6 stocks on my watch list

The recent pullback in the biotech sector hit the vast majority of small/mid cap biotechs. As a group, it is hard to argue biotech stocks are cheap right now but some stocks are becoming attractive after losing 30-50% in several months.  Below are 6 companies that are approaching or already are at attractive valuations.  A key theme for all 6 is that they have been sold off alongside the general market rather than for fundamental reasons. Market fluctuations in 2014 may present investors with attractive entry points.  Agios – De-risked lead program and validated platform

Agios (AGIO) is the undisputed leader in the ever-so-hot cancer metabolism space and will probably be the first company to get a cancer metabolism drug approved. Cancer metabolism deals with how cancer cells reprogram their metabolic networks to support their growth. Interest in cancer metabolism grew significantly in recent years and there are now tens of programs in development.

Last month at AACR, Agios surprised the medical community and reported spectacular results for its IDH2 inhibitor (AG-221) in AML. The efficacy data set included only 10 patients with IDH2 mutation (IDH2+) who received the 2 lowest doses in the study. Of the 10 patients, 6 achieved an objective response including 5 (50%) complete responses. Having this level of activity already in the first 2 cohorts in a dose escalation trial is extremely rare and efficacy is likely to improve with higher doses.

According to the company, 15% of AML cases are IDH2+, which translates to 7,200 cases in developed countries. Celgene (CELG), which has global rights for AG-221, will pay Agios royalties of 10-15%. Assuming $100k per patient on average and 75% penetration, Agios’ potential royalties could reach ~$70M per year. This can further increase as there are several thousands of additional non-AML patients who are IDH2+.

The AG-221 results are of historic significance as they validate the cancer metabolism approach, proving that targeting metabolic enzymes can lead to profound anti-cancer effect. They also validate Agios’ platform and have positive read-through for the company’s second drug (AG-120) which targets IDH1. The similar biologic functions to IDH-2 and the selection of patients with IDH1+ tumors bode well for AG-120’s likelihood of success.

Agios estimates there are 31,000 cases of IDH1+ cancer in developed countries across multiple tumor types with varying degrees aggressiveness. Assuming a conservative penetration of 30% translates to a $900M opportunity (~$400M of which in the US). Similarly to AG-221, AG-120 may generate preliminary signs of efficacy early on in phase I already in 2014.

With a market cap of $1.37B, Agios is one of the best performing IPOs of 2013. Surprisingly, although nobody expected AG-221 to demonstrate this type of efficacy so early on, the stock is only 37% higher than its price before AACR.  The royalty stake in AG-221 alone should support a valuation of $600M, implying a $800M price tag for AG-120, a third drug for a rare metabolic disease and Agios’ platform.

Foundation Medicine – The future of cancer diagnostics

It is hard to overestimate the importance of Foundation Medicine’s (FMI) approach to the future of cancer treatment. The company uses next-gen sequencing to provide a genetic blueprint of tumors, looking at mutations in more than 250 (and counting) genes with relevant mutations.

Until recently, this information had no significance as tumors were treated based on origin and histology. The arrival of targeted therapies that are relevant only for genetically defined subsets of patients creates the need to assess many genes in parallel. Today, in order to find out if a patient is eligible for a specific drug (e.g. Tarceva, Xalkori, Herceptin) a sample from the tumor is assessed with a dedicated companion diagnostic kit.  As more and more drugs that require patient selection reach the market, it will become increasingly complex and unfeasible to use a diagnostic kit for each drug.

A single test that can guide treatment with multiple drugs and replace multiple expensive and labor intensive tests is therefore crucial for informing treatment selection.

Foundation Medicine’s products (Foundation One and Foundation One Heme) are the market leaders for solid and blood cancers, respectively. Given the commercial potential and the increased availability of next-gen sequencing, competition is inevitable. Nevertheless, its first mover advantage should allow it to capture a significant share of the $8-10B global market opportunity. Foundation Medicine should not be traded based on its current sales but on its explosive potential 5 years from now. My bet is that the company will not stay independent for long.

