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  • Jonathan Poyer

Oooh Baby Things Are Happening In Biotech To Kickoff the End of Summer!

There is value out there regardless of where inflation and the broader economy shakes out. Just look at Biotech and the week ending September 9th.

Positive clinical, regulatory and strategic news helped propel the S&P Biotechnology Select Index back up to the 200 day moving average.

Remarkably, Amylyx Pharmaceuticals' (AMLX) second FDA Advisory Committee meeting flipped positive with a 7 to 2 vote of whether available evidence of effectiveness is sufficient to support approval for their controversial Amyotrophic Lateral Sclerosis (ALS) therapy. AMLX shares rallied >50% on the news as the committee previously voted 4 to 6 against back in March before an additional data analysis was presented. Several other companies with controversial drug applications under review (such as Revance Pharmaceuticals, RVNC) rallied in sympathy as FDA Division Director Billy Dunn suggested during the meeting that regulatory flexibility was appropriate for indications with high unmet needs and limited therapeutic options.

Regulators further surprised investors to the upside by approving Bristol Myers Squibb's (BMY) oral TYK2 inhibitor deucravacitinib (Sotyktu) in psoriasis without and expected 'black box' warning. Ventyx Biosciences (VTYX) rallied >60% on the BMY news as investors looked more favorably on the prospects of their own TYK2 inhibitor.

Regeneron Pharmaceuticals (REGN) surprised investors with better than expected clinical data with their long acting 'high dose' version of their blockbuster Eylea therapy for diabetic macular edema (DME) and wet age-related macular degeneration (wAMD) patients. The stock gained over $10 billion in market cap and many analysts materially upped price targets by modeling a longer tail for the current $6 billion Eylea franchise. Some even speculated that high dose Eylea may be able to delay or avoid price controls passed under the so called Inflation Reduction Act by filing for approval under a new, separate Biologics License Application (BLA).

Several companies reported incremental positive data at / around the European Society for Medical Oncology (ESMO) conference that contributed to positive stock reactions. Gilead Sciences (GILD) made new highs for the year on disclosure of positive survival results from their TROPiCS-02 study evaluating Trodelvy versus comparator chemotherapy in breast cancer patients. Ideaya Biosciences (IDYA) rallied >30% on reporting positive data from an ongoing Phase 2 trial of their synthetic lethal combination in metastatic uveal melanoma. On the strategic front, Horizon therapeutics (HZNP) announced a $500 million share buyback representing ~4% of outstanding stock. HZNP's CEO commented "Our strong balance sheet and cash generation gives us the flexibility to opportunistically repurchase shares".

It appears more biotech management teams and investors are betting leading companies will continue to create value regardless of where inflation and the broader economy shake out.

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