Mehta Biotech Capital: Week 18 Update

You can learn more about Mehta Biotech Capital here:

The week started with a bang and ended on a sour note, with the S&P 500 giving up a 60-point rally over the course of Thursday and Friday. The selling followed the Fed’s first short-term interest rate increase in seven years and continued pressure on oil prices.

While the broader markets slipped, the biopharma sector held up fairly well during the two-day onslaught. The NASDAQ Biotech Index Fund (IBB) actually ended the week in the green.

In other news, Sarepta Therapeutics (SRPT) received word that eteplirsen, the company’s exon-skipping drug for Duchenne Musular Dystrophy, will go before an FDA advisory committee on January 22nd. Though this was widely expected, it had yet to be confirmed. Sarepta’s approval decision is slated for February 26.

BioMarin Pharmaceutical also announced that the FDA had not yet completed their review process for drisapersen, the company’s similar and competing drug for DMD, and would be unable to take action by the December 27 PDUFA date. The FDA anticipates taking action in early of January 2016, just prior to the Sarepta advisory panel assuming this timeline holds up.

Recall that drisapersen faced the same Peripheral and Central Nervous System Drugs Advisory Committee in November, which let some sunlight in on drisapersen’s less-than-stellar clinical dataset. Sarepta is in a similar position, with a fraught dataset, but we can’t overlook just how ideal Sarepta’s situation is for accelerated approval via FDA’s subpart H: the company has equivocal efficacy data, but backed by decent surrogate results (dystrophin production), and perhaps most importantly, a clean safety profile to date. Sarepta will have initial safety results from more than 100 patients by the time of the advisory panel meeting, notable in light of drisapersen’s cringe-worthy side effect profile.

Obviously, an approval decision for either drug in the near-term will take precedent, but chartists will note SRPT’s textbook cup-and-handle pattern over the last few months. If nothing else, this is worth watching for a short-term trade on technicals alone.

Gilead Sciences (GILD) purchased equity in another smaller drug company this week, though it’s not the inflectional event that investors have been waiting on. Gilead put up $725 million for access to Galapagos NV’s (GLPG) filgotinib, a JAK-1 inhibitor about to enter phase 3 studies; $425 million of that gives them a 15% stake in the smaller company. Note that AbbVie (ABBV) walked away from Galapagos and filgotinib this September, favoring their internal JAK01 inhibitor, ABT-494, instead.

It’s a deal that’s unlikely to satiate the Street’s yearning for a major acquisition or merger from the hepatitis C powerhouse. Gilead has traded sideways for the last 6 months as investors await clarity on where the company’s next step up in revenue – and earnings – will come from. Sovaldi and Harvoni still throw off copious cash flows, but most investors expect that sales from the two hepatitis C products have already peaked ($5 billion in Q3 sales) or are close to doing so.

You can learn more about Mehta Biotech Capital here: