Regulatory News For Rare Disease Products - Hot Stocks: BLUE, ICPT, SRPT -

Regulatory News For Rare Disease Products – Hot Stocks: BLUE, ICPT, SRPT

May 20, 2015Jeremy ParkinsonFinance0

Big News Day, Market Update

Trial Design Impacts Stocks?

Biotech stocks have partially recovered from the recent sell-off but still remain below ““Double top” levels (XBI) of 2015. The major ETFs- FBT,IBB and XBI- remain below the March 19 peak but above the April 30 recent low. A lot of selling took place after recent highs and we are currently in a May uptrend (See excellent Yahoo charts).

YTD the XBI leads up 24%, compared to 18.7% for the IBB and FBT. See chart below.

April 30 low is higher than Feb 4 lows so technicals look good.

XBI outperforms during “bull runs”.

Five star Fidelity Select Biotech Fund (FBIOX) tracks FBT and IBB a tad lower.

Rayno Large Caps are underperforming ETFs up about 10% YTD. Regeneron Pharmaceuticals (REGN) is the leader up 22% YTD followed by Gilead Sciences (GILD) up 17.3% and Biogen, Inc.(BIIB) up 16.4%.

Outside of the larger caps, small cap biotech stocks are volatile with big moves on seemingly minor news. Mid-caps lead the market driven by clinical news and M&A after the mega-deals from Abbvie (ABBV) and Alexion (ALXN). See our recent post on Valuations of mid-caps driven by M&A. There is a high M&A premium for biopharma pipelines without consideration of clinical development risk.

Rayno Mid Caps remained strong with Alkermes (ALKS) up 3.77% and Seattle Genetics (SGEN) up 1.8%. Vertex (VRTX) is a laggard but holding up well at $128.31 up 8% YTD.

High Hopes for Gene Therapy-Novel Regulatory Pathway Cleared

Today the CAR-T Cell Therapies, and gene therapy stocks soared boosted by bluebird bio (BLUE) news on the pivotal design of a small 24 month clinical trial, reversing a downtrend over the past few weeks. T-cell genetic therapies are a transformative platform with potential for treatment of severe genetic diseases, cancer and rare diseases. No products are currently FDA approved using CAR-T.

Rare or orphan diseases are a favored business model and strategy favored by entrepreneurs, bankers and analysts because the cost effectiveness of the drug can be rationalized, even with very high pricing in excess of $100k per year per patient. Think high prices, rare disease and fast track approval. An expedited regulatory path is also possible because of the small patient size in trial. Alexion Pharmaceuticals (ALXN) is the model for “ultra-rare disease” R&D and now the Company has a market cap of $32B with revenues approaching $2.6B.