Pacific Biosciences of California (PacBio; PACB) shares scored their highest one-day gain in nearly six years Tuesday, soaring 34% from $1.62 to $2.17, for reasons about which investors were left to speculate.
Two potential explanations surfaced for the surge on X (formerly Twitter) and investor chat boards: One is investor interest in the company’s upcoming second-quarter earnings, which PacBio said Tuesday it will release on August 7 after the close of the markets.
The other potential explanation: A stock buying spree by two electronic transfer funds (ETFs) of ARK Investment Management (ARK Invest), the high-profile firm led by chief investment officer and portfolio manager Catherine D. (Cathie) Wood.
ARK Genomic Revolution ETF (ARKG) and ARK Innovation ETF (ARKK) bought a combined 147,030 PacBio shares this week—starting with the 98,190 shares purchased on Tuesday that was reported to have accounted for that day’s price jump. Over the following two days, ARKG and ARKK scooped up 48,840 additional shares, then sold off 99,652 shares, resulting in a total holding of 32,264,034 shares between the two funds. At Thursday’s closing price, ARK’s PacBio shares were valued at a combined $55,978,099.
As of Friday, ARKG held 12,682,225 shares in PacBio, with a market value of $22,003,660.38—a weight of 1.59%, the 22nd highest percentage among the 41 companies in which the fund holds shares, ARKG disclosed. ARKK held 19,581,809 shares in PacBio, with a market value of $33,974,438.62—a weight of 0.53%, the 29th highest percentage among the fund’s 33 portfolio companies, ARKG disclosed.
“Strong buying opportunity right now,” Michael Hall, CEO and founder of Hedge Street Capital, the marketing arm of digital CEO interview service Alpha Street IR, commented Wednesday on X.
Another X commenter, “PACB Realist,” took an opposite view: “Sell while you still can folks. Yesterday [Tuesday] was a fluke if I’ve ever seen.”
Despite ARK’s seeming vote of confidence, PacBio’s stock failed to maintain Tuesday’s momentum the rest of this past week. Shares fell 5.5% Wednesday to $2.05, then declined another 15% Thursday to $1.74, and dipped a further 4% Friday, to $1.66.
Free-falling shares
PacBio’s previous one-day highest stock gain occurred November 2, 2018, the day after Illumina (ILMN) announced plans to acquire the company for $1.2 billion or $8 a share. Investors responded by sending PacBio shares zooming 67% to $7.53. The companies scrapped their deal in January 2020, after regulators in the U.S. and the U.K. revealed plans to block the deal on anticompetitive grounds.
Over the past 3-1/2 years, PacBio’s shares have free fallen 96% from the all-time high of $53.69 reached on February 8, 2021, when the stock closed at $50.32. Shares more than doubled in the year ending August 2023, then resumed their decline—notably in April when PacBio reversed its earlier “guidance” forecast to investors for 5% operating expense growth this year, revealing instead plans to cut its annual operating expense run rate by $50 million to $75 million. That news sent shares tumbling 51% to $1.40 a share on April 16.
However, Jefferies offered a more bullish view of PacBio last month by initiating coverage of the company’s shares, with a “Buy” rating and a 12-month price target of $4.
Tycho Peterson, an equity analyst with Jefferies, acknowledged a key reason for investor skittishness about PacBio in recent months: Its results over recent quarters despite the launches of several new products. These include the Apton high throughput short-read sequencer, which PacBio inherited by acquiring Apton Biosystems for up to approximately $110 million in 2023; and the Revio long-read platform, the successor to the Sequel IIe.
“While there is undoubtedly frustration with recent performance, and we acknowledge the uncertainty in launching multiple modalities in a short span of time, we encourage investors to take a longer-term view,” Peterson advised in a June 3 research note. “The pending rollout of both Apton and the mid-throughput Revio instrument should put the company on a multiyear path to becoming a more significant competitor in the growing NGS market and importantly, one with the most comprehensive portfolio spanning short- and long-read capabilities.”
Revio generated some good news Thursday when multiomics solutions provider MedGenome said it had acquired the long-read sequencing system from PacBio, becoming the first commercial service provider in the San Francisco Bay Area to offer Revio in house.
“Their commitment to advancing scientific discovery aligns perfectly with our mission at PacBio, and we’re confident that this collaboration will empower researchers with the tools they need to make groundbreaking discoveries,” Jeff Eidel, PacBio’s chief commercial officer, said in a statement.
IPOs: HSBC report shows near doubling of deal value
HSBC’s 1H 2024 Venture Healthcare Report, released Wednesday, showed both how far the initial public offering market has come from the doldrums of recent years—and how much higher the IPO market has to climb before it approaches its heights of the COVID-19 era.
During January–June 2024, HSBC tallied 10 biopharma companies as having launched IPOs—triple the three IPOs of the first half of last year, and one less than the 11 companies that went public in all of 2023.
