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Brexit And Biotech

With Britain  voting to leave the European Union (EU), the market has turned into risk off mode. This is a huge negative for the biotechnology sector. In pre-market trading, the iShares NASDAQ Biotechnology Index (ETF) (IBB) was down more than 4%. But will the sell-off create a buying opportunity?

There will be some huge bargains on offer because of the negative sentiment. But I will remain on the sidelines as predicting a bottom would be difficult given the uncertain environment. While Brexit does not change the fundamental picture of the biotechnology sector, the moves over the coming weeks will be based on sentiment.

The strategy should be to hold on to fundamentally strong companies i.e. companies that have strong cash balance and do not need to raise money in the near future. Biotech sector has already been facing some challenges when it comes to capital raising in recent weeks. The present environment will make it even more difficult.

Another issue for the sector will currency. The dollar has strengthened significantly against the euro and the pound.

Cerulean Pharma Doses First  Patient in 2a Portion of Phase 1/2a Study of CRLX301- Cerulean Pharma (CERU) announced that the first patient has been dosed in the 2a portion of its Phase 1/2a study evaluating  nanoparticle-drug conjugate (NDC) CRLX301 in patients with advanced solid tumors. The 2a portion of the trial consists of 2 stages. The first will enroll will enroll up to eight subjects in each dosing schedule and is designed to further establish the safety and tolerability of the dosing schedules and to provide additional data on pharmacokinetics, pharmacodynamics and antitumor activity. The second stage will enroll up to 36 additional subjects with specific tumor types using the optimal dosing schedule. The company plans to advance into a pivotal study once the preferred dosing regimen and indication have been identified.

Teva and AstraZeneca Settle Patent Dispute- AstraZeneca (AZN) and Teva Pharmaceuticals USA (TEVA) have settled a patent infringement litigation. The settlement allows Teva to market a generic version of diabetes med BYETTA (exenatide) injection beginning October 15, 2017 or earlier under certain circumstances.

Innocoll Completes Enrollment in COACT-1 and COACT-2- Innocoll Holdings Plc (INNL) announced that it has completed patient enrollment in two Phase 3 clinical trials, COACT-1 (U.S.) and COACT-2 (Europe, Australia, U.S.), assessing QIDP-tagged COGENZIA (gentamicin-collagen topical matrix) for the treatment of diabetic foot infections. COACT-1 enrolled ~610 patients and COACT-2 ~525. Top-line data should be available in late Q3 or early Q4. If all goes well, the company will submit marketing applications in the U.S. and Europe. The primary endpoint of each study is the clinical cure rate 10 days after treatment.

Reata Reports Encouraging Data from Mid-Stage Extension Study for Lead Product Candidate- Reata Pharmaceuticals (RETA) announced that interim data from an extension Phase 2 trial, LARIAT, evaluating its lead product candidate bardoxolone methyl (bard) in pulmonary arterial hypertension (PAH), showed a sustained treatment effect. Specifically, the increase in six-minute walk distance (6MWD) demonstrated by bard-treated patients at week 16 was "not significantly different"  through 32 weeks. In addition, bard-treated patients with connective tissue disease-associated PAH showed similar sustained results through week 32. The company plans to submit the data for presentation at a future medical conference. A Phase 3 study, CATALYST, is set to commence shortly.


Regulus Announces Debt Financing- Regulus Therapeutics (RGLS) announced that it has signed a loan and security agreement with Oxford Finance LLC for up to $30M in a series of term loans. The company borrowed $20 million at 8.51% + 30-day U.S. Dollar LIBOR on Thursday itself. The remaining $10M may be borrowed following the achievement of the milestone of positive interim safety and efficacy data from a Phase 2 clinical trial evaluating RG-101 and GlaxoSmithKline’s (GSK) oral GSK 175 for the treatment of hepatitis C virus infection no later than March 31, 2017.

Incyte announced that the FDA has granted its Jakafi a Breakthrough Therapy designation or the treatment of acute graft-versus-host disease (GVHD), a condition where the donated tissue, bone marrow or peripheral blood stem cells, view the recipient's body as foreign and attack the body. It is a significant cause of morbidity and mortality in transplant patients. There are no currently approved treatments for the disorder.

Gilead Sciences (GILD) announced that the European Commission (EC) has approved its Odefsey (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir alafenamide 25 mg or R/F/TAF) for the treatment of HIV-1 in patients at least 12 years old who weigh at least 35 kg without known mutations associated with resistance to the non-nuclease reverse transcriptase inhibitor (NNRTI) class, tenofovir or emtricitabine and who have a viral load less than 100K HIV-1 RNA copies/mL.

Allergan (AGN) announced that the FDA has approved its supplemental New Drug Application (sNDA) to update the labeling of combo antibiotic AVYCAZ (ceftazidime and avibactam) to include Phase 3 safety and efficacy data of AVYCAZ, in combination with the antibiotic metronidazole, for the treatment of complicated intra-abdominal infections (cIAI). The undated label also contains data on difficult-to-treat infections due pathogens resistant to ceftazidime and beta-lactam antibiotics.

