As it is the case during the beginning of the year, the Biotechnology sector is quite volatile as many companies take the opportunity of the JP Morgan Healthcare conference, which starts today, to make updates on their pipelines progresses and financial forecasts.

During the last few days, we had the following significant events impacting our Biotechnology/Healthcare M&A/Bionics certificates.

We already comment last week on Moderna, and here we give a quick update on three companies that saw large price movements.

Ultragenyx's (RARE US) shares closed at +23% last Friday due to better than expected data on its DTX301 gene therapy for ornithine transcarbamylase (OTC) deficiency.

In the third cohort of Phase I/II study, two patients showed a response and a third showed potential signs of reaction. In the second cohort, an additional patient had a positive response. Two patients in the second and first cohort, who had previously shown positive data, remained stable. So far, six out of nine patients tested in Phase I/II have responded well to treatment.

OTC deficiency is a rare genetic disease resulting from a partial or total lack of the enzyme ornithine carbamyl transferase (OCT). The absence of this enzyme causes an excess of ammonia in the blood. In the most severe form, symptoms usually appear in the first few days of life and consist of lethargy and coma. One of the complications is mental retardation.

Data are encouraging and prove, once again, the potential of gene therapy on genetic diseases. However, longer-term follow-up data will be needed to confirm the effectiveness and safety of the treatment. Ultragenyx plans to test higher doses of DTX301 on three patients, this time using steroids to avoid the immune response. In this cohort, the company will have to demonstrate a uniform response with consistent data across all patients.

Ultragenyx is currently in discussion with the FDA on the Phase III future trial design. The company will likely have to demonstrate, as a primary endpoint, a decrease in blood ammonia levels. Higher levels of ureagenesis, a sign of enzymatic metabolism, encourage patients to stop taking alternative drugs and could also support the approval of DTX301.

Turning to Nektar Therapeutics (NKTR US), the stock rose by almost +25%. The company announced a deeper collaboration with Bristol-Myers Squibb (BMY US). This new R&D agreement will study bempegaldesleukin (NKTR-214) in combination with Bristol-Myers Squibb's Opdivo in new trials in addition to existing studies. Indeed, this combination is already being tested in first-line trials in metastatic melanoma, renal cell carcinoma and urothelial cancer. Both treatments are immunotherapies aimed at using our immune system to fight cancer cells.

Due to manufacturing problems, Nektar had been administering inactive doses in its clinical trials. It then reassured investors that none of the ineffective bempegaldesleukin was included in the Phase 3 trials. We believe that the expansion of the existing agreement is a sign of confidence from Bristol-Myers and shows that manufacturing issues might be behind us.

Phase 3 data for NKTR-214 and Opdivo combo in advanced melanoma (breakthrough designation) are expected in the second half of 2020. We believe Nektar's immuno-oncology franchise has strong potential. Their candidates, including NKTR-214, could receive the FDA approval for at least one solid tumor indication.

Turning to Abiomed (ABMD US), today the stock is selling-off quite sharply as the company continues to raise concerns among investors. The company updated FY revenue guidance to be in the range of $864mn to $877mn (from the previous $880mn - $890mn range).

Among the reasons, a flow of negative headlines, calling into question the safety and efficacy of Impella, Abiomed’s flagship product.

In August, post-approval studies showed that less than 20% of subjects implanted with Impella RP met the primary endpoint. On November 17, two separate studies presented at the American Heart Association found that Impella was associated with higher rates of bleeding and in-hospital deaths vs. Intra-Aortic Balloon Pump (IABP).

These results sparked a drop in the company’s heart pumps adoption.

Abiomed is committed to rebooting acceptance of its devices as it remains firmly convinced of the long-term thesis around Impella hemodynamic support.

The company is initiating a process to increase publications of real-world evidence for its devices, educate and train physicians around the use of Impella pumps.

We confirm once again our view on Abiomed, backed up by:
 

• almost no competition,
• a market penetration lower than 15%,
• the launch of new products, most notably the Impella CP® and Impella 5.5™ with SmartAssist, a platform for providers to more easily monitor patients,
• international markets experiencing a fast growth (total revenue for the quarter totaled $36.0 million, an increase of 29% compared to revenue of $28.0 million during the same period of fiscal 2019, due to strength in Germany and Japan),
• new coming indications.