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  • Jonathan Poyer

Merck Hits All-Time High; But Momentum Trading Continues to Push Down the Biotech Index

Updated: Apr 11



The first quarter ended with the FT reporting US small cap stocks had the worst performance run compared to large cap peers in more than 20 years.



Expectations are growing among strategists that the Fed intends to enact a soft removal of the 2% inflation target with Powell's comments that the goal will be reached "over time". This should be a tailwind for the many biotech stocks that have yet to participate in the recovery rally, especially small cap commercial companies. The Fed may be further motivated to start cutting rates despite some hotter economic data due to the $1.1 trillion in interest payments on US government debt made in the past 12 months. Additionally, government spending is now growing at ~10% YoY, adding ~$1.0 trillion to the debt every 100 days!



Regulatory:


  • Merck (MRK) hit an all-time record high on approval for PAH therapy sotatercept with a clean label only requirement for monitoring platelets and hemoglobin, but no blackbox. MRK acquired the drug in the $11B purchase of Acceleron Pharma

  • Biocon's generic liraglutide won approval in the UK. This shorter acting GLP-1 is approved for diabetes and has a more muted impact on weight loss

  • Akebia therapeutics (AKBA) announced FDA approval of Vafseo tablets for anemia due to CKD in adults on dialysis, but debate over labeling restrictions pressured shares

  • Applied therapeutics (APLT) announced FDA extended the PDUFA 3 months for govorestat in classic galactosemia to 11/28.2024. APLT shares closed >10% below the recent Feb PIPE that raised $100 million


Clinical:


  • Disc Medicine (IRON) fell ~50% after a P2 trial in orphan disease Erythropoietic Protoporphyria (EPP) failed to meet a key secondary clinical endpoint of cumulative total time in sunlight due to an apparently high placebo response

  • Viking Therapeutics (VKTX) announced Phase 1 data for the oral formulation of dual GLP-1/GIP receptor agonist VK2735 that showed a 3.3% pbo-adjusted mean weight loss (5.3% from baseline) at the highest dose after 28 days. VK2735 appeared to be safe and well tolerated with low rates of GI related AEs

  • Stoke Therapeutics (STOK) reported reductions in convulsive seizure frequency in a single arm, uncontrolled OLE extension trial of STK-001 in patients with Dravet Syndrome. Debate focused on data transparency with only 45 patients included in much of the data update out of 81 enrolled


Capital Markets:


  • Boundless Bio (BOLD) fell >10% after raising $100M in an IPO


Corporate Updates and Earnings:


  • Bluebird Bio (BLUE) came under pressure after announcing the identification of accounting errors relating to the application GAAP to certain arrangements with contract manufacturing organizations that are deemed to contain one or more leases for accounting purposes. As a result, the company intends to restate its financial statements for the year ended 31-Dec-22 and for each of the first three quarters of 2022 and 2023


Culling the Herd:


  • Eiger Biopharmaceuticals (EIGR) filed for Chapter 11 bankruptcy with $39 million in assets and $53 million in liabilities

  • Gamida Cell (GMDA) commences restructuring to become private under Highbridge ownership

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