Why Biogen, Baytex Energy, and Catalyst Biosciences Slumped Today

Wall Street continued its downward streak on Monday, with the Dow Jones Industrial Average falling more than 100 points. Most major benchmarks fell more modestly, with a few actually poking into positive territory on the day. Trade-sensitive stocks were among the weakest as investors focused on uncertainty related to tariff disputes between the U.S. and China. But for some other companies, bad news of a different sort was responsible for the drops in their shares. Biogen (NASDAQ: BIIB), Baytex Energy (NYSE: BTE), and Catalyst Biosciences (NASDAQ: CBIO) were among the worst performers on the day. Here’s why they did so poorly.

Biogen faces competition

Shares of biotech giant Biogen fell 5% in the wake of a competitive threat from a small upstart in the space. Currently, Spinraza, which Biogen licenses from Ionis Pharmaceuticals, has been the go-to treatment for spinal muscular atrophy, posting very close to $1 billion in sales during 2017. Yet news that PTC Therapeutics had released favorable data for its treatment for the disease raised concerns about possible alternatives to Spinraza. Biogen has many prospects in its candidate pool, including plenty of treatments covering a wide range of potential diseases. Yet with investors laser-focused on this particular opportunity, Biogen shareholders aren’t inclined to look on the bright side given today’s announcement.

Image source: Biogen.

Did Baytex just make a bad deal?

Baytex Energy stock dropped 12% after the Canadian energy company agreed to merge with regional rival Raging River Exploration in an all-stock deal. Under the terms of the agreement, Raging River shareholders will get 1.36 shares of Baytex stock for every share of Raging River they own. Baytex CEO Edward LaFehr will remain as CEO of the combined company, while Raging River CEO Neil Roszell will act as chairman of the combined entity’s board. Although proponents of the deal point to the average annual production exceeding 100,000 barrels of oil equivalent per day, shareholders appear to be unhappy about the level of dilution involved in Baytex’s having made the purchase.

Catalyst sees a trial setback

Finally, shares of Catalyst Biosciences plunged 64%. The clinical-stage biopharmaceutical company said that its ongoing phase 1/2 trial testing hemophilia B treatment CB 2679d/ISU304 showed the presence of a neutralizing antibody in a couple of its patients in its most recently added cohort. As a result, Catalyst said it would look more closely at the antibody observations before adding any additional subjects to the cohort as the company searches for answers about the cause and impact of those antibodies. Investors aren’t happy about the potential delay, even though some of the other comments that Catalyst made about CB 2679d/ISU304 were fairly positive. Most top biotech stocks encounter binary events like these, so the big question is whether Catalyst will be able to recover from the setback.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Biogen. The Motley Fool has a disclosure policy.

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