failure for Novavax’s RSV F vaccine.

Small cap ($250m-5bn): top risers and fallers in 9 months 
Market capitalisation ($m) 
Top 5 risers SP change Q3 2016 9-mth change EP Vantage comment 
Exelixis ($) 127% 2,946 1,664 Therapy focus – New kidney cancer data emerge in time for Asco
Theravance Biopharma ($) 121% 1,734 1,114 Daily Market Movers: Global Majors & Industry (8 Sep 2016)
Ariad Pharmaceuticals ($) 119% 2,638 1,455 Weekly Market Movers: Global Majors & Industry (to 29 Jul 2016)
Indivior ($) 115% 2,900 1,551 Indivior’s addiction to the opioid market is paying dividends
GW Pharmaceuticals (£) 112% 3,326 1,766 Snippet roundup: Wins for Amgen, cuts for Novo and confusion over Cabometryx
Top 5 fallers
ProNAi Therapeutics (C$) (84%) 55 (275) Daily Market Movers: Global Majors & Industry (6 Jun 2016)
Northwest Biotherapeutics ($) (83%) 63 (244) Interview – Tocagen touts two-step cancer vaccine 
ImmunoGen ($) (80%) 234 (946) Daily Market Movers: Global Majors & Industry (14 Jun 2016)
Infinity Pharmaceuticals ($) (80%) 77 (309) Dynamo puts Infinity into a tailspin 
Novavax ($) (75%) 564 (1,700) The puzzling excuse for Novavax's pivotal failure

To contact the writer of this story email Joanne Fagg in London at joannef@epvantage.com or follow @JoEPVantage on Twitter.

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