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Insight & Intelligence™ : Jan 13, 2014

Top 10 Wall Street Losers of 2013

Which biotech and biopharma firms tanked last year?

Following is a list of the top 10 worst stock performers of 2013—the 10 biotech, pharma, tools/tech, and services (CROs) company stocks whose prices fell the most during the past year. Companies are listed by name; their stock exchange and trading symbol, the closing price on December 13, 2013, and December 13, 2012; the percentage of change between the closing prices; and a brief explanation for the companies’ misfortune, combined in some cases with better news.

Most of the companies that lost on Wall Street during 2013 are, like the past year’s winners, up-and-coming companies, small- to mid-capitalization (“small cap” to “mid cap”) stocks that plunged in value as a result of some sort of bad news—often the failure of a mid- to pivotal-stage clinical trial, but including unfortunate resulting events such as terminations of clinical development programs, layoffs, consolidations and restructurings, sudden exits for top management, and sometimes the issuing of subpoenas, no matter the legal presumption of innocence. Unlike last week’s mostly unknown Wall Street winners, many of the 10 companies on this list were companies that repeatedly made headlines for all the wrong reasons.

Not listed are companies that appeared to show even larger price losses, but only as a result of reverse stock splits or dividends, since the adjusted closing prices resulting from the splits showed much smaller year-to-year losses for investors.

#10. BG Medicine

NASDAQ: BGMD

December 13, 2013: $1.10

December 13, 2012: $2.89

% Change: -61.9%

2013 highlights: The company in September hailed positive clinical results in a European Journal of Heart Failure study linking elevated levels of Galectin-3 to adverse outcomes in chronic heart failure patients—and thus a need for its diagnostic. A month later, rival Critical Diagnostics published a study in JACC (Journal of the American College of Cardiology) in October concluding its soluble protein ST2 biomarker showed superiority to BG’s Galectin-3 in predicting all-cause death and cardiovascular mortality in a study of 876 heart failure patients over five years. From 92 cents on September 30, the share price fell by nearly half in October to a low 55 cents on October 15. But on December 10, shares nearly doubled from 58 cents to $1.08 after the Center for Medicare and Medicaid services nearly doubled the reimbursement rate for Galectin-3 as of 2014, to $30.01 from $17.80.

#9. XTL Biopharmaceuticals

NASDAQ: XTLB

December 13, 2013: $2.81

December 13, 2012: $7.50

% Change: -62.5%

2013 highlights: In a Form 6-K filing with the SEC dated May 30, the company said it “expects to incur additional losses in 2013 arising from research and development activities, evaluating additional technologies, and operating activities, which will be reflected in negative cash flows from operating activities.” To complete its clinical trials and see product development through to approval, XTL “will be forced to raise additional funds in the future by issuing securities.” The company began trading its American Depository Receipts (ADRs), each representing 20 ordinary shares, in July on NASDAQ, where company American Depository Shares have traded on its Capital Market; in addition to shares traded on the Tel Aviv Stock Exchange.

XTL is focused on late-stage clinical development of drugs for the treatment of multiple myeloma, schizophrenia, and hepatitis C; lead drug candidate rHuEPO, a recombinant erythropoietin for multiple myeloma blood cancer, won FDA’s orphan drug designation in 2011. The biggest stock price dip saw shares slide about 18% from $5.35 to $4.40 on November 7, the day the company disclosed the resignation of former CEO David Grossman from its board of directors; he stepped down October 15 as CEO, a position he held from 2009. The executive shuffle continued December 30 ($2.94 at close), as David Kestenbaum was named CFO, succeeding CFO and Deputy CEO Ronen Twito, who told the company he was leaving the company “to pursue other opportunities.”