Immunogen – Multiple catalysts ahead

Long time followers of this blog will remember Immunogen (IMGN) was one of my top picks for years before selling the stock at $15 3 years ago. Back then, the main issue I had with Immunogen was the lack of catalysts beyond T-DM1 (Kadcyla). The company’s lead proprietary ADC (IMGN901) was only mildly active and had safety issues, whereas the company’s partnered pipeline lacked exciting programs like Kadcyla.

Today, Immunogen is in a completely different place. Kadcyla is generating significant sales for Roche ($115M in Q1 2014) and is likely to grow based on geographic expansion and 1st line results in breast cancer (expected later this year). Immunogen’s wholly owned pipeline is early with 3 phase I programs but 1 ADC (IMGN853, anti- folate receptor) already generated signs of efficacy. Another ADC (IMGN289, anti-EGFR) will probably have meaningful results only in 2015 but its target and design make it very attractive. As for its partnered pipeline, Immunogen finally has a program with strong efficacy as monotherapy and a clear route to market (SAR650984, anti-CD38).

Kadcyla and the 3 programs mentioned above are expected to generate significant news flow in the coming 12 months. For Kadcyla, the biggest event is data from a phase III in 1st line breast cancer (2H14). The trial evaluates Kadcyla alone or with Perjeta vs. standard of care. A positive outcome should push Kadcyla to annual sales of $1.5B. Assuming an average royalty rate of 4%, Kadcyla should earn Immunogen $60M annually for 10+ years. Expansion to adjuvant/ neo-adjuvant breast cancer or gastric cancer represents additional upside.

IMGN853 will have updated phase I results at ASCO that might alleviate investors’ skepticism following safety issues and the recently announced failure of Endocyte’s (ECYT) vintafolide. On the safety front, Immunogen already implemented dosing modifications that appear to improve the safety profile (especially ocular toxicity) but this needs further validation with longer follow up.

The phase III failure of vintafolide, which targets folate receptor with a competing technology (small molecule drug conjugate), increases the risk around folate receptor as a target but IMGN853 could succeed where vintafolide failed.  IMGN853 is better positioned for unlocking the therapeutic potential of Folate receptor as a target given its higher potency and favorable exposure in humans (days vs. hours). This explains why, in contrast to vintafolide, IMGN853 has activity as monotherapy already in phase I.

IMGN289 is Immunogen’s most intriguing program (at least from a scientific standpoint). Although EGFR is a validated target for naked antibodies (Erbitux, Vectibix), it is considered unsuitable for ADCs due to safety concerns (especially skin toxicity). Immunogen circumvented the toxicity issue by identifying an antibody that does not lead to significant skin toxicity in cell culture and animals. The company then armed the antibody using the same linker and payload as in Kadcyla (EGFR is HER2 are similar structurally and functionally). The new ADC (IMGN289) demonstrated potent activity in animals but without EGFR-associated toxicities. Initial results are expected in 2H14, but they will probably not be mature enough to demonstrate clinical proof of concept.

SAR650984 (anti-CD38 naked antibody) belongs to the most exciting class of myeloma drugs in development. The antibody (licensed to Sanofi [SNY]) generated a promising efficacy signal that appears comparable to that of daratumumab, Genmab’s (GEN) anti-CD38 currently in pivotal studies. Both antibodies will have updated results at ASCO.

Immunogen’s market cap (~$1B) is predominantly derived from the Kadcyla royalty stake ($600-700M assuming $1.5B peak sales). Immunogen’s pipeline (10 programs in clinical development), partnership deals [Sanofi, Novartis (NVS), Lilly (LLY) and Amgen (AMGN)] and the technology platform are assigned a reasonable valuation of ~$350M. At ASCO, clear efficacy for SAR650984 in multiple myeloma or IMGN853 in ovarian cancer should lead to further price appreciation.

