Nasdaq shuffles biotech index ranks, highlighting 2016 hits, misses
- After a rollercoaster ride of a year for the biotech sector, Nasdaq is bouncing 37 companies from its biotechnology stock market index as part of an annual re-ranking.
- Obesity drugmakers Orexigen Therapeutics and Zagen, Inc, along with other notable companies such as the gene therapy company UniQure and inhaled insulin believer Mannkind Corp., were removed from the Nasdaq Biotechnology Index prior to market open on December 19.
- On the other side of the ledger, 21 companies, including the CRISPR gene-editing companies Editas Medicine and Intellia Therapeutics, will join the NBI ranks.
The Nasdaq Biotechnology Index hit a peak in mid-July 2015, cresting 4,000 for the first time in its history that month. Since then, however, the market retrenched and 2016 has not shaken off cooling investor sentiment — even after a post-election bump on the prospects of a lighter-touch Trump administration.
Nasdaq's re-ranking of its market index reflects many of the notable biotech failures from 2016, along with some of the success stories.
Take Infinity Pharmaceuticals. The Cambridge-based company laid off a fifth of its staff and shut down its discovery research division in the immediate wake of a Phase 2 setback which showed a smaller-than-expected clinical benefit for its lymphoma drug duvelisib. Two weeks later, AbbVie nixed its collaboration with Infinity, triggering another round of layoffs.
Others ran into similarly challenging clinical roadblocks. Regulus Therapeutics saw its stock collapse after the Food and Drug Administration halted testing on its hepatitis C candidate. Tokai Pharmaceuticals abandoned clinical testing of its prostate cancer drug galeterone after a Phase 3 miss, trimming down to a skeleton staff of 10 employees.
The incoming crop of 21 companies to Nasdaq's list, on the other hand, include CRISPR stars Editas Medicine and Intellia Therapeutics and a number of other surging biotechs.
CoLucid Pharmaceuticals, for example, got a boost when its oral migraine drug lasmiditan hit both its primary and secondy endpoints in a late-stage study. Opko Health overcame a manufacturing-related complete response letter from the FDA to secure approval for its kidney disease drug Rayaldee.
Next year could be a busy year for M&A if a Trump administration signals a looser regulatory environment or takes steps to encourage repatriation of offshore pharma cash. Emerging science — such as in oncology, inflammatory diseases and neurodegenerative conditions — coupled with lower valuations could also open up pharma warchests.
But if 2016 is any indication, an industry under fire for goosing drug prices might end up becoming more cautious on betting the farm on marginal additions to pipelines.
- Nasdaq Press release
- BioPharma Dive After rough 2016, markets to open for emerging biotech
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