The S&P Select Biotech Index bounced off the 50 day moving average just as tech titan Nvidia (NVDA) enters correction territory after a quick $400+ billion drawdown in less than a week.
The outperformance of US large caps over small caps is now at its most extreme level since November 1999 enabling the S&P 500 to keep going up despite most stocks going down. The macro picture for small caps continues to improve with rates\borrowing costs trending lower and earnings revisions generally improving. Biotech has seen several positive clinical and regulatory developments in recent weeks that bode well for the balance of the year.
M&A:
Novartis (NVS) announced plans to implement a merger squeeze-out of MorphoSys (MOR) minority shareholders (~9% of shares outstanding) at the same €68.00 per share in cash as during the initial merger tender offer. Shares will be delisted at the conclusion of this process. NVS closed the merger in May, but the minority MOR shares will remain listed until the squeeze out is complete
Regulatory:
Argenx (ARGX) announced FDA approved Vyvgart Hytrulo in Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) with a broad label
Sarepta Therapeutics (SRPT) announced FDA granted DMD gene therapy Elevidys full on for >4 years old ambulatory patients and Accelerated Approval for non-ambulatory patients contingent on confirmatory data. Controversary surround the approval was revealed in FDA's review memo that showed the review team and OTP head were opposed to approval given the lack of clear efficacy, but were overruled by Peter Marks the head of CBER
Intra-Cellular Therapeutics (ITCI) announced positive data from the second Phase 3 trial for lumateperone as an adjunctive therapy to antidepressants for the treatment of MDD (Study 502)
Zentalis Pharmaceuticals (ZNTL) announced FDA placed a partial clinical hold on Wee1 inhibitor azenosertib due to two sepsis-related deaths in the DENALI study. Shares were off >40%
Harmony Biosciences (HRMY) announced FDA approved Wakix for pediatric patients with narcolepsy. The approval seems to validate the safety and efficacy profile of the drug that were called into questions in a short report from 2023
Clinical:
Alnylam Pharmaceuticals (ALNY) delivered positive results in the highly anticipated HELIOS-B trial in ATTR-CM. The study met all endpoints with 28% and 33% reduction in composite of all-cause mortality and recurrent cardiovascular events
G1 Therapeutics (GTHX) fell >50% after announcing the Phase 3 PRESERVE 2 trial in patients with metastatic triple negative breast cancer (mTNBC) failed to meet the primary endpoint of overall survival with the control arm outperforming the treatment arm
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