Xenoport – A Tecfidera (not so) fast follower

Xenoport’s (XNPT) value proposition relies heavily on XP23829, an anti-inflammatory drug with the same active ingredient as Biogen’s (BIIB) Tecfidera. Tecfidera’s launch in multiple sclerosis (MS) is the major driving force behind Biogen’s recent performance, as the drug approaches an annual run rate of $2B after only 1 year on the market. XP23829 is still years from the market but the attractiveness of a “Tecfidera-like” drug with a de-risked development program is straightforward, especially for potential acquirers.

Last week, Xenoport presented  phase I data in healthy volunteers where 2 formulations of XP23829 were compared with Tecfidera. On top of assessing the drug’s safety profile, the trial was intended to compare the PK profile as well as the pharmacodynamic effect of the drugs. Tecfidera leads to a drop in lymphocyte counts and increase in eosinophil counts, which is viewed as a surrogate for the drug’s activity.

Overall, XP23829 had a similar exposure and led to the expected drop in lymphocytes but the reductions were stronger than those observed with Tecfidera. This discrepancy is puzzling given the fact that it was observed even with blood exposures similar to Tecfidera. It is hard to assess whether this differentiation represents a fundamental difference between the drugs and whether lower doses of XP23829 will be sufficiently active.

In order to reach clinical proof of concept , Xenoport chose psoriasis as a first indication based on the short timelines and the fact Tecfidera generated an efficacy signal in this indication. Results are expected in 1H15 and will trigger the decision to pursue phase III in psoriasis and/or MS.

In January, the company raised  $77M to support clinical development of XP23829. This  removed a major overhang and allows the company to generate phase II data in psoriasis.

Xenoport also has an approved pain medicine on the market for 2 niche indications. The company got rights for the drug from GSK and is now marketing the drug in the US (Astellas has commercial rights in Japan). Horizant revenues are still limited (~10M a year run rate) but it appears that Xenoport is successful at increasing sales and could eventually reach sales of $25M in 2016-2017.

Xenoport’s depressed market cap of $230M appears attractive assuming the market ascribes $100M to Horizant. Although the higher than expected drops in lymphocyte counts observed in phase I increases the risk associated with the project, Xenoport will have meaningful phase II data next year. If positive, Xenoport will be the owner of a de-risked “phase III ready” program targeting 2 multi-billion dollar markets.

Bluebird – Gene therapy comes of age

Gene therapy is making a huge comeback but the field is still dealing with many challenges, most notably delivery to target cells. Bluebird’s (BLUE) approach circumvents the delivery issue by focusing on genetic diseases of the hematopoietic system that can be treated with stem cell transplant. The company’s treatments aim at achieving the clinical effect of stem cell transplant without the associated toxicity and donor availability issues.

Bluebird has 2 programs, Lenti-D and Lenti-globin for ALD (A rare neurological disease) and  beta-thalassemia /sickle cell disease. The three diseases are characterized by a single genetic defect that is important for the function of certain blood cells. Today, the only effective option for these diseases is a stem cell transplant from a healthy donor. A transplant is associated with complications that are often fatal, a high failure rate and in many cases a matched donor is not available.

Bluebird’s process starts with collecting hematopeitic stem cells from a patient and genetically engineering them to express a functional copy of the defective gene. The cells are then re-infused to patients who are engrafted with a modified version of their own bone marrow. This approach has multiple advantages as it has no delivery issues (cells are treated outside of the body), uses available technologies of stem cell transplant and should have a favorable safety profile.

Proof of concept for its two lead products, using earlier product versions, has been established by the company or academic collaborators. An older version of Lenti-D halted disease progression in 4 ALD patients (initial 2 patients reported in 2009 by a French group). Lenti-globin was evaluated in 3 beta-thalassemia patients and led to a dramatic durable response (measured by transfusion- independence) in one of them. Importantly, the products above were technically inferior to the newer generation Bluerbird currently has.

Given the unmet need, the favorable safety profile to date and the potential for a durable response or even a cure, even a low success rate is enough for wide adoption of Bluebird’s treatments. The major risk with any gene therapy is long term safety, with an emphasis on development of blood cancers (which plagued the gene therapy field in the past). To date, Bluebird’s treatments have demonstrated a good safety profile but this will continue to be an issue until data for more patients and longer follow up are available.

