This past week saw one of the strongest signs in weeks that M&A may be coming back—or at least deals of more than $1 billion—based on GlaxoSmithKline (GSK)’s announced $1.9 billion acquisition of Sierra Oncology, and the strong positive response by Sierra shareholders.

Stay at the forefront of the week’s champions and runners-up among publicly traded biotech companies and the reasons behind the ups or downs of their stock price fluctuations.

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Sierra Oncology (SRRA)

Sierra Oncology shares jumped 39% on Wednesday after GlaxoSmithKline (GSK) announced it was acquiring the San Mateo, CA-based developer of targeted therapies to treat rare forms of cancer for $1.9 billion. GSK seized the opportunity to buy Sierra three months after it reported positive topline data for its lead candidate momelotinib from the Phase III MOMENTUM trial. Sierra is expected to file a New Drug Application for momelotinib this year.

“Momelotinib offers a differentiated treatment option that could address the significant unmet medical needs of myelofibrosis patients with anaemia, the major reason patients discontinue treatment,” GSK’s chief commercial officer Luke Miels stated. “With this proposed acquisition, we have the opportunity to potentially bring meaningful new benefits to patients and further strengthen our portfolio of specialty medicines.”

GSK’s deal caps a 14-year period that saw momelotinib change hands from original developer Cytopia to YM Biosciences in 2009, to Gilead Sciences three years later, then to Sierra in 2018 for just $3 million upfront, up to $195 million in milestone payments, plus royalties.

“Now we have a partner with a global infrastructure and oncology expertise that enables us to deliver momelotinib to patients as quickly as possible and on a global scale,” said Stephen Dilly, MBBS, PhD, Sierra’s President and CEO.

In MOMENTUM, momelotinib met its primary endpoint of statistically significant total symptom score (TSS) of >50% compared with placebo in symptomatic and anemic myelofibrosis patients who were previously treated with an approved JAK inhibitor—25% vs. 9%. Momelotinib also met two secondary endpoints of the study, showing 31% transfusion independence compared with 20% for placebo, as well as a 23% splenic response rate (SRR) >35%, compared with a 3% SRR rate for the placebo arm.

“Close to a ‘home-run’ situation for the drug,” analyst Maury Raycroft, PhD, of Jefferies wrote Wednesday in a research note. “Total data support [momelotinib]’s profile as a potent JAK inhibitor, but differentiated by also providing benefit on anemia.”

Raycroft said GSK’s acquisition of Sierra made sense, citing GSK’s global commercial footprint in oncology, its marketed drug Blenrep® (belantamab mafodotin-blmf) for a form of multiple myeloma, and several late-stage oncology assets that include the PARP inhibtor Zejula® (niraparib), the PD-1-blocking antibody Jemperli® (dostarlimab), the autologous T-cell therapy letetresgene-autoleucel, the TIM-3 binding antibody cobolimab, and several drugs in Phase I development.

“It is possible other buyers could emerge, but based on our price/penetration ests we think current value at $55 is fair,” Raycroft added. (That’s a 39% premium over Sierra’s $39.52 closing price on Tuesday). He speculated that GSK’s move could spark interest from others, including Eli Lilly, AstraZeneca, and Merck & Co.

Other Leaders and Laggards

Artelo Biosciences (ARTL)

Shares of small-cap stock Artelo spiked 54% at the start of trading Wednesday before retreating to a 20% gain, after the company trumpeted positive preclinical results for its lead program, the cancer-related anorexia candidate ART27.13, in an additional indication of cancer-induced muscle degeneration (cachexia). Originally developed by AstraZeneca, ART27.13 is a peripherally restricted synthetic, dual G-Protein Coupled Receptor (GPCR) agonist believed to target the cannabinoid receptors CB1/CB2, which according to Artelo has the potential to reduce muscle wasting as well as increase appetite and food intake.

Artelo hopes to expand on those results in its Phase I/II Cancer Appetite Recovery Study (CAReS; ISRCTN15607817), which the company said is in final stages of enrolling cohort 3 at six clinical trial sites in the United Kingdom and Ireland. Complete Phase IIa clinical data from CAReS is expected to emerge in the second half of this year.

