The Best Boring Companies in Biotech
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the industry’s most valuable companies on the strength of one super-expensive antibody drug for patients with a disease that hardly anybody has ever heard of:Paroxysmal nocturnal hemoglobinuria (PNH). While Genzyme is the company everybody looks to as the trailblazer in the rare disease drug development field, Alexion has also set an example that many rare disease-focused startups want to follow.
—Cubist Pharmaceuticals. Never heard of Cubist? It’s another company that made its name selling a single product, daptomycin (Cubicin). The Lexington, MA-based company (NASDAQ: CBST) has been around 20 years, and has made its living selling a potent antibiotic used to fight tough-to-treat infections in hospitals. This isn’t a consumer product you’ll ever see advertised on TV. Cubist rode this horse to $736 million in sales last year, which has enabled the company to join the small fraternity of profitable biotech companies. If Cubist can deliver some new antibiotics from its pipeline, that could be a good thing for its shareholders, and for public health. But given how antibiotics are taken for granted in this country—even though drug-resistant superbugs are a cause for concern—don’t expect to hear people scream from the rooftops about success even if Cubist can deliver a couple more Cubicins.
—Halozyme Therapeutics (NASDAQ: HALO). This San Diego-based company says on the “Who We Are” part of its web page that it is “a biopharmaceutical company developing and commercializing products targeting the extracellular matrix for the diabetes, oncology, dermatology, and drug delivery markets.” If you haven’t fallen asleep already, the company keeps going, trying to explain that its technology offers “a novel drug delivery platform designed to increase the absorption and dispersion of biologics.” Drug delivery companies by their nature tend to do the behind-the-scenes grunt work to make drugs more effective, so they tend not to be nearly as glamorous as drugmakers. Yet this company makes a modest amount of revenue from licenses, enough to support a $1 billion market valuation.
—NewLink Genetics. This Ames, IA based company (NASDAQ: NLNK) starts out with a pretty big strike against it, coming from the Midwest, which many on the coasts dismiss as flyover country. My first guess on hearing the name was that it was some kind of crop biotech company. But it’s actually focused on the currently buzzy business of cancer immunotherapy. The company has more than doubled since its November IPO, from $7 a share to more than $15.93 at Friday’s close. And yet this company still can’t buy some attention.
“Nobody seems to know about NewLink or even care,” says Brad Loncar, an independent investor in Lenexa, KS, by email. “Even on days when it has made a nice jump, there is virtually zero chatter about it.” On a website for investors called StockTwits, Loncar says NewLink has three followers, compared to Dendreon’s 645, and Oncothyreon’s 228. The company doesn’t have Phase III data to support its work yet, but its stock has been moving in the right direction.