"Terrible." In a word, that's Brad Loncar's summary of biotech's market performance this year.
Loncar, a founder of biotech exchange-traded funds, said he's ambivalent on how the rest of 2019 will unfold, given the industry's persistent challenges.
"Everything you see in the news about drug pricing, for the first time ever, is starting to have a real effect," he said in an interview with BioPharma Dive, adding the developing trade war between the U.S. and China will also be influential in how biotech performs over the next six months.
Loncar's tepid outlook matches well with how analysts at Credit Suisse gauge investors' views of the sector. Yet the investment bank thinks sentiment could be lifted by three upcoming events that might help biotech break out from an underpeforming year.
In a Wednesday research note to clients, Credit Suisse analyst Evan Seigerman said updates from Amgen, Novartis and Roche are "likely to move the needle" for the industry, despite lingering worries over the broader economy and a fast-approaching election cycle.
New results from Amgen's closely watched KRAS inhibitor program will be first to come. The California biotech has moved quickly to speed clinical development of AMG 510 following impressive results in lung cancer announced in June.
This weekend, Amgen is expected to present updated data from early testing of the drug at the World Conference on Lung Cancer in Barcelona. Amgen will provide further updates later this month at the European Society for Medical Oncology, scheduled for Sept. 27 through Oct. 1.
Amgen's the first to break through with a KRAS inhibitor, but maybe not for long: Mirati Therapeutics is expected to report initial findings for a potential rival this fall as well.
Seigerman is also watching for Roche and PTC Therapeutics to file a New Drug Application for risdiplam, an oral therapy for spinal muscular atrophy that would challenge Biogen's Spinraza (nusinersen) and provide a third option in a market now reshaped by Novartis' Zolgensma (onasemogene abeparvovec).
Risdiplam has shown comparable efficacy to Biogen's product, but as an oral agent instead of a spinal injection, according to clinical results from earlier this year. Spinraza posted $1 billion in sales for the first half of 2019, after earning $1.7 billion in 2018 sales.
A further catalyst is a Food and Drug Administration approval decision on Novartis' brolucizumab, currently set for October. The investigational eye therapy would directly compete with Regeneron's Eylea, Seigerman wrote.
Previous studies have shown brolucizumab to be superior to Eylea in neovascular age-related macular degeneration. Eylea is Regeneron's most lucrative drug, posting more than $3.6 billion in sales halfway through 2019 after recording $6.7 billion in 2018.
While Credit Suisse predicts those events can stir a more positive outlook for the industry, Loncar isn't as optimistic.
"There's a few catalysts coming up, but nothing I think are really game-changing," he said, predicting an unresolved trade war will curb market gains in the near future. Perceived as a risker industry, biotech tends to see sharper losses when broader markets retrench.
M&A remains "the number one thing that can change the sector overnight," Loncar added. The market's struggles could entice dealmaking, with companies trading at similar values as they were at the beginning of 2019.
So far, the industry has already seen major buyouts of Celgene and Allergan this year, as well smaller deals for Loxo Oncology and Spark Therapeutics.
Seigerman appeared to share Loncar's view on M&A.
"We believe that M&A is likely to remain a backdrop for the sector as sellers look to capitalize on premium valuations while acquirers have large cash balances, easy access to capital and valuable stock to use to transact," Seigerman wrote.