Bluebird started a pivotal trial for Lenti-D in ALD last year and expects to complete enrollment in 2015. The primary endpoint will be measured 2 years post transplant but the company may share results from the study based on secondary endpoints for the initially treated patients.  Lenti-globin is being evaluated in 2 studies in beta-thalassemia and sickle cell disease, with initial results expected in the back end of 2014.

In summary, Bluebird has the potential to revolutionize treatment of multiple rare genetic diseases by offering one-time treatments with curative potential. Lenti-D and Lenti-globin represent a commercial opportunity of $250M and $1B, respectively. Acknowledging the technical and clinical risks, modifying cells ex-vivo coupled with early proof of concept for Bluebird’s approach make it a good risk/reward story.

Ambit – Undervalued Ph3 program

Ambit (AMBI) is down almost 70% from its 52-week high (October 2013). This represents the market’s disappointment with the failure to gain accelerated approval for quizartinib in FLT3+ AML. The FDA required Ambit to show a survival benefit in a phase III trial, which started last month. Beyond the regulatory setback, the negative sentiment is based on additional issues with quizartinib’s clinical profile.  These include short durability of response and the fact that most quizartinib-induced responses were CRi (elimination of leukemia cells with incomplete neutrophil recovery), which are traditionally associated with inferior long- term outcome.

Even after factoring in the issues above (as well as the terrible success rate the industry has in AML), quizartinib is still a promising drug for a disease with very limited options. In its phase II, the drug generated a CR rate (most were CRi) of 47% in heavily pre-treated patients, an unprecedented effect for a targeted therapy. Despite the short response duration, a high proportion (32-42%) of patients were able to receive a transplant following quizartinib. This is the most important clinical outcome as a successful transplant represents the only opportunity to achieve long term remission.

The phase III trial is evaluating quizartinib vs. chemotherapy and is designed to demonstrate a 2-month survival difference. Importantly, patients on the quizartinib arm who proceed to transplant will be able to receive the drug as maintenance therapy after transplant. This further increases likelihood of success as it may enhance quizartinib’s overall effect in over a third of patients.

Although phase III results are expected in late 2015/early 2016, quizartinib will have multiple data readouts from combination and maintenance studies. There is a strong rationale for adding quizartinib to standard of care as the drug’s mechanism (Flt3 inhibition) and safety profile are distinct from those of available drugs. Preliminary results for quizartinib in combination with chemotherapy in Flt3+ AML included a 100% CR rate. According to Ambit, an investigator-sponsored combination phase III trial is planned.

Therefore, quizartinib is not a “wonder drug” but it is has sufficient activity that may lead to long term benefit in patients who have very limited options. At the end of the day, it gets the job done (bridge patients to transplant) with limited toxicity and has even greater potential in combination with chemotherapy or as maintenance treatment.

Quizartinib represents a significant market opportunity of ~4500 patients in the US (25% of AML patients are FLT3+). Assuming $100k per patient, the commercial potential is $450M in the US alone and ~$1B globally. Even after factoring in a 25% likelihood of success, 50% penetration and peak sales in 2021, Ambit’s valuation should be $330M (still quite low for a wholly owned p3 program). Therefore, with a market cap of $120M, Ambit is extremely undervalued.

Portfolio updates

We are adding a third position in Ambit which appears oversold as a phase III company with a strong clinical validation. We are selling our position in Infinity (INFI) as well as 2 of 4 positions in Array Biopharma (ARRY) following the uncertainty created by the GSK/Novartis deal and the increased dependence on filanesib.

Portfolio holdings – May 4th 2014Portfolio - May 4th 2014- after changes

biotech etfs - May 4th 2014

53 thoughts on “6 stocks on my watch list

  1. Hello Ohad
    Why selling infi? dont IPI-145 have a decent chance in the long run?

  2. Following the disappointing Imbruvica launch, the market opportunity for all immuno-kinase inhibitors might be smaller than anticipated. At best, penetration will be slower than expected.


