A number of companies in the biotechnology space moved at the end of last week, with a host of fresh inputs dominating sentiment in each. Here is a look at two of the biggest movers with the description of what caused the action we saw and where we expect things to go next for the companies in question.
The two companies in our crosshairs for the session today are La Jolla Pharma (NASDAQ:LJPC) and Pfizer Inc. (NYSE:PFE).
So, let’s kick things off with La Jolla.
This one is a little bit convoluted at first glance but stick with us. During the session on Friday, La Jolla closed down more than 15% on its daily open price without, seemingly, any obvious internal input driving the action. However, and especially in this sector, drivers don’t always need to be internal. In this instance, the action we saw in La Jolla derived from an update by analysts at JP Morgan, which labeled the company as Underweight as compares to its previous rating of Neutral.
These sorts of analyst ratings are pretty widely followed but for one to inject a 15% downside in a company in a single session, it’s got to really be rooted in top-tier concerns – so was that the case here?
Well, sort of.
La Jolla is trying to get a drug called LJPC-501 approved in the US in a target indication of hypotension in adults with distributive or vasodilatory shock who remain hypotensive despite fluid and vasopressor therapy. That’s a pretty wordy indication but it basically refers to patients with low blood pressure to the degree that it can cause lightheadedness, chest pain etc. and, in this instance, to the point that it can expose a patient to a potentially life-threatening sudden drop in blood pressure.
It’s a pretty large unmet need globally and, if approved, has the potential to bring in some significant revenues for La Jolla – assuming widespread adoption. And it’s in this assumption that the risk, and in turn, the decline, is rooted.
Basically, the above-mentioned analysts think that the fact that the drug didn’t meet a secondary endpoint in the study of improving overall survival on the back of a reduction in major organ failure points to a potentially limited adoption by physicians.
Is this concern warranted?
To a degree, yes. An improvement in overall survival would’ve been a major string to this drug’s bow ahead of an agency decision.
With that said, however, there still a solid chance of approval and, if we do see this one pick up a regulatory green light, chances are the recent decline will reverse and the gap will close.
Next up, Pfizer.
This one’s a much more traditional move. On Friday, the company announced data from a phase 3 trial called EMBRACA. The trial was set up to investigate the safety and efficacy of a drug called Talazoparib in patients with germline (inherited) BRCA1/2-positive (gBRCA+) locally advanced and/or metastatic breast cancer (MBC).
As per the release, the data showed a median PFS (progression free survival) of 8.6 months in patients that received the drug, which compares with 5.6 months for patients on chemotherapy (so, standard of care), representing a 46% reduction in the risk of disease progression (HR = 0.54).
That’s a pretty substantial reduction and becomes even more significatnt when you take into consideration the severity of this type of cancer and the dramatic unmet need that exists in this market right now. It also puts the drug on par with another asset of essentially the same type, which AstraZeneca (NYSE:AZN) is trying to get approved in the same breast cancer indication and which demonstrated a similar impact, with a 42% reduction of risk of disease progression or death (HR = 0.58), earlier this year.
AstraZeneca already has its drug with the FDA and the agency will likely report its decision at some point during the first quarter of next year, meaning AstraZeneca is going to get its asset to market first, assuming both get approved. However, with a slightly improved risk reduction and a similar safety profile, Talazoparib won’t be far behind and this means that, somewhat counterintuitively, an approval for AstraZeneca will likely serve up some positive sentiment for Pfizer if and when it hits press.