Here’s Why Medivation Inc (NASDAQ:MDVN) and Genocea Biosciences Inc (NASDAQ:GNCA) Gained This Week

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On Thursday, we looked at two biotech companies that had registered losses throughout the first half of this week, despite (and against the backdrop of) wider market strength. Today, as the week draws to a close, we’re going to flip this around. Markets sold off yesterday, but here are two companies that gained strength nonetheless.

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At the Thursday open in the US, Genocea Biosciences Inc (NASDAQ:GNCA) stock sold for just shy of $4 a share – a level around which the company has fluctuated throughout the entire first quarter. At session close, however, the company traded at $7.74 – a 95% gain across the period and a price that represents the highest seen since the third quarter of 2015.

The gains come on the back of a data release that seems to prove the efficacy of Genocea’s lead pipeline candidate, a genital herpes immunotherapy drug called GEN-003. The drug has long been the crux of the company’s pipeline, and its potential is the primary derivative of Genocea’s market capitalization, so the latest efficacy data comes as a welcome (to the company and its shareholders) validation of this value base.

So what did the data show, and what should we look for going forward?

The trial was a dose escalation study, with a primary endpoint that looked at the change in proportion of days with detectable viral shedding, across a six-week period. Shedding refers to the expulsion of viral matter when a virally infected cell replicates, so a reduction in shedding means a reduction in viral activity. Across 310 individuals in the US, the drug demonstrated a statistically significant reduction in viral shedding days (readers can check out the specific numbers here), and the trial hit its endpoint. Additionally, and just as importantly, the Genocea drug is a 3 dose, 21-day interval administration. Current SOC’s with the level of efficacy demonstrated by GEN-003 in the latest trial require year round dosing.

There’s an ongoing phase IIb which will offer up the next major milestones, and is a rollover study from the just reported phase II. Genocea expects to report some initial efficacy data during the third quarter of the year, and 6 months’ post dosing data before the end of 2016. Beyond that, look for the initiation of a pivotal during Q2 2017.

Next, we’ll look at Medivation Inc (NASDAQ:MDVN). Unlike the data driven gains seen in Genocea, this one’s a purely speculative gain. Medivation closed out Thursday’s US session at just shy of $46 a share, a 23% gain across the day, on rumors that it is pitching for a buyout. As things stand, however, the rumors are exactly that – rumors. The company has denied that it is looking to sell itself, and claims that the root of the sell out suggestions is the hiring of some advisors seem to be the real cause of the movement. We know the company has hired an advisory panel, and that this panel is reportedly working with Medivation on some valuation points, but exactly which remains unclear.

Medivation is one of the company’s that has drawn some unwanted attention regarding the pricing of its portfolio, and the advisors may just be addressing this situation, and the company’s appropriate response. There’s rarely smoke without fire in the biotech space however, and this isn’t the first time this year that buyout rumors have circulated Medivation. A couple of weeks ago news media reported Sanofi SA (ADR) (NYSE:SNY) could field an offer. Over the last couple of years, a number of companies have been rumored to be interested in a takeover, with some of the higher profile being AstraZeneca plc (ADR) (NYSE:AZN), Pfizer Inc. (NYSE:PFE), Amgen Inc. (NASDAQ:AMGN),  and even Abbott Laboratories (NYSE:ABT).

This is definitely a space to watch. The company is currently trading at $46 a share, but industry analysts, including those of Credit Suisse, suggest a $75 a share pricing wouldn’t be unreasonable if a takeover goes through. With this in mind, we could well see some further upside as we head into the second quarter of the year, and beyond.

If we get any more information or details on the validity of the rumors, or otherwise, we’ll report them as updates to this note going forward.

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