
US outperformance dominates small-cap drug stock gains
Surging valuations in the US are not only evident among the world’s biggest drug makers. A look at the progress of the industry’s smaller players on stock markets so far this year reveals the leaderboards are once again dominated by American companies.
Also evident is Japan’s own biotech bubble, with the government’s promise of support for advanced technologies like stem cells propelling many stocks to substantial gains this year. Meanwhile in negative territory, several smaller players have been carried off by commercial or clinical failure. Even the biotech bubble has not been able to insulate certain US companies from these common tripping points – step forward Affymax, Aveo and Resverlogix.
Small cap ($250m-2.5bn) pharma companies: top risers and fallers in 9M | |||||||
Share price (local currency) | Market capitalisation ($m) | ||||||
Rank | Top 5 risers | YE 2012 | 9M 2013 | Change | YE 2012 | 9M 2013 | EP Vantage comment and analysis |
1 | ACADIA Pharmaceuticals | $4.65 | $27.47 | 491% | 413 | 2,439 | Acadia taps market for cash again as FDA filing approaches |
2 | Celldex Therapeutics | $6.71 | $35.43 | 428% | 543 | 2,869 | Celldex rides the antibody-drug conjugate wave |
3 | Clovis Oncology | $16.00 | $60.80 | 280% | 483 | 1,834 | On a wing and a prayer, Clovis calls the top |
4 | Isis Pharmaceuticals | $10.44 | $37.54 | 260% | 1,204 | 4,329 | Biogen's grip on Isis and antisense tightens |
5 | Alnylam Pharmaceuticals | $18.25 | $64.01 | 251% | 1,149 | 4,030 | Alnylam’s subcutaneous success drives shares to record high |
Rank | Top 5 fallers | ||||||
1 | Affymax | $18.99 | $1.36 | (93%) | 706 | 51 | Affymax faces extinction after Omontys debacle |
2 | Pharmaxis | AUS$1.24 | AUS$0.13 | (90%) | 394 | 37 | Weekly Market Movers (to 1 Feb 2013) |
3 | Celsion | $8.19 | $1.15 | (86%) | 501 | 70 | Daily Market Movers (31 Jan 2013) |
4 | AVEO Oncology | $8.05 | $2.06 | (74%) | 420 | 107 | Aveo reveals fallout of tivozanib failure |
5 | Jubilant Life Sciences | Rs223.95 | Rs79.65 | (64%) | 672 | 212 | Daily Market Movers (27 Feb 2013) |
The spectacular surge in valuation of several US small-cap companies – classified by EvaluatePharma as those with a market value of $250-$2.5bn at the start of the year – will see them elevated to the ranks of the mid caps next year, assuming nothing catastrophic happens between now and Christmas.
Pipeline wins for Alnylam and Isis this year, as well as a string of deals from the latter, have built hopes that the companies have finally unlocked the therapeutic potential of their RNAi-based platforms. Both now boast $4bn-plus valuations, but late-stage clinical and regulatory wins need to follow.
The other small-cap contender for the mid-caps is Celldex, which has surged on hopes for its antibody-drug conjugate CDX-011, with investors also likely betting on a deal of some sort. Its valuation is certainly up there with the most frothy, where it is joined by Clovis which had also been riding high on takeout hopes after positive data for its lung cancer candidate CO-1686.
The top riser, Acadia, has made real progress with its Parkinson’s disease psychosis treatment pimavanserin – the FDA agreed to a quicker than expected submission process – but still has to get it to market and establish demand, and investors are no doubt hoping that a partner emerges.
However, Clovis's reported failure to find a buyer – an unjustifiable valuation must surely have played a part – should raise warning signs to investors hoping that similarly highly valued assets will persuade interested parties to part with cash at these levels.
On the flip side, the small-cap decliners include familiar tales of catastrophe: the withdrawal of Omontys for Affymax; the FDA's refusal to approve Pharmaxis’s cystic fibrosis treatment Bronchitol or Aveo’s kidney cancer treatment tivozanib; the failure of Celsion’s liver cancer treatment ThermoDox in a phase III trial; and, over in India, disappointing financial results from Jubilant and concern about its high debt levels.