#8. Amicus Therapeutics

NASDAQ: FOLD

December 13, 2013: $2.05

December 13, 2012: $5.48

% Change: -62.59%

2013 highlights: The year started well for Amicus, as share prices rose 49% between January 3 and January 10 (from $2.84 to $4.22), on positive Phase II trial results for AT2220 in Pompe disease revealed January 4. But by June shares plummeted 20%, from $3.19 to $2.64, after the company said FDA insisted on waiting for additional Phase III data for Amigal (migalastat HCl) before advancing an NDA for the Fabry disease candidate it was co-developing with GlaxoSmithKline (GSK). In November, Amicus bought back full rights to develop the compound as a monotherapy and with an enzyme replacement therapy (ERT) for Fabry. Amicus paid nothing upfront but gave up possible future milestone payments and royalties to GSK, which took a $3 million stake in Amicus.

Amicus also said it will cut its workforce 14%, to 91 staffers, by shutting down its San Diego research lab and consolidating at its Cranbury, NJ, headquarters. On a brighter note, Amicus launched a partnership with Biogen Idec to discover small molecules that fight Parkinson’s disease by targeting the lysosomal enzyme glucocerebrosidase (GCase). It was one of many actions by which Amicus repositioned itself into a developer of ERTs, as was its acquisition of ERT developer Callidus Biopharma for up to $130 million.

#7. GTx

NASDAQ: GTXI

December 13, 2013: $1.50

December 13, 2012: $4.24

% Change: -64.62%

2013 highlights: Senior executives cut their pay while 53 employees were laid off in October, less than two months after the company acknowledged the failure of a pair of Phase III studies, causing share prices to plunge nearly 66% on August 19, to $1.43 from $4.15 the previous trading day. GTx said its POWER1 and POWER2 trials for enobosarm in patients with non-small-cell lung cancer (NSCLC) receiving chemotherapy failed to meet its co-primary endpoints of lean body mass and physical function. It was a disappointing outcome for a drug candidate that earlier this year won FDA’s Fast Track designation. And while investors were mostly unconvinced, the company said enobosarm had value in fighting cancer-induced muscle waste, citing “significant” quantitative advantage in lean body mass compared with placebo in both trials. The price bounced back slightly before falling another 12% (to $1.65) following the pay cuts and layoffs.

#6. Vical

NASDAQ: VICL

December 13, 2013: $1.05

December 13, 2012: $2.98

% Change: -64.8%

2013 highlights: The company announced plans to lay off 47 staffers (39% of its workforce) and refocus on its infectious disease vaccine programs in August, 10 days after disclosing it was scrapping development of its lead pipeline drug, the cancer immunotherapy Allovectin (velimogene aliplasmid), following a failed Phase III clinical trial. The failure sent Vical’s stock price falling by more than half (57%), to $1.53 at the close on August 12, from $3.58 the previous trading day. In a trial of 390 patients with metastatic melanoma, Allovectin failed its primary endpoint of showing statistically significant improvement vs. first-line chemotherapy for objective response rate at 24 weeks or more after randomization. The drug candidate also failed its secondary endpoint of overall survival.

#5. Pernix Therapeutic Holdings

NASDAQ: PTX

December 13, 2013: $2.44

December 13, 2012: $7.53

% Change: -67.6%

2013 highlights: In reporting its third-quarter results November 12, the company lowered its net revenue investor guidance to $80 million from a range of $90 million to $100 million, and said it implemented “net personnel reductions” designed to save $2 million annually. Investors responded by sending the stock price down nearly 22%, from $2.80 to $2.19, before it bounced back somewhat in later weeks. Pernix didn’t say how many jobs it was shedding in the “elimination and consolidation of certain management level and staff positions” it disclosed following acquisitions that included Cypress Pharmaceuticals and Hawthorn Pharmaceuticals on December 31, 2012, for a combined $101 million, and Somaxon on March 6 for $25 million. Two months after the Somaxon deal closed, Pernix abruptly changed CEOs, with the board replacing President and CEO Cooper Collins with Chairman Michael Pearce; Collins stayed on as chief strategy officer and director. The CEO news didn’t faze investors as much, as the stock dipped 4% to $3.41 from $3.56.