This year’s 10 IPOs raised a combined $1.763 billion, nearly double (97% above) the $893.1 million raised by the year-ago IPOs, but 30% below the $2.518 billion raised by all 11 of last year’s biopharma IPOs, according to the IPO Tracker of law firm Goodwin Procter (HSBC’s H1 2023 report did not furnish a total capital raised figure).
“The biopharma IPO market relies on generalist investor support to really drive returns for public biopharma specialist and venture capital investors,” HSBC observed in its report.
Positive as the IPO news has been this year, it pales compared to the numbers of initial offerings launched in recent years. That number dipped from 55 in 2018 to 50 the following year—then leaped during the pandemic to 83 in 2020 and 96 in 2021, when the market for first-time biopharma stocks turned bearish.
Most of the HSBC report covered trends in private venture capital investment in biopharma and three other life sciences segments, diagnostics and tools, healthtech (technologies applied by healthcare providers), and medical devices.
In Biopharma, the HSBC report tallied 297 VC financings totaling $14.8 billion—rising 36% from the $10.9 billion in the value of financings, though the number of deals actually dipped nearly 1% from 299 in January–June 2023.
“Some companies continue to raise large rounds even in the down market, but the key question in 2024 is whether the prevalent insider rounds from 2022 and 2023 will provide enough runway for companies to reach a value-creation event that justifies new investment,” Jonathan Norris, the report’s lead author and a managing director with HSBC, said in a statement. “Most VCs possess substantial new capital available for new investments, and growth investors have become active once again.”
Leaders & Laggards
- Agenus (AGEN) shares plummeted 66% from $17.73 to $7.30 Thursday, then to $5.99 Friday, after the company acknowledged that FDA regulators discouraged the company from pursuing an accelerated approval pathway for its immunotherapy combination of botensilimab (BOT) and balstilimab (BAL), for the treatment of adults with relapsed/refractory microsatellite stable colorectal cancer (r/r MSS CRC) with no active liver metastases (NLM). During an end-of-Phase II meeting, the FDA offered its advice “based on their view that objective response rates may not translate to survival benefit,” Agenus said. Emily Bodnar of H.C. Wainwright lowered the firm’s rating on the stock Thursday from “Buy” to “Neutral.” The company cited topline interim data from the Phase II trial (NCT05608044) showing an objective response rate of 19.4% and six-month survival rate of 90% for the BOT 75mg/BAL combination—trends Agenus said were consistent with results from a Phase I study (NCT03860272).
- Aslan Pharmaceuticals (ASLN) shares nosedived 37% from $1.11 to 70 cents Wednesday after the company said its Singapore-incorporated sole operating subsidiary filed for voluntary liquidation. Aslan said the decision followed a “comprehensive” review by its board of Aslan SG’s financial position and strategic alternatives. Effective immediately, Aslan terminated all employees of Aslan SG and the company’s U.S. subsidiary, Aslan Pharmaceuticals (USA). Aslan reported 35 full-time employees as of December 31, 2023. Aslan also named Luke Anthony Furler and Tan Kim Han of Quantuma (Singapore) as provisional liquidators to oversee an orderly wind-down of Aslan SG operations, “including seeking potential strategic alternatives for its development programs and the Company’s primary assets, eblasakimab and farudodstat, settling outstanding obligations, and distributing any remaining proceeds, if any, to creditors and shareholders, including the Company, in accordance with Singaporean law.”
- Caribou Biosciences (CRBU) shares fell 15% over three days, from $2.73 to $2.64 on Wednesday, then to $2.40 Thursday and $2.30 Friday, after the company disclosed in a regulatory filing that it ended preclinical research activities associated with its allogeneic CAR-NK platform and reduced its workforce by 21 positions, or approximately 12%. Caribou estimated it will incur approximately $0.5 million to $1.0 million in costs associated with the job cuts, which the company expects will extend its cash runway “by at least six months into the second half of 2026.” On a preliminary unaudited basis, Caribou said it expects to report $311.8 million in cash, cash equivalents, and marketable securities as of June 30, 2024—down about 10% from $345.9 million as of March 31.
- Cassava Sciences (SAVA) shares sank 29% from $13.53 to $9.57 Wednesday after the developer of the Alzheimer’s disease treatment candidate simufilam announced the departure of its chairman, president, and CEO Remi Barbier and his wife Lindsay Burns, senior vice president of neuroscience. The departures come nearly three weeks after a federal grand jury in Maryland indicted Hoau-Yan Wang, PhD, a former paid science advisor to Cassava and medical professor at City University of New York (CUNY) School of Medicine. The indictment alleges that he fabricated and falsified scientific data in applying for NIH grants totaling approximately $16 million awarded to him and the company between 2017–2021. Cassava stated June 28 that Wang and the medical school “have had no involvement in the Company’s Phase III clinical trials of simufilam.” Cassava’s board has since appointed Richard (Rick) Barry as executive chairman and principal executive officer. Cassava said Barbier remains employed until September 13 “in a non-executive capacity, without duties or responsibilities.”
