To say biotech stocks suffered a rough second half of 2015 would be an understatement. It was awful. The first quarter of 2016 wasn’t exactly stellar either, even with the group testing the bullish waters a few times in March.
While Valeant Pharmaceuticals Intl Inc (VRX) and a couple of other specialty drugmakers have been specifically targeted, traders have wondered if the entire industry is about to hit a regulatory headwind.
The dust cloud is starting to settle, however, and while plenty of biotech stocks still have trouble ahead, some are ready to rebound.
With that as the backdrop, here’s a closer look at ten biotech stocks that have catalysts in the queue for the second quarter that may well shake them out of their ruts … or put them back in one.
Biotech Stocks to Watch in Q2: Acadia Pharmaceuticals Inc. (ACAD)
Despite the dire need, there just aren’t any game-changing drugs that treat Parkinson’s disease.
That’s why the FDA has given priority review to Nuplazid (pimavanserin), from Acadia Pharmaceuticals Inc. (ACAD), for Parkinson’s disease psychosis. The scheduled decision date from the administration is May 1st.
Nuplazid is a selective serotonin inverse agonist that targets 5-HT2A receptors. In plain English, HT2A receptors may regulate the brain’s chemistry in a way that it’s not being regulated in PDP patients. Nuplazid met all of its targeted endpoints in Phase 3 of its trial, and Acadia Pharmaceuticals says those results were statistically significant.
If the drug is approved — and between the priority review, its breakthrough designation and a yes recommendation from an advisory panel, the odds look good — it would be the first viable therapy for Parkinson’s disease psychosis, making ACAD one of the hottest biotech stocks of 2016. Though not all Parkinson’s patients have PDP, an estimated 40% of them do.
The underserved Parkinson’s disease market, in total, is estimated to be worth roughly $2.6 billion per year.
Biotech Stocks to Watch in Q2: Exelixis, Inc. (EXEL)
A priority review from the Food & Drug Administration is never a guarantee of an approval. On the other hand, an accelerated approval effort from the FDA has worked in favor of more biotech stocks than it has worked against; there’s a reason the FDA sees the urgency.
That bodes well for Exelixis, Inc. (EXEL), which has a June 22nd priority Prescription Drug User Fee Act date for Cabozantinib as a therapy for metastatic renal cell cancer.
Cabozantinib is a small-molecule tyrosine kinase inhibitor that takes aim as the vascular endothelial growth factor receptor. In clinical trials it was 42% more effective as an RCC therapy than the current standard of care, everolimus.
Biotech Stocks to Watch in Q2: Tesaro Inc (TSRO)
Tesaro Inc (TSRO) is one of a handful of biotech stocks that has not one but two key updates in the near-term lineup. It doesn’t know exactly when it will be delivering those updates, but they’re in the cards for Q2, and both are for the same drug … Niraparib.
Niraparib, formerly called MK-4827, is a poly-ADP-ribose polymerase inhibitor. In simplest terms, the drug helps repair the “broken” DNA of a cancerous cell. The mechanism of action could be applicable to a variety of tumorous cancers, but Tesaro is first taking aim and ovarian cancer and breast cancer.
The ovarian cancer trial called Quadra is in phase 2 trials, while the NOVA trial — also for ovarian cancer — is in phase 3 trials.
Biotech Stocks to Watch in Q2: Clovis Oncology Inc (CLVS)
While several biotech stocks could heat up or cool off very quickly in Q2, by a sheer calendar-based coincidence, Clovis Oncology Inc (CLVS) is going to take traders on a roller-coaster ride over the course of the next three months.
That’s because an FDA advisory panel is slated to make a recommendation to the regulator on Rociletinib — as a therapy for lung cancer — on April 12th, and the administration will either take or reject that advice (by approving or not approving the drug) on June 28th.
Rociletinib is a treatment for mutant epidermal growth factor receptor (EFGR)-positive non-small cell lung cancer in patients who develop a T790M mutation. The therapy has demonstrated impressive efficacy, with an overall response rate of 67% and a disease-control rate of 89%.
The fact that Rociletinib was also given a breakthrough therapy designation bolsters the odds of an approval, though obviously there are no guarantees.
Biotech Stocks to Watch in Q2: GW Pharmaceuticals PLC- ADR (GWPH)
If the name GW Pharmaceuticals PLC- ADR (GWPH) rings a bell, but you’re not sure why, it’s one of several biotechs working on cannabinoid-based prescription drugs.
Unlike most of the other biotech companies working on ways to convert cannabis to medicine, however, GWPH is one of the few cannabinoid-centric biotech stocks that traders can afford to take seriously.
