The biotech sector could easily continue to grow. Why? The long-term trends that have made the sector an outperformer in the market over the past five years remain in place. Biotechnology stocks continue to maintain a strong pace amid phase trials, new leadership and big investments from insiders.
Before the 2016 U.S. presidential election, the biotech industry itself was in a downward trend with many expecting Hillary Clinton to become president and put pressure on big pharma. Once President Trump took office, biotechnology stocks took on a much brighter spotlight. This has been clearly evidenced by the dramatic shift in the Nasdaq Biotechnology Index (NBI). The index itself has increased by as much as 33% after hitting new highs earlier in July.
In line with this, the Nasdaq Biotech Index (in blue, above) continues to outpace both the S&P500 (in green) and the Nasdaq (in red). The regulatory environment in the U.S. leans in favor of biotechnology, with the Food and Drug Administration offering fast-track approval for some breakthrough drugs, especially those targeting rare diseases.
Oxis International Inc. (OXIS, Financial), for example, develops and commercializes innovative immunotherapeutics and has a robust portfolio. Oxis has a portfolio of next-generation cancer initiatives and its lead drug candidate, OXS-1550. In fact, the first patient has begun treatment in a FDA-approved Phase 2 clinical trial of its cancer therapy.
Dr. Daniel Vallera, director of the section on Molecular Cancer Therapeutics at the University of Minnesota Cancer Center, helped develop OXS-1550. He commented on the drug.
"The initiation of Phase 2 patient treatment is a key opportunity to demonstrate the effectiveness of this promising cancer therapy," Vallera said. "This brings us one step closer to an important alternative to invasive chemotherapies and costly cell therapies, Kite Pharma, Inc. (KITE, Financial), Juno Therapeutics (JUNO, Financial), for cancer patients."
Oxis recently announced it has signed a binding letter of intent agreement to acquire Georgetown Translational Pharmaceuticals Inc. Formal completion of this agreement will allow Oxis to acquire Georgetown Translational’s leading candidate, Pain Brake. This therapy is a pain relief drug expected to be submitted to the FDA as a new drug application in 15 to 18 months.
Dr. Kathleen Clarence-Smith, co-founder of Chase Pharmaceuticals Corp. (acquired by Allergan PLC (AGN)), will become the new CEO of Oxis and the company has also proposed a name change to GT Biopharma Inc. as part of the transaction.
Similar to Oxis, Moleculin Biotech Inc. (MBRX, Financial) also recently announced adding members to the company. In late July, Moleculin appointed John M. Climaco as an independent member of the board of directors.
"We are pleased to have John join our Board as he brings a wealth of international business successes managing complex operations in addition to his well-established capabilities in capital markets, product commercialization and business development," Moleculin CEO Walter Klemp said.
Recently, the company has been focused on providing support to help jumpstart the launch of a physician-sponsored investigational new drug (IND) application to study the company's WP1066. This drug is designed for the treatment of adult brain tumors (glioblastoma).
"By providing additional guidance and data, we think we can help accelerate the ability of the physician investigator to respond to FDA's requests in a way that will allow the study to begin, which we believe could position WP1066 for a brain tumor trial this year," Klemp said in a press release.
Moleculin share prices have jumped since late June to as high as $3.75. On July 31, the stock closed at $2.99, which was up over 100% since July 10.
Another biotech stock in focus is BioLineRX Ltd. (BLRX, Financial). The company is in its clinical stages and focusing on oncology and immunology. It is currently working on a combination trial of BL-8040 (the company’s lead oncology platform) and atezolizumab in order to develop a cancer immunotherapy combination. Genentech, a member of the Roche Group, has begun a Phase 1b/2 study for BL-8040 in order to evaluate the combination in metastatic pancreatic ductal adenocarcinoma.
In this study, the company said up to 40 patients are planned for enrollment, where the Phase 1b/2, multicenter, randomized, controlled, open-label study will evaluate clinical response, safety and tolerability of BL-8040 in combination with atezolizumab.
A few days ago, the company also gained further interest from its largest shareholder, BVF Partners LP, via a definitive agreement to make another direct investment of $9.6 million while increasing its interest in the company to nearly 25%. The investment is priced at $1.13 per unit and includes ordinary shares and Series A and B warrants with four-year terms.
Philip A. Serlin, CEO of BioLineRx, commented on the deal in a press release.
"We thank BVF for their support and confidence," Serlin said. "BVF's new direct investment, on the heels of its recent initial investment in the company this past March, provides us with additional resources to accelerate our clinical development programs. We continue to execute on our clinical development strategy and look forward to the data readouts from our multiple clinical studies."
Since making these two key announcements, shares of BiolineRx have dramatically increased in price. In early July, shares of BioLine were trading around 84 cents and on July 31, the stock saw highs of $1.09 to mark a near 30% move in three weeks.
But it is not just drug trials and board appointments that have become quick catalysts for biotech companies this summer. Licensing agreements have been a hot topic as well. CytRx Corp. (CYTR, Financial) announced on July 28 it had entered into a global strategic license with NantCell Inc. for the exclusive rights to develop and commercialize aldoxorubicin for all indications.
“[NantCell is] committed not just to bringing aldoxorubicin to the market for patients with soft tissue sarcomas, but to expand aldoxorubicin's potential use in combination with both immuno-oncology and cell based therapies to better serve patients suffering from cancer," Steven A. Kriegsman, CytRx's chairman and CEO, said in a press release..
For investors, this transaction comes at a premium to current market prices. NantCell made a strategic investment via a $13 million purchase of CytRx common stock at $1.10 per share, representing approximately a 14% premium to the stock's most recent closing price on July 31.
CytRx is further entitled to receive up to an additional $343 million in milestone payments related to regulatory approvals and commercial milestones for aldoxorubicin. Over the last two days, shares of CytRx have climbed from roughly 59 cents to as high as 99.8 cents in some of its most active trading volume all year.
Conclusion
Many biotech companies are undertaking phase trials, have projects under development and some have just begun to capitalize on their action plans. The allure of underfollowed companies has been a big focus as of late with the mergers and acquisitions climate becoming red hot. While new board appointments, key phase trials and new fast-track designations abound, the biotech sector continues to be in focus during the second half of 2017.
Disclaimer: The author owns ZERO shares in any companies mentioned within this article. The author is affiliated with MIDAM VENTURES LLC a company which has an exisiting marketing & awareness contract with Oxis International Inc. (OXIS, Financial) to provide marketing & awareness . The author has not been compensated to write this article.