#4. Prima BioMed

NASDAQ: PBMD

December 13, 2013: $1.07

December 13, 2012: $3.63

% Change: -70.5%

2013 highlights: Share price tumbles 31.5% in September after company says its ovarian vaccine candidate CVac showed no observed improvement among all patients in one of two primary objectives, progression-free survival (PFS) compared to control groups in the 63-patient Phase II CANVAS-003 trial, which assessed PFS in epithelial ovarian cancer patients in first or second remission (the other primary objective was safety). Company follows by suspending enrollment in 800-patient CANVAS-004 clinical trial, designed with PFS as primary endpoint; at the time 76 patients had been randomized, and have begun various stages of their first-line treatment, with 13 moving on to dosing as of November 1. Price leaps as high as $1.90 during trading following a presentation of trial data in November, before settling back down about a month later.

#3. Aveo Oncology

NASDAQ: AVEO

December 13, 2013: $1.71

December 13, 2012: $6.68

% Change: -74.4%

2013 highlights: Company laid off 140 staffers—62% of its workforce—in June, days after FDA issued a Complete Response Letter faulting as uninterpretable and inconclusive Aveo’s results from its TIVO-1 trial of tivozanib for advanced renal cell carcinoma (RCC) and requesting a new RCC trial. The agency sided with its Oncologic Drugs Advisory Committee, which in May voted 13–1 to recommend that FDA reject tivozanib for RCC. Three weeks later, Astellas Pharma told Aveo it would not pursue European approval for the drug candidate, and would stop funding trials under their collaboration.

In July, Aveo disclosed receiving a subpoena from the U.S. Securities and Exchange Commission requesting documents and information on tivozanib, including what the company called “related communications with the FDA, investors, and others.” Aveo repositioned the experimental kidney cancer drug for colorectal cancer (CRC) and breast cancer, only to suffer another setback in December when the company conceded its Phase II BATON-CRC trial was “unlikely to meet the primary endpoint” of superiority with modified FOLFOX6 compared to bevacizumab with modified FOLFOX6 as first-line treatment in patients with advanced metastatic CRC.

#2. Amarin

NASDAQ: AMRN

December 13, 2013: $1.73

December 13, 2012: $8.96

% Change: -80.7%

2013 highlights: FDA’s Endocrinologic and Metabolic Drugs Advisory Committee in October recommended against the company’s supplemental NDA (sNDA) to expand the label for the cholesterol-fighting fish oil–derived Vascepa (icosapent ethyl) capsules. Amarin seeks to add an indication allowing the drug as an adjunct to diet and exercise for adults on statin therapy with mixed dyslipidemia and triglyceride levels between 200 and 499 mg/dL. Shares fell 15% after FDA on October 29 rescinded its Special Protocol Assessment (SPA) agreement with the company, citing results that failed to show a triglyceride-lowering drug significantly reduced the risk for cardiovascular events among patients meeting the new indication.

FDA has indefinitely postponed a decision on the sNDA that had a PDUFA date of December 20, while studying further the design of the company’s ANCHOR study. Amarin is appealing FDA’s overturning of the SPA, with the agency set to decide on the appeal by January 15. By then, Amarin’s effort to salvage its sNDA will be led by a new CEO, as President John F. Thero adds duties being relinquished by Joseph S. Zakrzewksi, who officially retired as chairman and CEO at the end of 2013.

#1. Ariad Pharmaceuticals

NASDAQ: ARIA

December 13, 2013: $3.98

December 13, 2012: $23.88

% Change: -83.3%

2013 highlights: FDA’s December 20 decision to let Ariad resume marketing leukemia treatment Iclusig to a smaller patient population nearly doubled Ariad’s share price (to $7.02) on December 24, before both dipped slightly three days later (to $6.64). The decision came less than two months after the company withdrew Iclusig from the market at FDA’s request, after the agency launched a safety investigation into side effects that prompted the company to halt a Phase III trial of the drug in October. A week later, Ariad announced plans to lay off 160 workers, accounting for about 40% of its U.S. staff.