Activity in the biotech space brought us a volatile end to the week on Friday, and a number of companies are kicking of a fresh week at a double digit shift on their mid week market capitalization. Here’s a look at two of the week’s biggest movers, and a look at what’s driving their volatility.
We’ll kick things off with Portola. Last week, Portola Pharmaceuticals Inc (NASDAQ:PTLA) reported topline from a phase III in Betrixaban. On the release, the company tanked, and currently sits close to 30% down on its pre-release market capitalization. The drug is targeting what’s called venous thromboembolism (VTE), which is another word for blood clots, in patients that are “acutely ill” – i.e. have been hospitalized for things like heart attacks, strokes etc. The trial compared Betrixaban to a current SOC called enaxoparin, with an endpoint of statistically significant improvement over the latter.
The data hit, and while the trial did show a net benefit (i.e. did demonstrate a certain level of efficacy of SOC), it wasn’t enough to qualify as stat sig over its rival, and so the endpoint was missed. A missed endpoint and a 30% decline seems pretty clear cut – but there’s one thing worth mentioning. Portola noted in its declaration of the data that the company intends to carry the drug forward to an NDA submission, despite the missing of the primary endpoint, based on the net benefit data. This is an interesting step, and one that could prove costly, but it could also serve to mitigate some of the decline seen at the end of last week. While there was no improvement over current SOC, the company believes the safety profile of its candidate is superior to that of enaxoparin, and with similar efficacy data, that could be enough to help it pick up an FDA green light. It’s a long shot, but there’s a massive market potential (regardless of price) for a drug with such a wide patient population, so Portola, rightly, thinks it’s a gamble worth taking.
This paints the company as an interesting speculative allocation for the latter half of 2016. Portola management stated they are targeting an end 2016 submission, assuming cohort 2 data, when subjected to full analysis, supports an efficacy readout. In short, probably worth staying away from until we see the full cohort 2 readout, but one to watch as 2016 matures.
Next up, United Therapeutics Corporation (NASDAQ:UTHR). United is down a little over 10% on last week’s Friday open, on the announcement that the FDA had rejected an implantable version of its pulmonary arterial hypertension drug, Remodulin. The company had been developing the treatment with Medtronic PLC (NYSE:MDT), and we don’t know exactly why the FDA has refused to give it the green light (both companies were markedly light on their offering of detail surrounding the agency’s response), but just as with Portola, there’s a chance this latest decline could reverse in the coming quarters.
Why? The FDA has reportedly offered up some points on which United needs to work before it resubmits the NDA, and the companies and the agency are set to discuss these points at length near term, so its reasonable to conclude that the agency feels both Medtronic and United could bring the drug to an approval further down the line. It’s an unmet need, and that the FDA is responding with some specific requests suggests the underlying MOA is both effective and tolerable (as was shown by the phase III on which the company’s NDA was based). With this in mind, it’s likely the concerns relate to something like manufacturing, marketing or some other element of the supply and logistics side of the operation. These things can be both expensive and timely to remedy, but the FDA must believe it is achievable for these billion-dollar healthcare partners, and the tone of United’s release suggests the same.
We’re keeping an eye out for any updates relating to the specifics of the decline, and will update this analysis if and when they appear. Looking at things from a longer term perspective, United has a pretty robust portfolio, and so long as the wider healthcare space holds out, there’s no reason it shouldn’t recover this data driven decline.