Roche (RHHBY) announced that the FDA has granted 510(k) clearance for its Elecsys BRAHMS PCT (procalcitonin) assay which will be used to aid in the management of sepsis risk.

Janssen (JNJ) announced that Health Canada has approved its SIMPONI (golimumab) for the treatment of adults with severe active non-radiographic axial spondyloarthritis (nr-AxSpA) with objective signs of inflammation as indicated by elevated C-reactive protein ("CRP") and/or magnetic resonance imaging ("MRI") evidence who have had an inadequate response to or are intolerant to nonsteroidal anti-inflammatory drugs (NSAIDs).

No patents to report.

No deals and collaborations to report.

No secondary offerings to report.

No IPOs to report.

Cyanotech (CYAN) reported a loss of $0.79 per share in its fiscal year 2016. The company’s revenue for the quarter was $31.84 million, down 5.8% on a year-over-year basis.

Company (Ticker) Brokerage Action Recommendation Price Target My Price Target
Adamas Pharmaceuticals (ADMS) Mizuho Reiterate Buy N/A N/A
Alnylam Pharmaceuticals (ALNY) JMP Securities Reiterate Buy

$127

$130

Ardelyx (ARDX) Leerink Swann Reiterate Buy N/A N/A
Ardelyx (ARDX) Wedbush Reiterate Outperform

$24

N/A
Celgene (CELG) JMP Securities Reiterate Buy

$152

N/A
Cesca Therapeutics (KOOL) Maxim Group Reiterate Hold N/A N/A
Collegium Pharmaceutical (COLL) Piper Jaffray Reiterate Buy N/A N/A
Corcept Therapeutics (CORT) FBR & Co. Reiterate Outperform

$12

N/A
Corium International (CORI) Needham & Company Reiterate Buy

$15

N/A
Epizyme (EPZM) JMP Securities Reiterate Buy

$28

N/A
GlaxoSmithKline (GSK) Citigroup Reiterate Buy N/A N/A
Halozyme Pharmaceuticals (HALO) Piper Jaffray Reiterate Overweight N/A N/A
Ignyta (RXDX) JPMorgan Chase & Co. Initiation Overweight

$15

N/A
pSivida (PSDV) FBR & Co. Reiterate Outperform N/A N/A
Regeneron Pharmaceuticals (REGN) Citigroup Reiterate Buy N/A

$475

Revance Therapeutics (RVNC) Brean Capital Reiterate Hold N/A N/A
SAGE Therapeutics (SAGE) HC Wainwright Initiation Buy

$56

N/A
Spark Therapeutics (ONCE) Cantor Fitzgerald Price Target Cut Buy From $100 to $94 N/A
The Medicines Company (MDCO) Leerink Swann Reiterate Buy N/A N/A
Veracyte (VCYT) Leerink Swann Reiterate Buy N/A N/A

BioTime (BTX)- Broadwood Partners LP, Director, bought 2,732,636 shares at $2.39. The total value of the transaction was approximately $6.53 million. Broadwood Partners now owns 24,897,032 shares of BTX.

ARIAD Pharmaceuticals (ARIA)- Timothy P. Clackson, President, R&D, CSO, sold 23,999 shares at $7.28. The total value of the transaction was $174,638. Clackson still holds 264,742 shares of ARIA.

No management changes and additions to report.

NYSE- Axovant Sciences (AXON) shares were among the major gainers on the NYSE. The stock closed 7.83% higher. Puma Biotechnology (PBYI) ended the day 6.72% higher.

NASDAQ- Genocea Biosciences (GNCA) shares were among the major gainers on the NASDAQ. The stock closed 26.56% higher. Pulmatrix (PULM) ended the day 15.17% higher. GlycoMimetics (GLYC) ended the day 13.14% higher. Dimension Therapeutics (DMTX) shares were among the major losers on the NASDAQ. The stock closed 6.17% higher. Achaogen (AKAO) ended the day 5% lower. Global Blood Therapeutics (GBT) ended the day 4.67% lower.

NYSEMKT- Asterias Biotherapeutics (AST) shares were among the major movers on the NYSEMKT. The stock closed 4.91% higher.

OTC- Soligenix (SNGX) shares were among the major movers on the OTC market. The stock closed 3.78% lower.

Company (Ticker) Short Interest as % of Float % Change Days to Cover
Vitae Pharmaceuticals (VTAE)

8.2%

9.2%

6

Vital Therapies (VTL)

12.3%

-4.7%

38

VIVUS Inc. (VVUS)

14%

1.5%

32

Voyager Therapeutics (VYGR)

5.4%

1.2%

4

vTv Therapeutics (VTVT)

3.8%

1.6%

16

Valeant Pharmaceuticals International (VRX)

7.9%

8.3%

1

WAVE Life Sciences (WVE)

1.6%

-22.1%

4

XBiotech (XBIT)

17.4%

13.6%

13

Xencor (XNCR)

6.8%

-3.4%

15

Xenon Pharmaceuticals (XENE)

0.2%

-16.5%

2