Market feeling frothy? You might be right

Yesterday saw substantial share price gains for Adaptimmune and Nantkwest on the back of very early results; the latter’s 99% jump is even more remarkable considering that it was triggered by comments made by the chief executive in an interview. Over-the-top reactions to small datasets seem to be relatively frequent at the moment, a phenomenon that can perhaps partly be explained by the advancement of gene therapies, which can generate excitement with responses in only a handful of patients. But some investors have been voicing concerns about a “frothy” or irrational market for some weeks now. Here, Vantage looks at the biggest out-of-the-park share price reactions since the beginning of 2016 that have been attributed to early clinical results. The findings seem to confirm the fears: five of the 10 biggest phase I data-prompted valuation hikes have happened since October. It is surely no coincidence that this is when the latest biotech rally commenced on the Nasdaq biotechnology index. This is far from a rigorous test of market conditions, of course, but it seems that biopharma remains primed to provide investors with a wild ride. The fact that several of these advances proved misplaced should also be noted.