A 2020 vintage investment for Switzerland’s BB Biotech has turned out to be one of the highest profile victims of the stock price moves occasioned by the ASCO abstract release earlier this week. Black Diamond Therapeutics (Nasdaq: BDTX) saw its shares fall by 37% yesterday after early-stage results of its lead compound BDTX-189 – although positive – fell short of high market expectations.
The disclosures come in the form of an abstract (a precis of to-be-presented information) for the forthcoming American Society of Clinical Oncology (ASCO) meeting, which is one of the most important scientific conferences in the biotech calendar. Several thousand of these abstracts were disclosed simultaneously on Wednesday evening, after market close in the US. Typically, ASCO abstract disclosures prompt some of the most significant one-day share price moves of companies in the oncology space.
Black Diamond’s shares have already been coming under pressure this year and are now down by 56% year-to-date, and by 65% over the past year. The company was a new investment for BB Biotech in the first quarter of 2020 , at – or shortly after – its IPO in January. The stock is now trading at just under $14/share, down on the $19/share IPO price. BB Biotech’s stake that accounted for 1.2% of its portfolio value at the end of March.
The specific data revealed in the abstract were from a Phase I data testing BDTX-189 in advanced solid tumours harbouring EGFR or HER2 alterations. The phase I, dose-escalation portion of the MasterKey-01 trial tested BDTX-189 in patients with advanced solid tumours harbouring any one of more than 48 alterations with cancers including non-small cell lung cancer (NSCLC), breast, colorectal, ovary and pancreatic and others.
The results from the trial showed that out of the six patients with HER2-amplification, there were two partial responses (one unconfirmed) and two stable disease. Of three patients with NSCLC with EGFR Exon 20 mutation (all of whom had received prior EGFR/HER2-targeted therapy), there was one confirmed partial response and one stable disease. The company said it was encouraged by the data and remained on track to initiate a potentially pivotal phase 2 portion of the trial in the second half of the year.
Black Diamond has now displaced Mersana (Nasdaq: MRSN), as the bottom performer within BB Biotech’s portfolio, based on share price change this year. The latter’s stock has fallen by 46% since January but in fact rose by 3% yesterday on its own ASCO abstract data.
Another faller from within the BB Biotech portfolio on an ASCO abstract yesterday was Macrogenics (Nasdaq: MGNX). It saw its shares fall 3.6% on concerns about a possible safety issue with an early-stage compound. BB Biotech’s stake in Macrogenics represented 3.6% of the portfolio at the end of March; the stock is nevertheless still up by 32% year to date.
Stock prices also tend to move again on the more comprehensive updates presented at the conference in June. ASCO should see updates from other BB Biotech portfolio companies including Incyte (Nasdaq: INCY) and Exelixis (Nasdaq: EXEL).
Meanwhile, the contrast these stock price moves make with one of BB Biotech’s newer oncology investments – Essa Pharma (Nasdaq: EPIX) – could hardly have been greater. This company has seen sizeable stock price gains this year, against the background of the wider sell-off in the sector. Its stock is up 178% year to date and is the best performer of the roughly 35 stocks in BB Biotech’s portfolio. The company is developing a small molecule drug coded EPI-7386 in metastatic castration-resistant prostate cancer.
The volatility of stock prices in biotech, especially in oncology, highlight the desirability for most investors to take a portfolio view to manage risk, which can best be achieved a collective investment vehicle such as BB Biotech. As of yesterday, BB Biotech’s stock was up 10.6% year to date at CHF78.75, with the NAV having declined 2.5% at CHF65.4/share.