Here are two biotech movers of note today with a look at what happened for each where we expect them to go next.
The first bit of news out of the market today in the biotechnology space is rooted in an approval just announced by biotechnology behemoth Novartis AG (ADR) (NYSE:NVS). The company announced on Wednesday that a drug called Kymriah (CTL019) picked up approval in a target indication of the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse.
It’s worth noting that this isn’t just another drug approval.
One of the hottest topics in the healthcare sector right now, and especially as relates to oncology, is the harnessing of the human’s own immune system in order to tackle hard to treat cancers – immunotherapy. Going a little deeper, one of the most talked about subcategories of this type of treatment is called CAR-T therapy. Basically, this involves engineering T cells using what are called chimeric antigen receptors (the CAR in the description) and teaching the cells in question to recognize a particular type of cancer. The antigens used to form the therapy are taken directly from the patient, meaning the treatment is highly personalized and selective/targeted towards the cancer in question.
The importance of disapproval is that it represents the first time any CAR-T drug has been approved in the US in an oncology indication. Indeed, it represents the first time any CAR-T has been approved anywhere, in any indication.
The drug is able to command premium pricing based on this first to market principal (the ethics of this, of course, aren’t as straightforward) and expectations are that the drug will cost around $425,000 annually to patients in this category. These patients are under 25, so the vast majority won’t be covering this cost entirely themselves – insurers will account for a large portion of it – but that doesn’t negate the revenue potential for Novartis once it hits shelves.
There is no reason for the company to hang around on this one and we will almost certainly see Novartis get Kymriah in the hands of patients late third quarter, early fourth quarter at the outside.
These sorts of mega healthcare companies don’t always see a boost in their market capitalizations on a drug approval, at least not to any substantial degree. However, there is a good chance that Novartis will have a strong close to the week this week as the company draws speculative media attention and benefits from a bit of extra volume on the back this. As things stand, Novartis is trading at a percentage point or so premium to the price at which it opened yesterday’s session.
Next in line for our attention today is Otonomy, Inc. (NASDAQ:OTIC).
This one is on the complete opposite end of the spectrum from Novartis, but as biotechnology traders will be all too aware, just because a company small doesn’t mean it can’t move on an input – in fact, it’s in these companies that we generally see the most dramatic swings.
On Tuesday, Otonomy announced data from a phase 3 trial of one of its lead development assets, a drug called OTIVIDEX. The company set up the trail to try and demonstrate safety and efficacy in a target indication of patients with Ménière’s disease, which is a disorder of the inner ear that causes episodes in which patients feel as if they are spinning (vertigo), and also causes fluctuating hearing loss.
Unfortunately for Otonomy and its shareholders (and also, of course, the target population, for which there is very little in the way of options available right now) the drug doesn’t seem to work – at least not in this indication. The primary endpoint of definitive vertigo days by Poisson Regression analysis was not met (p value came in at 0.62) and a range of secondary endpoints also missed their targets. There is a second trial ongoing using the same asset, a phase 3 in the same indication but in Europe, and this trial has been discontinued on the back of the latest results.
Chances are we will see the company continue to depreciate heading into the weekend as markets absorb news and reevaluate the company’s prospects based on the latest development. At last count, Otonomy was down a little over 82%.
