Who are the best biotech companies of 2017? Who would know better than the Labiotech team, which selected the shiniest European stars based on financial events as reflections of scientific success.
What follows is their list of standouts, their comments about each, and my take on their comments.
(This list is in no particular order other than the first three are publicly held.)
1. Ablynx NV launched its IPO on Nasdaq this year in what became the largest of the year for a European biotech: the Belgian biotech banked $175M (€148M). While the company doesn’t yet have a product on the market, its platform of nanobodies has yielded a robust pipeline. Labiotech notes:
“Most recently, Ablynx scored a Phase 3 win for its treatment of a rare blood disorder, caplacizumab, shortly before it filed for an IPO; this nanobody has also received Fast Track Designation from the US Food and Drug Administration. As CEO Edwin Moses explained in an interview due to be published this week, Ablynx expects to have its first product on the market next year.”
Steve’s Take: Ablynx has 2017 Sales so far of €64.7 million and a Net Loss of €73.5 million. Not shabby by any means.
Of the 7 analysts who follow the company, 4 Rate it a Buy, 2 an Outperform and 1 a Hold. This amounts to a consensus rating of Outperform.
Analysts have a 12-month, high-price target of €32.3, a low target of €14.60, leading to an average target of €22.9. That reflects a 58% spread between high target and the closing price of €20.39 on Monday; a -28% spread to the low target, and a 13% spread (upside) to the average target.
Ablynx is a clinical stage biopharmaceutical company, which engages in the development of proprietary therapeutic proteins under the Nanobodies brand. It offers programs for inflammation, hematology, immuno-oncology, oncology, and respiratory diseases. The company was founded on July 4, 2001 and is headquartered in Ghent, Belgium.
All things considered, this name looks like a winner. Risky, but a rationale bet.
2. Genmab A/S, Europe’s biggest biotechpost J&J’s acquisition of Actelion, has reached a milestone: its multiple myeloma antibody, Darzalex, rang the cash register forover $1B (€850M) in sales in November. (J&J unit Janssen has exclusive rights to it, so Genmab received a milestone payment of $50M (€42M).) Labiotech had this to say:
“Since its foundation in 1999, the Copenhagen-based company has been developing antibody-based therapies to treat cancer. Nowadays, it is perhaps Europe’s most fiercely independent biotech, as CEO Jan van de Winkel told [Labiotech]. Word on the street, however, is that J&J is considering a buyout after the success of Darzalex.”
Steve’s Take: Genmab is projected to close 2017 with Sales of €2.196 billion and Net Income of €968 million. Impressive to be sure.
Of the 19 analysts who cover the company, 7 rate it a Buy, 4 rate it Outperform, 7 rate it Hold and 1 rates it Underperform. This leads to a mean consensus of Outperform.
Analysts have a 12-month, high-price target of 1800 Danish Krone, a low target of 784, leading to an average target of 1456. That reflects a spread of 52% from the high target, a -34% from the low and an upside of 23% from the average.
Genmab operates as an international biotechnology company. The firm develops human antibody therapeutics for the treatment of cancer. Its antibody product, Arzerra used in the treatment of chronic lymphocytic leukemia indications; and Darzalex. The company was founded by Lisa N. Drakeman and Jan G. J. van de Winkel in 1999 and is headquartered in Copenhagen, Denmark.
Must call this a Buy, but not for the risk-averse portfolio.
3. ERYtech Pharma SA, one of Labiotech’s top biotechs in Lyon, France, came publicin one of the largest IPOs by a European biotech of the year, raising a massive $144M (€122M) on Nasdaq. Labiotech’s assessment:
“The company’s platform, ERYCAPS, uses red blood cells to deliver drugs with potential applications to tumor starvation, enzyme replacement, and immunotherapy. Its eryaspase technology, GRASPA, wowed the industry in September with Phase 2b results demonstrating its ability to improve overall and progression-free survival in pancreatic cancer, one of the deadliest of its kind.”
Steve’s Take: After Labiotech published its piece, FiercePharma reported that Erytech delivered an unpleasant surprise to the investors who backed its IPO last month. The biotech’s lead candidate failed to improve overall survival in patients with acute myeloid leukemia (AML), wiping 27% off its stock.
