Biotech Movers At Both End Of The Space: GlaxoSmithKline plc (ADR) (NYSE:GSK) And Brainstorm Cell Therapeutics Inc (NASDAQ:BCLI)


Here are two of biotech’s biggest movers at the end of last week, one big one small, with a look at what’s moving each and what’s next.

The first company to make the list today is GlaxoSmithKline plc (ADR) (NYSE:GSK). GlaxoSmithKline is one that the vast majority of readers will already be familiar with, with the company commanding and established dominance across a number of target indications and indication groups in the healthcare sector as things stand. When a company of this size (GSK traded for a market capitalization of a little over $110 billion at last count) announces positive news, the impact is generally muted. Why? Because any news, however positive, is likely only going to impact the company’s core metrics to a small degree. Adding an extra billion dollars in revenues to total sales potential for a small cap biotechnology is enough to revalue the company in question many times over to the upside.

For GSK, however, $1 billion in revenue amounts to something like 3% of the company’s total annual sales, so the impact on overall valuation is somewhat diluted.

With that said, however, market sentiment surrounding a particularly positive development (one with far-reaching implications for not just this company but the spacing question) can get things moving and – at the end of last week – we saw an example of this.

On Friday, GSK announced that the FDA has approved a new subcutaneous formulation of Benlysta for the treatment of Systemic Lupus Erythematosus (SLE). For those not familiar with this condition, SLE, which is also known simply as lupus, is an autoimmune disease in which the body’s immune system mistakenly attacks healthy tissue across a range of different areas of the body. Symptoms are wide ranging and variable but can include painful and swollen joints, fever, and a red rash which is most commonly on the face. As is the nature of the disease, a patient will generally experience periods of illness, which are commonly referred to as flares, and periods of remission when there are few symptoms.

GlaxoSmithKline already dominates this market with the drug in question, but the latter needs to be administered intravenously. This intravenous necessity brings with it obvious complications and costs (not to mention a degree of uncomfortability for patients receiving the treatment) and the Holy Grail of the space has long been a version of an effective treatment that the patient can administer themselves without too much trouble.

The latest approval is exactly that.

It is a subcutaneous formulation, meaning it can be injected by the patient, and – as per the data that underpins the company’s application to the agency – it is at least as effective as its intravenous counterpart in its target population.

As might be expected, GSK is running up on the news, but (as outlined above) the run is limited to a percentage point or two as things stand based on the drugs overall impact on the company’s sales potential. With that said, however, and as this drug hits commercialization phase, we expect its impact on GSK’s valuation to grow.

Second on the list is a less well-known company, Brainstorm Cell Therapeutics Inc (NASDAQ:BCLI).

Brainstorm Cell Therapeutics announced at the end of last week that it has been awarded a $16m grant from the California Institute for Regenerative Medicine (CIRM). The grant is earmarked as underpinning a phase 3 trial that will investigate the company’s lead development asset, a drug called NurOwn, in a target indication of amyotrophic lateral sclerosis (ALS).

This disease attracted a considerable amount of attention a few years ago when the so-called ice bucket challenge spread across the globe and brought with it a wave of charitable capital into the space. On the back this capital injection, a number of new treatments were put to the test and we are now seeing the fruits of these early-stage investigations.

NUrOwn is one example.

If Brainstorm can get NurOwn through a phase III successfully, it could quickly become a very much needed option for patients that – right now – have very little in terms of effective treatment options available to them.

As might be expected, Brainstorm is running up on the news of the grant. With companies of the size (a market capitalization of around $90 million at last count) capital infusion is a real bonus as it negates the necessity for dilution, which is one of the primary risks associated with these sorts of companies. Any type of a grant, therefore, which are generally non-dilutive, will bring with it wave of speculative buying as markets look to gain exposure to the (in this case pivotal) catalyst that the capital is earmarked to fund.

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