In any case, the company has two research and development updates expected sometime in the second quarter of 2016. One of those updates will tell the market how the phase 2 trial of GWP-42004 as a therapy for type 2 diabetes is proceeding. GWP-42004 appears to be an oral GLP-1 (glucagon-like peptide-1) secretagogue, and has shown promise thus far.
We may also get a phase 3 trial update on Epidiolex as a treatment for Lennox-Gastaut syndrome during Q2.
Epidiolex has already shown strong efficacy as a treatment for Dravet syndrome, and if approved, Epidiolex would be the first FDA approved treatment specifically for the disease.
Biotech Stocks to Watch in Q2: GlobeImmune Inc (GBIM)
While the biopharma industry has made hepatitis C public enemy No.1 over the past year or so, it has mostly taken its eye off of hepatitis B. Not GlobeImmune Inc (GBIM) though.
GlobeImmune is in the midst of phase 2 trials of GS-4774 as a therapy for chronic HBV. Another round of results for that trial are due sometime in Q2.
Hepatitis B isn’t a massive market. It’s only expected to be worth $3.5 billion by 2021. It’s another underserved market though, and if GBIM can come up with something even modestly impressive, it could be a big win.
Biotech Stocks to Watch in Q2: Achillion Pharmaceuticals, Inc. (ACHN)
As was noted, if there has been one overarching theme within the world of biotech stock, hepatitis C would be it … with most of that attention devoted to Harvoni and Sovaldi, from Gilead Sciences, Inc. (GILD). If the news in the lineup for Achillion Pharmaceuticals, Inc. (ACHN) this quarter pans out, though, ACHN could steal some of Gilead’s thunder.
Sometime during Q2, the company is supposed to update the market on its phase 2 trial of odalasvir, AL-335, and simeprevir — in combination — as a treatment of HCV.
Actually, Johnson & Johnson (JNJ) is leading the charge, having licensed part of the therapy from Achillion Pharmaceuticals. The deal, however, could be very lucrative for ACHN if JNJ sees the expected efficacy.
Biotech Stocks to Watch in Q2: Kite Pharma Inc (KITE)
There are several non-Hodgkin Lymphoma drugs on the market, and in development. None of them are wildly impressive, however. It remains to be seen if KTE-C19, from Kite Pharma Inc (KITE), will be that game-changer, but we may get a better idea of its potential sometime in the second quarter.
That’s because KITE is going to offer an interim update on its phase 2 trial of the treatment sometime within the next three months. Though no firm date has been set, the company will likely announce a release date ahead of time.
KTE-C19 is one of a handful of CAR T cell therapies. CARs, or chimeric antigen receptors, are proteins that allow immune cells called T cells to recognize a specific protein, or antigen, on tumor cells. A patient’s own T cells can be collected and engineered to develop CARs on their surface, cultivated and then reinjected into a cancer patient’s body where they can more effectively combat cancer.
Biotech Stocks to Watch in Q2: Array Biopharma Inc (ARRY)
The second quarter is going to be an especially busy one for Array Biopharma Inc (ARRY). It has two phase 3 trial updates in the hopper, plus — if all goes as planned — an NDA filing. There are no firm dates for any of the potential catalysts, though Array should give pre-announcement warnings for the phase 3 reports.
The new drug application in the lineup is for Binimetinib (MEK162), as a therapy for melanoma. One of the trial updates will look at the results for Selumetinib as a treatment for thyroid cancer.
The likely mover and shaker in the bunch, however, is going to be the look at how MEK162 is faring as a treatment for BRAF-mutated melanoma.
Biotech Stocks to Watch in Q2: Ultragenyx Pharmaceutical Inc (RARE)
Ultragenyx Pharmaceutical Inc (RARE) doesn’t have just one big announcement in the hopper for the second quarter of 2016, but two: rhGUS and KRN23.
RhGUS is currently in phase 3 trials as a therapy for Mucopolysaccharidosis 7 (or Sly syndrome), which is a an enzyme-deficiency disease that can cause skeletal defects and tissue and organ problems. It’s not a big market, but it’s a worthy market without a ton of competition.
KRN23 is a monoclonal antibody being tested as a treatment for a couple of different indications, but the drug’s efficacy as a therapy for tumor-induced osteomalacia (TIO) is in sharper focus right now. In simplest terms, TIO causes a vitamin D deficiency, which can create a variety of health problems.
Note that there’s no firm date (yet) for these updates. The company has only said it expected to post news on rhGUS sometime in mid-2016, and news about KRN23 during the first half of the year. It will likely give the market a “heads up” beforehand, however.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.