Three Biotech Companies That Closed Out The Week With A Bang

The weekend is just about upon us, and a number of companies in the biotech space are closing out the week with a bang, primarily driven by data and news catalysts. Here are three of the biggest movers of the week so far, and what’s driving the action in each.

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The three biotech companies in question are Novavax, Inc. (NASDAQ:NVAX), bluebird bio Inc (NASDAQ:BLUE) and Aralez Pharmaceuticals Inc (NASDAQ:ARLZ).

So, let’s kick things off with Novavax. At market close on Thursday, Novavax shares traded for a little over $8.3 a share, having gained steadily towards this level throughout the majority of the week. Current prices put the company at a close to 85% discount to this price, with Novavax now trading for less than $1.50 a share. To say ts a disastrous day for the company and its shareholders is an understatement, and it doesn’t look as though we are going to see any discernible recovery (likely not even a bounce) near term. Speculators are running for the door on this one, and seemingly rightly so. So what caused the sell off?

The company announced post market close on Thursday that it had missed both the primary and the secondary endpoints in its lead pivotal, a phase III investigating its RSV F Vaccine – a drug targeting the treatment of moderate-severe RSV-associated lower respiratory tract disease in the elderly.

We’re steering well clear of this one for the time being. The company is set to address the misses near term, so we’re going to see what management has to say and form an opinion as to whether there’s any hope of a medium to long term recovery, or whether it’s a write off.

Next, bluebird.

This one’s on the opposite side of the equation. bluebird is working on some gene therapy candidates in the rare disease space, with its three lead focuses being LentiGlobin, a drug targeting a condition called beta thalassemia, and Lenti-D, targeting cerebral adrenoleukodystrophy. The company is up more than 20% on its weekly open, primarily rooted in a Goldman Sachs report that added bluebird to the investments firm’s so called conviction Buy List – a list that seeks to identify and highlight the near term best opportunities across a range of sectors – one of which is development stage biotech.

Goldman suggested that the next few quarters should be catalysts rich for the company, and that these catalysts, if they materialize in favor of bluebird and its shareholder, have the potential to serve u pa triple digit upside in the company’s market capitalization.

We’ve log heralded bluebird as a stock to keep an eye on at this end of the space, and it’s good to see the company picking up some well deserved institutional attention as this quarter draws to a close. Very much one to watch going forward.

Finally, Aralez.

This is another gainer, this time based on an FDA approval. The agency approved the company’s lead development candidate (now commercial product) Yosprala for the secondary prevention of cardiovascular and cerebrovascular disease in patients who experience gastric ulcers from typical aspirin treatments. Strangely. The company hasn’t gained too much on the announcement, despite the long path to approval this one has had to undertake, and it looks as though markets are taking their time to digest the information before pulling the trigger. There exist some concerns about the potential size of the market, based on the labeling and the second line indication, but there’s definitely a market there, and if Aralez can execute on an aggressive sales strategy then the company should have no problem converting the approval to revenues.

Sometimes there is an extra cash concern at this end of the space, when an approval hits, based on the fact that it means a company is going to have to spend tens of millions of dollars in marketing to get its product in the hands of patients and physicians. This is valid, but in this instance, there shouldn’t be too much of an issue. At last count (June 30, 2016) Aralez recorded a little over $93 million cash on hand, giving the company plenty to play with as it executes on its strategy.

We’ll be watching this one closely. There’s likely further upside, but we’d like to see a strategy on paper before making a recommendation.

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