(Bloomberg) -- The second quarter will have a slew of catalysts for biotech investors even as Covid-19 closes markets, cancels medical meetings and puts many early-stage studies on hold.
Investors should get an early look at results for a potential treatment and vaccine for the new coronavirus strain. That's overshadowing the first treatment for an obesity-driven liver disease, a market once expected to be measured in billions of dollars.
Race to Curb the Pandemic
This month, a pair of studies on Covid-19 patients in China will show investors how Gilead Sciences Inc.'s remdesivir works. Results from studies conducted in the U.S. are expected in May. Gilead's data will be closely followed by investors and the medical community, though even if remdesivir looks effective in the viral disease, its IV administration and a complicated manufacturing process may present hurdles.
The struggle to find a vaccine will take even longer than finding a potential treatment -- more than a year by many counts. Wall Street analysts have suggested that the market could see a first glimpse of immune response data from Moderna Inc.'s mRNA-1273 around the end of the second quarter. The New York-based biotech company is planing an April 14 “Vaccines Day.” Among small-cap drug developers, Inovio Pharmaceuticals Inc. is expected to start its own vaccine trial sometime in April after getting as much as $9 million in funding from the Oslo-based Coalition for Epidemic Preparedness Innovations.
Despite enthusiasm from President Trump, viable medicines for pandemics are often elusive, as are profits for the drugmakers. “The major reward will come not in a monetization opportunity but rather in goodwill, sentiment, and potentially expanded multiples from finding a cure,” RBC analyst Brian Abrahams wrote in a note to clients.
NASH Drugs
Those still following the race to develop treatments for the fatty liver disease known as nonalcoholic steatohepatitis are waiting to see if Intercept Pharmaceuticals Inc. secures the first drug approval by the end of the quarter.
Intercept will face a Food and Drug Administration advisory panel on June 9, and the agency is expected to make an approval decision on obeticholic acid for NASH by June 26. A recent draft report on cost-effectiveness for the medicine was viewed positively by the Street.
Meanwhile, investors are awaiting the results of Genfit's pivotal “Resolve-IT” study. Results from Genfit's elafibranor offer a “high risk, high reward read-out,” according to SVB Leerink analyst Thomas Smith. Investor confidence was shaken after a delay in February on the heels of another deferral last year. The Lille, France-based company signaled on Tuesday that it didn't expect the pandemic to further postpone FDA feedback on the data, which is still expected this quarter.
Shares of the two NASH drug developers have sunk deeper than the broader market this year amid skepticism over how widely used the medicines will be. It also remains to be seen how patients will be identified without an expensive and potentially dangerous biopsy, though many drugmakers have been searching for biomarkers that may preclude the need for a biopsy. Intercept lost close to half its value in the first three months of the year, while Genfit lost about a quarter. The Russell 2000 Health Care Index dropped almost 20%.
Biogen, MyoKardia, UroGen
Investors are also still waiting on an announcement from Biogen Inc. on whether it has submitted an application to the FDA for its proposed Alzheimer's disease treatment, aducanumab, after controversial results. “We admittedly are surprised it hasn't occurred yet given prior commentary,” Jefferies analyst Michael Yee wrote.
Many early-stage clinical trials are being put on indefinite pause and more announcements are likely to come in quarterly results. Late-stage studies approaching completion have so far not been hit as hard but drug launches may also face delays as sales teams are forced to stay home or reach out to doctors and health-care providers virtually.
While MyoKardia Inc. has stopped enrollment in some trials, a study of mavacamten in obstructive hypertrophic cardiomyopathy is still expected to read out in the quarter. Cantor's Alethia Young expects the shares may more than double to as high as $100, although she cautioned that “Covid-19 volatility has led to some muted reactions even on positive data.”
So far, the FDA appears to have kept pace making timely decisions on drug approvals. UroGen Pharma Ltd. expects to hear back on its urothelial cancer treatment by April 18.
The company isn't expecting any regulatory delays and still plans to launch in mid-May, Chief Executive Officer Liz Barrett said in a phone interview. “In some respects it could help our procedure because it is a procedure that can be done under local anesthesia,” she said of UroGen's therapy, which can be administered outside of hospitals.
Options Implied Moves
Options data as of March 31 suggest there could be big moves in stock prices around these catalysts. For Gilead, options expiring April 24 imply a 15% move, by June they show shares potentially moving by 23%.
Moderna may move 42% by July. Inovio options imply a 62% move in shares by May 15 while Intercept options suggest a 38% change by June. June options imply MyoKardia could see a 69% shift.
Other key events for the quarter:
- A virtual American Society for Clinical Oncology Meeting in June could have key cancer data from Amgen Inc. and other drugmakers
- Initial results for Sarepta Therapeutics Inc.'s gene therapy, SRP-9003, in limb girdle muscular dystrophy
- Karuna Therapeutics Inc. will meet with regulators to discuss results and pivotal trial plans for antipsychotic KarXT
- FDA decisions for:
- United Therapeutics Corp. on Trevyent in pulmonary arterial hypertension by April 27
- PTC Therapeutics Inc. and Roche Holding AG's risdiplam for spinal muscular atrophy by May 24
- Immunomedics Inc.'s sacituzumab govitecan in previously treated metastatic triple-negative breast cancer by June 2
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