Halloween week produced treats instead of tricks for some biotech investors. Quite a few biotech stocks rose by double-digit percentages, with three in particular soaring close to 30% and higher over the last five days.
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Adamas Pharmaceuticals (NASDAQ: ADMS), Juno Therapeutics (NASDAQ: JUNO), and Stemline Therapeutics (NASDAQ: STML) ranked among the biggest biotech winners of the week. Here's what drove these stocks higher -- and whether or not they're smart picks now.
Adamas Pharmaceuticals stock skyrocketed more than 40% this week, with two notable developments occurring. On Monday, Point72 Asset Management disclosed in an SEC filing that it had bought more shares of Adamas during the third quarter. That news caused Adamas stock to jump 21% in one day.
Three days later, Adamas provided an update on its third-quarter performance. Investors didn't care too much about the company's nearly non-existent revenue or its $23.4 million loss. Instead, there was growing excitement over Adamas' launch of Parkinson's disease drug Gocovri, which won U.S. Food and Drug Administration (FDA) approval on Aug. 24.
Adamas announced that it had hired six regional sales managers for a planned sales force of 59 representatives. This sales team at least theoretically should have a relatively easy job promoting Gocovri, since it's the first and only drug approved by the FDA for treating dyskinesia (involuntary muscle movements) in patients with Parkinson's disease receiving levodopa-based therapy.
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Juno Therapeutics share price soared more than 30% higher this week. Like Adamas, Juno reported its third-quarter results. But that wasn't the big story for the biotech.
On Wednesday, Juno announced that it would present new data from its Transcend study of experimental drug JCAR017 in treating relapsed or refractory aggressive B-cell non-Hodgkin lymphoma (NHL) at the American Society of Hematology (ASH) annual meeting in December. The biotech's sneak peek at the top-line data from the Transcend study gave investors plenty to like.
Patients taking JCAR017 had a three-month overall response rate of 80% and a complete response rate of 73%. Those impressive results were accompanied by a potentially better safety profile than the two CAR-T (chimeric antigen receptor T-cell) therapies that have already won approval.
Stemline Therapeutics stock jumped close to 30% over the last week. The big gains came on Tuesday with Stemline's announcement of results from a phase 2 study of lead candidate SL-401 in treating blastic plasmacytoid dendritic cell neoplasm (BPDCN), a type of acute myeloid leukemia (AML).
Patients in the third, pivotal stage of the clinical study who took SL-401 achieved a complete response rate of 54%. The overall response rate was 77%. In addition, 86% of patients with complete responses had no relapses at least five-to-eight months after initial treatment.
Based on the success in the study, Stemline plans to begin submission of a Biologics License Application (BLA) by early 2018 at the latest. The company is also working with regulatory authorities to make SL-401 available to patients as quickly as possible under compassionate use provisions.
Are they buys?
Adamas is the only of these three biotechs to have already won FDA approval for a drug. That doesn't mean the stock isn't without significant risk, though. Adamas will probably have a slow launch for Gocovri as it builds its sales team and works through the payer reimbursement process. I think the stock should be a winner over the next several years, though.
I'm bullish on Juno Therapeutics for a couple of reasons. First, the CAR-T space is hot right now, and the potential for JCAR017 looks really good. Second, Juno has a solid partnership with big biotech Celgene (NASDAQ: CELG). In fact, Celgene owns a nice chunk of Juno stock. It expects JCAR017 to be a blockbuster over the next several years. I do, too.
Stemline Therapeutics also has plenty of room to grow, in my view. I suspect the chances for approval of SL-401 are pretty good. Treating BPDCN could be just the start for the drug. Stemline hopes for success in the broader AML indication as well.
But while I like the long-term prospects for all three biotech stocks, the decision about whether or not they're ones to buy now comes down to their cash positions. I'd hold off on buying Stemline for now, because I suspect the company will have to issue more stock in 2018 to raise cash. Adamas appears to be in good shape, though. And Juno has a great cash stockpile of more than $1 billion. My view is that Adamas and Juno are hot biotech stocks that should stay hot for a while.
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