Buying Glaxo's Biotech Stock Throwbacks Proves Profitable
An interesting side note from Monday's $840 million acquisition of Prosensa by BioMarin Pharmaceuticals: GlaxoSmithKline gave up rights to Prosensa's lead rare disease drug drisapersen in January 2014 because of negative results from a phase III study.
A lot of people (I'll throw myself in this group) believed Glaxo's exit meant drisapersen was dead, and you could have bought Prosensa shares for around $5 at the time. Today, BioMarin is buying those same shares for $17.75 with another $4 per share in potential payouts possible.
In November 2013, Glaxo also gave up on a partnership with Amicus Therapeutics to co-develop the rare disease drug migalastat. Glaxo's exit caused Amicus shares to sink to around $2 per share.
A year later, migalastat is very much alive and well, heading towards a likely approval in Europe. Amicus shares are trading around $7.50.
Bad decisions by Glaxo have provided wonderful buying opportunities for savvy, risk-taking biotech investors.
Here's one more example: Celldex Therapeutics has been flying high on the positive outlook for its brain tumor drug rindopepimut. Pfizer had rights to the drug but returned it to Celldex in 2010.
Conventional wisdom often dictates that Big Pharma knows best, meaning they only license biotech drugs which work and get rid of those that don't. Reality is a lot more complicated. For Prosensa, Amicus and their loyal shareholders, the departure of Big Pharma Glaxo wasn't the end, it was a new beginning.
