They say good things come in threes. If so, biotech companies could be in for not just another year of outperformance, but another decade. The first era of biotech was a building phase, when companies created their first blockbuster drugs. The second, current one, has resulted in a four-year rally that reflects the sector’s transition from a cluster of one-hit wonders to mature companies with multiple blockbuster products. And now the third is just starting to emerge – Credit Suisse calls it Biotech 3.0 – that looks likely to continue to 2020 and beyond.
For the past four years, biotech stocks have been the top-performing industry in the S&P 500, and the recent outperformance has been notable: a 74 percent gain in 2013 (versus 30 percent for the S&P 500) and a 42 percent gain in 2014 (versus 11 percent). And Credit Suisse Head of Global Biotechnology Research Ravi Mehrotra expects the stocks to beat the market once again this year. “This multi-year outperformance has not been a simple sentiment-driven bull run, but rather a fundamental rerating of the biotech sector,” he writes in a recent report published this year.
On the trading floor, shares of Incyte Corporation (NASDAQ:INCY) gained 8.32% to close at $114.60. The $19.10B company on July 7, 2015 announced that it has entered into a multi-year research support and collaboration agreement with Vanderbilt-Ingram Cancer Center (VICC) at Vanderbilt University Medical Center (VUMC), whereby Incyte will provide funding for certain aspects of Vanderbilt’s cancer research activities. This alliance is designed to develop an improved understanding of basic cancer biology and the mechanisms of action of certain Incyte-proprietary compounds, as well as identify and develop novel approaches to patient selection which may enable new therapeutic opportunities in oncology.
Esperion Therapeutics Inc (NASDAQ:ESPR) closed at $75.51 with an increase of 14.10%. The $1.49B company on August 17, 2015 provided an update from the ETC-1002 (bempedoic acid) End-of-Phase 2 meeting with the U.S. Food and Drug Administration (FDA) last week. The FDA confirmed that LDL-C remains an acceptable clinical surrogate endpoint for the approval of an LDL-C lowering therapy such as ETC-1002 in patient populations who have a high unmet medical need, including patients with heterozygous familial hypercholesterolemia (HeFH), or clinical atherosclerotic cardiovascular disease (ASCVD), who are already taking maximally tolerated statins yet require additional LDL-C reduction and where there is a positive benefit/risk ratio. Based on feedback from the FDA, approval of ETC-1002 in the HeFH and ASCVD patient populations will not require the completion of a cardiovascular outcomes trial (CVOT). The Company continues to plan and initiate a CVOT prior to NDA filing to pursue broader label indications related to cardiovascular disease risk reduction.
Inotek Pharmaceuticals Corp (NASDAQ:ITEK) ended at $15.12 by gaining of 4.78%. The $380.96M company on July 30, 2015 announced that $20,970,000 of its 5.0% Convertible Senior Notes due 2020 (the “2020 Notes”) maturing February 15, 2020 have been converted into shares of common stock of the Company. The 2020 Notes converted into approximately 3.86 million shares, including approximately 3.33 million shares underlying the 2020 Notes and approximately 0.53 million shares issued pursuant to the interest make-whole provision, which the Company elected to settle in shares. As a result of these conversions, Inotek has $30,000 of its 2020 Notes outstanding.