Gaining 22% in a year is a very good return for most stocks. But racking up that much or more in just a week is better than very good -- it's fantastic.
Three biotech stocks that achieved this feat this week are Nightstar Therapeutics (NASDAQ: NITE), Arbutus Biopharma (NASDAQ: ABUS), and Biogen (NASDAQ: BIIB). What caused these stocks to soar, and are they smart picks to buy now? Here's what you need to know.
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1. Nightstar Therapeutics: Old news is still good news
Shares of Nightstar Therapeutics jumped 29% this week. By Thursday, the biotech stock was up more than 30%, but gave up some of its gains. Nightstar didn't have any news in recent days, but the small biotech continues to enjoy momentum from last month.
On June 6, Nightstar reported its Q1 results. The major story was that the company's phase 1/2 clinical study evaluating gene therapy NSR-RPGR in treating rare genetic retinal disease X-linked retinitis pigmentosa (XLRP) was ahead of schedule. Preliminary data from the dose-escalation portion of the study are expected to be announced in the third quarter of 2018.
Nightstar's lead candidate, NSR-REP1, is currently in a phase 3 study targeting another genetic eye disease, choroideremia. On June 14, the biotech announced that the Food and Drug Administration (FDA) had granted a "regenerative medicine advanced therapy" (RMAT) designation to the gene therapy, which enables Nightstar to work closely with the FDA on advancing the therapy, and could lead to an expedited approval process.
2. Arbutus Biopharma: Momentum and milestones
Shares of Arbutus Biopharma moved 25% higher this week. What big news served as the catalyst? Actually, there wasn't any -- this week's movement is a continuation of Arbutus' momentum over the last month.
Investors appear to be excited about several milestones for Arbutus. The biotech doesn't have any products on the market yet, but it stands to receive royalties from Alnylam on sales of patisiran, assuming the drug wins FDA approval this summer for treatment of rare genetic disease hereditary ATTR (hATTR) amyloidosis.
Arbutus also expects to announce interim results in the second half of this year from a phase 2 study evaluating a combination of its lead candidate, RNA interference (RNAi) therapy ARB-1467, with tenofovir (TDF) and pegylated interferon in treating patients infected by the hepatitis B virus (HBV). The biotech plans to advance two other HBV candidates to phase 1 clinical studies this year as well.
3. Biogen: The second time's the charm
Biogen stock rose nearly 23% this week. The big biotech, along with its partner, Japanese drugmaker Eisai, announced positive top-line data on Friday from a phase 2 clinical study evaluating investigational antibody BAN2401 in treating Alzheimer's disease.
This wasn't the first time that Biogen and Eisai reported results from the phase 2 study of BAN2401. In December, the companies announced that the drug failed to achieve its primary endpoints after 12 months of treatment. This time around, though, the highest dose of BAN2401 achieved statistically significant improvement in slowing progression of Alzheimer's and reducing amyloid plaque deposits in brain cells after 18 months of treatment. The primary difference, other than additional time for treatment, between the previous failure and the recent success is the statistical method used to analyze the study's results.
Biogen and Eisai now plan to follow up with regulatory authorities on potential next steps for BAN2401, which almost certainly will lead to a pivotal late-stage clinical study. The good results for the drug could bode well for Biogen's lead Alzheimer's disease candidate, aducanumab, which is being evaluated in two phase 3 clinical studies and, like BAN2401, targets amyloid accumulations in the brain.
Are they buys?
My concern with Arbutus Biopharma is that the big gains achieved recently don't leave as much room to run for the stock. It's also still too early to know how successful the company's HBV therapies will be.
Nightstar Therapeutics' gene therapies appear to be quite promising. The biotech could be destined to follow the path of Spark Therapeutics, which won FDA approval for a gene therapy that treats a genetic eye disease last December and now claims a market cap of nearly $3.5 billion. However, Nightstar still has a lot of risks. I don't think the stock would be well suited for most investors.
What about Biogen? It's the best pick of the three, in my view. The prospects for BAN2401 now look pretty good. Even better, the whole idea that Alzheimer's disease is caused by amyloid buildup received a boost from the phase 2 results for the drug. That's potentially great news for aducanumab, a drug that market research firm EvaluatePharma sees as the third-most-valuable pipeline asset in the biopharmaceutical industry.
I wouldn't go as far as to say that Biogen is definitely a stock to buy right now, though. The biotech still faces serious headwinds for its multiple sclerosis franchise. And despite the positive results for BAN2401, there's no guarantee that aducanumab or other drugs in Biogen's pipeline will be successful. I plan to keep my eyes on all three of these biotech stocks, especially Biogen, but for now will only watch from the sidelines.
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