3 California Biotechs That Have Already Gained 300% or More This Year

Published: Sep 20, 2017

3 California Biotechs That Have Already Gained 300% or More This Year September 14, 2017
By Mark Terry, BioSpace.com Breaking News Staff

While the iShares Nasdaq Biotechnology Index grew 26 percent so far this year, three biotech companies have wildly exceeded that, quadrupling their share prices or more. Cory Renauer, writing for The Motley Fool, looks at these three companies, why they took off, and if there’s more to come.

1. Kite Pharma

Based in Los Angeles, Kite Pharma focuses on chimeric antigen receptor (CAR) and T-cell receptor approaches to immuno-oncology, CAR-T. On Aug. 28, Gilead Sciences (GILD) acquired the company for $180 per share, a deal worth about $11.9 billion.

Kite stock grew just under 300 percent this year. The is currently trading for $178.88, and it’s doubtful if it would exceed the $180 price Gilead is paying for it.

Yet Renauer thinks Gilead is likely to gain quite a bit from this acquisition. He writes, “A single infusion of Kite’s lead candidate, axi-cel, has been shown capable of driving aggressive lymphomas into complete remission for patients that had exhausted all available treatment options. Axi-cel is under FDA review at the moment, and it’s not the only reason Gilead snapped up Kite Pharma. Reprogramming patient immune cells to attack cancer is expected to play an important role in the years ahead. Gilead’s new position as a leader in this field could make it one of tomorrow’s best-performing biotech stocks.”

2. Sangamo Therapeutics

Headquartered in Richmond, Calif., Sangamo Therapeutics uses engineered zinc finger proteins (ZFPs) to edit the human genome, knocking out a gene or adding a new DNA sequence in a precise location. Company stock climbed in May when Pfizer (PFE) paid $70 million upfront for rights to a hemophilia drug, SB-525.

Renauer writes, “Sangamo remains entitled to a double-digit royalty percentage on potential sales, and another $300 million in various payments that trigger if SB-525 passes specified milestones. Perhaps the most important milestone will be a success in a phase I/II study that dosed the first of up to 20 patients in August. If the results are positive enough to persuade Pfizer to commit to a larger phase III study, this stock could continue soaring.”

Sangamo is currently trading for $13.62. Share traded for $3.65 on Jan. 2, 2017.

3. Dynavax Technologies Corporation

Headquartered in Berkeley, Calif., Dynavax Technologies Corporation focuses on immune system modulation for infectious and inflammatory diseases and cancer. The company’s stock had a bit of a roller-coaster ride this year. In August, a U.S. Food and Drug Administration (FDA) panel voted 12 to 1 to recommend its Heplisav-B hepatitis vaccine, which was good news for the company, then only days later the FDA requested more information about its post-marketing plans. As a result, Dynavax shares dropped 11 percent.

There was never much concern about the vaccine’s efficacy, but there was concern over its safety profile. Regulators pointed to an imbalance of fatalities and cardiac events that have never been explained. So after the committee vote, the FDA and Dynavax decided that more time was needed to lock in details of the post-marketing study, especially since there was an Aug. 10 PDUFA date.

Renauer notes that if approved, Heplisav B could bring in $700 million in annual sales, “but the stock had been depressed going into an independent advisory committee meeting this summer. The FDA wanted to know what other physicians thought about five out of 4,425 patients given Heplisav-B that suffered a pulmonary embolism during a 52-week observation period.”

The vote pushed the stock up, and if approved, could go much higher. The August date was pushed back. Renauer writes, “Communications with the FDA aren’t subject to full disclosure, but it’s hard to imagine the Agency hammering out post-marketing study details for a vaccine it doesn’t intend to approve. If previously observed safety issues eventually fade, a successful launch for Heplisav-B could drive this stock much higher over the long run.”

Dynavax is currently trading for $20.75. Shares traded on Jan. 3, 2017 for $4.05.

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