Biotech Stock Roundup: CAR-T In Focus On Gilead-Kite Deal, Incyte Up On Baricitinib Update

CAR-T stocks were in the news this week with key biotech player, Gilead Sciences (NASDAQ:GILD) announcing its intention to acquire Kite Pharma (NASDAQ:KITE) , one of the most advanced players in the CAR-T therapy market. Moreover, the FDA approved Novartis’ Kymriah yesterday, making it the first CAR-T therapy to gain approval in the U.S.

Recap of the Week’s Most Important Stories

Gilead Looks to Boost Oncology Pipeline with Kite Deal: Gilead has finally announced an M&A deal with the company saying that it will acquire Kite Pharma for $180 per share in cash or approximately $11.9 billion. Gilead has been under a lot of pressure to utilize its huge pile of cash for a major acquisition deal given the dwindling sales of its erstwhile top-selling hepatitis C virus ("HCV") franchise. The Kite acquisition, slated to close in the fourth quarter, will place Gilead among the top players in the emerging field of cell therapy. Kite’s expertise lies in developing engineered cell therapies that express either a chimeric antigen receptor ("CAR") or an engineered T cell receptor ("TCR"), depending on the type of cancer.

Kite already has a CAR-T therapy, axicabtagene ciloleucel (axi-cel), under priority FDA review with a response expected by Nov 29, 2017. EU approval could come next year. Axi-cel is under review for the treatment of refractory aggressive non-Hodgkin lymphoma ("NHL"), which includes diffuse large B-cell lymphoma ("DLBCL"), transformed follicular lymphoma ("TFL") and primary mediastinal B-cell lymphoma ("PMBCL"). Other candidates in Kite’s pipeline include those targeting hematologic cancers as well as solid tumors (Also read: Gilead to Fly High with Kite Pharma Acquisition for $11.9B). Axi-cel has blockbuster potential though Novartis is currently the first company to gain approval in the U.S. for a CAR-T treatment with the FDA approving the company’s Kymriah.

Kite’s shares were up 28% following the acquisition news while year to date, the stock has gained 296.9%, substantially outperforming the 9.7% rally of the industry it belongs to.

With the Kite-Gilead deal being announced, other companies involved in CAR-T treatment saw their shares shooting up on hopes that more M&A deals will be announced in this segment of the market. While Juno shot up 20.1%, bluebird bio was up 8.6%.

Gilead is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Incyte Up on Baricitinib Regulatory Update: Incyte (NASDAQ:INCY) and partner Eli Lilly and Company (NYSE:LLY) provided an update regarding the resubmission of their regulatory application in the U.S. for their experimental rheumatoid arthritis (RA) treatment, baricitinib. The companies, which had previously said that they expect a delay of at least 18 months in the resubmission of the regulatory application for baricitinib, announced that they will be resubmitting the regulatory application by Jan 2018. New safety and efficacy data will be included in the resubmission. Investors reacted positively to the news sending Incyte’s shares up 10.6%.

The Medicines Co.’s Vabomere Gets FDA Nod: The Medicines Company (NASDAQ:MDCO) got a boost with the accelerated approval of Vabomere for the treatment of adult patients with complicated urinary tract infections, including pyelonephritis. The drug addresses pathogens designated by the U.S. Centers for Disease Control ("CDC") as urgent and serious antimicrobial resistance threats, and pathogens cited by the World Health Organization ("WHO") as a critical need for new antibiotics. Vabomere will enjoy an additional 5 years of exclusivity given its status as a Qualified Infectious Disease Product ("QIDP") under the Generating Antibiotics Incentives Now ("GAIN") Act. The Medicines Company intends to launch Vabomere in the fourth quarter.

Priority Review for BioMarin Drug: BioMarin Pharmaceutical’s (NASDAQ:BMRN) pegvaliase got priority review in the U.S. for the reduction of blood phenylalanine (Phe) levels in adult patients with phenylketonuria ("PKU") who have uncontrolled blood Phe levels on existing management. This means a response from the agency regarding the approval status of pegvaliase should be out by Feb 28, 2018. However, with the FDA asking the company to submit additional Chemistry, Manufacturing, and Controls ("CMC") information, BioMarin said that it expects the review period to be extended by an additional three months (Also read: BioMarin's Pegvaliase BLA Granted Priority Review by the FDA).

Acorda Down on Inbrija Regulatory Update: Acorda Therapeutics (NASDAQ:ACOR) saw its shares fall 24.3% on news that the FDA has issued a Refusal to File ('RTF") letter for Inbrija. The agency has raised two questions in the RTF – one regarding the date when the manufacturing site will be ready for inspection and the other regarding the submission of the drug master production record. The FDA has also asked for additional information at resubmission though it has not asked for additional efficacy or safety studies. Acorda intends to meet with the FDA to discuss the RTF.

Acorda is looking to get Inbrija approved for the treatment of the symptoms of OFF periods in people with Parkinson’s disease taking a carbidopa/levodopa regimen. The company needs to add new products to its marketed product portfolio considering flagship drug, Ampyra, is likely to face generic competition post Jul 2018.

Performance

Medical - Biomedical and Genetics Industry 5YR % Return

Medical - Biomedical and Genetics Industry 5YR % Return

It was a good week for biotech stocks with the NASDAQ Biotechnology Index gaining 4.9% over the last five trading sessions. Among major biotech stocks, Gilead was up 10.2% while Biogen (NASDAQ:BIIB) was up 7.5% on Alzheimer’s disease data (Also read: Biogen Alzheimer's Drug Shows Promise in Long-Term Study). Over the last six months, Vertex (NASDAQ:VRTX) was up 72.5% while Amgen (NASDAQ:AMGN) slipped 0.3% (See the last biotech stock roundup here: EU Label Expansion for Alexion, BIIB Facing Drug Price Probe).

What's Next in the Biotech World?

Watch out for the usual regulatory and pipeline updates.

One Simple Trading Idea

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.

Learn more >>