The trial enrolled 123 newly diagnosed AML patients aged 65 and older who were deemed unable to tolerate intensive chemotherapy. Erytech targeted this population in the belief its encapsulated form of L-asparaginase, eryaspase, could starve the patients’ tumors of certain nutrients without triggering the adverse events that make existing therapies unsuitable for some people with AML.
That theory is now in shreds.
But Jefferies analyst Peter Welford was hopeful despite the failure. “We view this to be a minor setback, having always assigned only a 30% probability to AML,” Welford wrote in a note to investors.
Of the 5 analysts who cover the company, 3 rate it Buy, 1 rates it Outperform and 1 rates it a Hold, leading to a mean consensus of Outperform.
Analysts have a 12-month, high price target of €70, a low target of €32, leading to a mean target of €49. This reflects a huge spread of 426% from the high, 95% from the low and an eye-watering upside of 298% from the average.
Despite the setback on Dec. 8, I agree with Labiotech that this name is a Buy. Speculative? Most definitely. But a rational bet given the staggering upside on share-price targets by analysts. Only for the highly risk-tolerant.
Now to the privately held–for now–group of biotech stars and Labiotech’s comments:
4. ADC Therapeutics Sarl, based in Switzerland, garnered what could turn out to be the largest fundraising in Europe of the year–a nice round $200M (€170) in an oversubscribed private placement to push its eight candidates through the arduous clinical stages. Labiotech says:
“The antibody-drug conjugates combine monoclonal antibodies with the company’s specialized pyrrolobenzodiazepine (PBD) dimers as toxins. These molecules cross-link between DNA strands to block cell division and kill a cancer cell; notably, PBDs escape DNA repair mechanisms. Two of these conjugates are set to enter Phase 2 next year in trials against lymphoma and leukemia, and one of them, ADCT-301, has already shown impressive though early preliminary Phase 1 results.”
ADC Therapeutics develops antibody drug conjugates (ADCs) and non-antibody drug conjugate products. The company is based in Lausanne. ADC operates as a subsidiary of Celtic Therapeutics Holdings LP.
5. Bicycle Therapeutics Ltd.is one of Labiotech’s favorite companies, as it develops the likely successors of ADC Thera’s bicycle-drug conjugates, based on peptides that mimic antibodies. From Labiotech:
“Following its €1B deal with AstraZeneca last year, the company this year closed a €344M partnership with Bioverativ Inc. (Waltham MA) to develop a new class of drugs against rare blood disorders like hemophilia. While ADCs are typically applied to cancer, the bicycles are useful to a range of indications beyond that. This deal followed June’s news that Bicycle had raised £40M (€46M) in a Series B round to propel its lead candidate, BT1718, into the clinic by the end of this year.”
The company applies its technology to various drug discovery projects, including oncology, ophthalmology, and other therapeutic areas through collaborative discovery partnerships with pharmaceutical companies. Bicycle was founded in 2009 and is based in Cambridge, UK.
2017 was not a big year for acquisitions apart from Actelion and tiny Bavarian biotech, Rigontec GmbH. In September, it was by MSD (Merck Sharp & Dohme) for €464M, having just reached Phase 1 since its formation in 2014.
This is a huge windfall for such a fledgling company but perhaps not a surprise after Rigontec managed to raise €30M in a Series A last year. The acquisition comes just as RNA therapies are gathering momentum–the first drug could be in the pharmacies as early as 2018 following eye-popping Phase 3 results from Sanofi and Alnylam.
In its closing observation for 2017, Labiotech notes:
“Everyone in biotech seems to want a piece of Exscientia Ltd.’s artificial intelligence (AI). This year, Evotec, GSK, and Sanofi all signed deals with the startup, based in Dundee, Scotland, to apply its algorithms to their drug discovery efforts…AI and machine learning (ML) are becoming a force to be reckoned with in biotech, particularly in Alzheimer’s research and drug discovery, and Exscientia may be well positioned to lead the charge in Europe.”
The Berlin-based biotech reporter’s full account of the European biotech scene is due out in January. I’ll be among the first to broadcast it on MondayMorning.com, for those observers who think the only meaningful action in biotech is here in the US.
Steve Walker has no position in any stocks mentioned. MedContent Inc. has no position in any stocks mentioned. MondayMorning.com has a disclosure policy.