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  • Jonathan Poyer

Jolly Old Biotech Markets

Biotech M&A received a much anticipated shot in the arm with Amgen's (AMGN) announcement it was purchasing Horizon Therapeutics (HZNP) for $116.50 per share or ~$28 billion. The acquisition represents a 48% premium to HZNP's closing price before the announcement of a possible deal under Irish takeover law. Analysts expect the deal to be accretive near term and bolster AMGN against loss of exclusivity risk in 2026 through the end of the decade.

Several biotech upside surprises expanded the list of companies with triple digit single day gains. Promethus Biosciences (RXDX) rallied >175% on strong Phase II data from its potential best in class TL1A program in Ulcerative Colitis. RXDX took full advantage of the move and raised $500 million to fund phase III development. Notably, the stock continued to run into the offering news, demonstrating the capital markets are wide open for companies with differentiated data. Shares have since broken deal price though.

Pharvaris NV (PHVS) rallied a remarkable >300% on positive data from a phase II trial in hereditary angioedema (HAE). PHVS had been trading at a negative enterprise value (EV) as FDA put the drug on clinical hold in the US back in August. The phase II data from patients enrolled outside the US provided investors hope the program may have a path forward.

Ambrx biopharma (AMAM) rallied even more, up >500%, on presenting initial results from the ACE-Breast-03 trial of ARX788, an anti-HER2 ADC. AMAM was also trading at a negative EV prior to the data release and had previously announced they had paused internal development of ARX788. Clearly the biotech bear market has pushed valuations of many companies down to levels where upside can be significant.

Positive developments extended to big pharmas as well with GSK PLC (GSK) and Sanofi (SNY) adding >$15 billion in combined market capitalization as the US District Court Judge in the Southern District of Florida for the multidistrict litigation (MDL) granted summary judgment for the pharma defendants, striking all plaintiffs' evidence Zantac causes cancer. Analysts viewed this outcome as a best case scenario since the MDL ruling is expected to clear a majority of the liability from the class action litigation.

It was not all roses in biotech; however, as many companies with updates at the American Society of Hematology (ASH) meeting were seeing tickers turn blood red. Adicet Bio (ACET), Caribou Biosciences (CRBU) and Affimed NV (AFMD) all fell as initially promising response data for their various oncology programs failed to show compelling durability of response over time.

Likewise, Kura Oncology (KURA), Allogene Therapeutics (ALLO) and Fate Therapeutics (FATE) fell as investors debated how each is truly differentiated from competitors. Competitive pressure and manufacturing challenges seemingly forced Instil Bio's (TIL) to discontinue their lead tumor-infiltrating lymphocyte (TIL) program and undergo a 60% reduction in force. TIL is now down ~95% on the year reminding investors that strategic and operational missteps can be costly.

Finally, Gossamer Bio crashed >60% on announcing nominally positive data from their TORREY Phase 2 study of seralutinib in patients with pulmonary arterial hypertension (PAH). PAH is a competitive space with several established and emerging treatment options and even though the trial met the pre-specified primary endpoint, the magnitude of benefit was below expectations prompting the hemorrhaging.

Yes, Virginia, fundamentals do matter.

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