BioCardia (BCDA)

BioCardia shares yo-yoed earlier this week, with a 4% climb on Monday turning into a 59% surge in Tuesday premarket trading after the company announced FDA approval of its Investigational New Drug (IND) application for BCDA-04. The Neurokinin-1 receptor positive (NK1R+) allogeneic mesenchymal stem cell (MSC) therapy will be studied in a first-in-human Phase I/II trial in adult patients recovering from Acute Respiratory Distress Syndrome (ARDS) due to COVID-19, with the trial set to start in the third quarter. The Phase I portion will assess increasing doses of BCDA-04, with the optimal dose to be administered in Phase II.

“We expect the anti-inflammatory nature of these mesenchymal stem cells to have a positive impact in ARDS because of the interaction of the Neurokinin-1 receptors with Substance P, a neuropeptide that has long been known to be a primary mediator of inflammation in the lungs,” Ian McNiece, PhD, BioCardia’s Chief Scientific Officer, said in a statement.

The premarket surge did not carry through to regular-hours trading, however, as BioCardia shares fell 7% at the close on Tuesday, followed by a 13% drop on Wednesday.

NanoString Technologies (NSTG)

Shares of NanoString tumbled 34% on Wednesday, a day after acknowledging that its preliminary total product and service revenue during Q1 was just approximately $31 million—falling short of management’s investor guidance of between $34 million and $38 million, issued March 1. The result led several firms to lower their price targets on NanoString stock—including Baird (to $35 from $51), Canaccord Genuity (to $37 from $50), and Cowen (to $50 from $65).

Instrument revenue for GeoMx® Digital Spatial Profiler (DSP) finished Q1 at $5 million, down 31% year-over-year, though consumable revenue of $5 million rose 78% YoY. nCounter instrument revenue fell 11% YoY, to $4 million, while consumables revenue dipped 5% YoY to $13 million—though service revenue of $4 million grew 16% YoY.

Brad Gray, NanoString’s President and CEO, blamed the revenue drop on “uneven sales execution” as the company focused on capturing Q4 2021 revenue over pursuing Q1 opportunities, and struggled to bounce back from a sales force reorganization in January in which it realigned its territories, each of them now overseen by an account manager, after adding to its staff last year.

“In specific accounts that were reallocated to different reps, NSTG observed more disruption in activity levels/close rates (i.e., saw lower GeoMx close-rates in impacted accounts vs. stable accounts and drops in consumables pull-through in accounts handed off from senior reps to junior reps),” Baird Senior research Analyst Catherine Ramsey Schulte wrote Tuesday in a research note.

“While this execution misstep could put NSTG in the penalty box near term, we’re not overly concerned with underlying fundamentals,” Schulte added.

Gray also warned investors that NanoString was evaluating its financial outlook for the full year, with an update—read a potential lowering of earlier guidance—planned for the company’s next earnings call on May 10. That guidance included total product and service revenue of $170 to $180 million, representing growth of 18% to 25% vs. 2021. “Customer interest in spatial biology continues to be strong, and we remain confident in our long-term prospects,” Gray said in a statement.

Veru (VERU)

Veru shares nearly tripled on Monday, zooming 182% after the company announced plans to pursue FDA Emergency Use Authorization (EUA) for its oral COVID-19 candidate sabizabulin—then sliding 19% on Tuesday as investors reportedly took profits, before rallying with a 43% gain on Wednesday.

Veru’s push for an EUA followed a “clinically and statistically meaningful” 55% reduction in deaths in the intent-to-treat population of the company’s Phase III VERU-111 trial (NCT04842747). The 98 patients treated with sabizabulin showed a 20% mortality rate compared with a 45% mortality rate for the study’s 52 patients randomized to placebo.

Those results led the trial’s Independent Data Safety Monitoring Committee to unanimously recommended an early efficacy halt to the study, which assessed sabizabulin in 150 hospitalized COVID-19 patients at high risk for Acute Respiratory Distress Syndrome (ARDS). The primary efficacy endpoint was the proportion of patients that died by Day 60.

“We strongly believe that sabizabulin, with its dual anti-viral and anti-inflammatory properties which demonstrated positive efficacy and safety results in the Phase III COVID-19 study, can be that greatly needed oral therapy for hospitalized moderate to severe COVID-19 patients,” stated Mitchell Steiner, MD, Veru’s chairman, president and CEO.

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