The Best Boring Companies in Biotech

7/9/12Follow @xconomy

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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.

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  • http://www.facebook.com/anthonybissell Anthony Bissell

    This is a great list of unknowns out there in the biotech community. The only one I’d say is very well known in the scientific community (which says nothing for how abuzz the media market is about it) is Cubist. Daptomycin was the first new class of antibiotics to be approved by the FDA in nearly 50 years and everyone in the sciences and biotechs were talking about it when that happened. That being said, is has some toxicity issues that make it a liability when treatment is anything, but a last ditch effort. That will give you a few shout-outs for MRSA treatment and a huge push for your income, but no media storm.

    Overall, It’s nice to have someone talking about the not-so-sexy biotechs out there.

  • biotech maven

    Pharmacyclic’s BKT inhibitor is truly working wonders on B-cell lymphomas and CLL. I have personally seen it in action. I also know that since money is tight (because they are “boring”) they are at an impasse now. They must decide which disease to take they drug to phase 3 clinical trial. They are leaning towards NHL but this leaves CLL out and it is helping some many people. This drug lets CLL be treated like hypertension or diabetes, aka managed. Its a daily pill, taken at home. No more rough chemotherapy. If people are smart and want to know where the next blockbuster is, its with this drug.

  • http://www.facebook.com/daniel.ryder.399 Daniel Ryder

    Thanks for the excellent article Luke. And yes I agree that some of the “flyover” biotech companies in the mid-west deserve some attention for their noble yet relatively boring pursuits.

  • Rod Raynovich

    Luke-these are good picks but they are hardly boring and “below the radar”. Alexion (ALXN) ,Cubist (CBST), Medivation (MDVN) , Pharmacyclics (PCYC), and Seattle Genetics (SGEN) are up significantly over one year and well known except newly discovered PCYC. Many are favorites among hedge funds.
    See Rayno Life Biopharmaceutical Portfoio at
    http://www.raygent.com.

  • jamey

    You are wrong in your assertation of NLNK (Newlink). They have already been approved in Phase II of one of their many products and are currently in Stage III with the FDA. You may want to check your research again, this company will move up and down, but long term is a buy. Iowa is a great place to live and this company has great potential.

    • http://twitter.com/celltherapy Lee Buckler

      Jamey. Brad said NLNK does not have ph III data yet. That’s true. They are in ph III but no data from it yet.

  • Pannobhaso

    One Australian company you missed is Benitec Biopharma. They own the rights to the human therapeutic application of shrna technology. While the company is still small, the potential for their technology is huge. They have had a clinical trial for HIV and have others planned, including one by a licence, Calimmune, which is funded by the CIRM.

    Merck is in pre-clinical studies using this technology for cholesterol treatment.

    Tacere, another licencee, is about to start a clinical trial for HCV and UC Davis is starting a clinical trial for Huntington’s disease.

    Need I say more?