Micro cap ($100-250m) pharma companies: top risers and fallers in 9M | |||||||
Share price (local currency) | Market capitalisation ($m) | ||||||
Rank | Top 5 risers | YE 2012 | 9M 2013 | Change | YE 2012 | 9M 2013 | EP Vantage comment and analysis |
1 | Japan Tissue Engineering (J-TEC) | ¥72,500 | ¥564,000 | 678% | 168 | 1,039 | When will Japanese biotech come off the boil? |
2 | Shin Nippon Biomedical Laboratories | ¥313.00 | ¥1,394 | 345% | 136 | 480 | When will Japanese biotech come off the boil? |
3 | Lannett Company | $4.96 | $21.82 | 340% | 141 | 663 | |
4 | GNI | ¥122.00 | ¥503.00 | 312% | 154 | 517 | When will Japanese biotech come off the boil? |
5 | tella | ¥850.00 | ¥3,395 | 299% | 141 | 447 | When will Japanese biotech come off the boil? |
Rank | Top 5 fallers | ||||||
1 | Bioton | PLN0.10 | PLN0.02 | (80%) | 265 | 53 | |
2 | TiGenix | €0.91 | €0.24 | (74%) | 152 | 40 | Weekly Market Movers (to 19 Jul 2013) |
3 | Pernix Therapeutics | $7.75 | $2.72 | (65%) | 288 | 101 | Daily Market Movers (26 Jul 2013) |
4 | Prima BioMed | AUS$0.11 | AUS$0.04 | (65%) | 121 | 44 | Daily Market Movers (19 Sep 2013) |
5 | Resverlogix | C$1.60 | C$0.59 | (63%) | 120 | 44 | Resverlogix doomed by second failure |
Outside of the small caps and into the territory of the tiny – those with market caps below $250m at the beginning of the year – signs of the Japanese bubble are evident, with companies continuing to benefit from the government’s pledge to support the industry’s efforts to back cutting-edge medical research.
The US generics firm Lannett is a notable entrant; a substantial leap in earnings has attracted investors possibly hoping to benefit from ongoing consolidation in the generics industry.
Among the nano caps, BioCryst has staged a remarkable turnaround on hopes of an oral hereditary angioedema treatment, while Opexa received a lifeline from Merck KGaA in the shape of an option over its multiple sclerosis immunotherapy Tcelna.
And Catalyst Pharmaceutical has staged a recovery after the failure of its cocaine addiction therapy last year, winning breakthrough therapy designation from the FDA for Firdapse, its treatment for the autoimmune disorder Lambert-Eaton myasthenic syndrome.
In negative territory are companies struggling to survive substantial setbacks. In particular, Resverlogix suffered a second failure of its good cholesterol-boosting therapy. For others like Pernix Therapeutics in the US and TiGenix in Europe, financial woes are responsible, as the companies struggle to keep their heads above water under the weight of weak demand for various product offerings.
Nano cap (<$100m) pharma companies: top risers and fallers in 9M | |||||||
Share price (local currency) | Market capitalisation ($m) | ||||||
Rank | Top 5 risers | YE 2012 | 9M 2013 | Change | YE 2012 | 9M 2013 | EP Vantage comment and analysis |
1 | D. Western Therapeutics Institute | ¥129.00 | ¥1,248 | 867% | 30 | 284 | When will Japanese biotech come off the boil? |
2 | Catalyst Pharmaceutical Partners | $0.44 | $3.05 | 601% | 23 | 161 | Weekly Market Movers (to 30 Aug 2013) |
3 | Champions Oncology | $0.30 | $1.75 | 483% | 20 | 117 | |
4 | BioCryst Pharmaceuticals | $1.42 | $7.28 | 413% | 77 | 395 | BioCryst eyes HAE market as Viropharma struggles to innovate |
5 | Opexa Therapeutics | $0.43 | $2.19 | 409% | 9 | 46 | Merck KGaA deal only a stopgap solution for Opexa |
Rank | Top 5 fallers | ||||||
1 | Myrexis | $2.83 | $0.0951 | (97%) | 76 | 3 | |
2 | China Botanic Pharmaceutical | $0.469 | $0.02 | (96%) | 17 | 1 | |
3 | Select Vaccines | AUS$0.20 | AUS$0.01 | (95%) | 9 | 1 | |
4 | Accentia Biopharmaceuticals | $0.07 | $0.01 | (93%) | 6 | 0 | |
5 | IntelliCell BioSciences | $0.18 | $0.01 | (92%) | 25 | 2 |
To contact the writer of this story email Amy Brown at [email protected] or Joanne Fagg [email protected] or follow @AmyEPVantage or @JoEPVantage on Twitter