  3. Hi Ohad, isn’t a forecast of $1.5B peak sales in Kadcyla a little bit low? Okay there will be competition by the then much cheaper generic Herceptin, but it is and will be a much more effective drug. And Herceptin, with a lower price tag than Kadcyla, is selling at $6-7B right now (with no generic competition).

  4. JQ – Send me an email.

    Ville – Agree Kadcyla can be as big as Herceptin down the road but a lot depends on the adjuvant setting which takes time for approval and where the burden of proof is on Kadcyla. Kadcyla can also be effective in additional tumors that overexpress HER2.


  5. hi Ohad,

    also CLVS Clovis corrected quite a lot. now at 1,82 USD billion market cap.

    do you consider adding or has anything changed your mind about CVLS in the last few weeks?


  6. With FMI more than 30% off of it’s $45 high, what would you consider a good entry point? Thanks.

  7. Hi Ohad:
    IMGN‘s value all depends on Kadcyla while the single digit royalty(2%-5%)is very likely to disappoint us based on the recent rejection of NICE on Kadcyla. The other 3 candidates are all in early stage. What concerns me the most is safety issue(ADC using IMGN’s technology had been reported to be too toxic. I heard from an expert that the excellent properties of Herceptin contributeed most to the success of Kadcyla(the sufficient amount of antigen on cell surface, the fast internalization). I doubt that such a miracle could be duplicated again based on IMGN’s own tech.
    SGEN‘s catalyst- the result of Aethera is assumed to come out this year. What do you think about it?

  8. Christian – I am still bullish on CLVS especially based on lucitanib for FGFR+ breast and lung cancer. If the stock goes lower in 2014 I intend to add. Waiting to see lucitanib’s ASCO abstract.

    DanS. – I like FMI even at these levels. Since near term commercial catalysts are limited imo and are not likely to push the stock higher I wanted to wait a bit for a better entry point. The rationale with FMI is the footprint they are building, which should be very attractive for many Dx companies looking for long term growth.

    zeng (IMGN) – Kadcyla is a great drug and I expect it will be widely used eventually with the appropriate pricing modifications.
    Agree about the other pipeline being in early stage development with all associated risks but I like the multitude of catalysts (10 programs) that could yield 1-2 winners even after acknowledging the safety issues. I don’t think IMGN’s technology is inherently problematic re: toxicity, it’s more target and construct dependent. Kadcyla is a very safe drug so one can hope that using similar ADC designs (like the EGFR ADC) will be as safe, depending on on-target toxicities of course.


  9. Hi Ohad,
    Can you elaborate more on ARRY and why you’re selling two positions? I’m holding a substantial position based on the thesis that ARRY has a very impressive portfolio in relatively advanced stages. The valuation for the company is not very high and it’s enough for one of the substances to succeed in order for the stock price to jump drastically. I got the impression in the past that you also believe in this thesis. Can you explain what has changed in the landscape that has changed this thesis?

  10. Aviv – I agree that ARRY has a diversified and unrecognized pipeline. I decided to decrease exposure to the stock until there is more clarity regarding MEK162. Just to emphasize, even if ARRY gets the program back, this could be transformational but the markets don’t like the uncertainty which will probably persist for months (until the deal is approved by anti-trust organizations). In addition, I am not optimistic about filanesib in myeloma.
    The programs I am excited about are the early stage ones (LOXO-101, ARRY380 and Genentech’s Erk inhibitor).


  11. Hi Ohad,

    what are your thoughts about Arqule? A phase 3 drug, 2 phase 1 programms and negative news are already priced in (my thought), but stock is going down more and more. Do you have an explanation?

    Thanks as always!
    Great blog!

  12. hope Im not too optimistic, but I think this is a last chord before the uptrend

  13. Martin – Thanks. On the one hand, ARQL is suffering from the negative sentiment about Met inhibitors and on the other hand many doubt that tivantinib is a true Met inhbitor. Either way you look at it they lose…
    The liver cancer study will readout in 18+ months so the lack of a catalyst there is also problematic.
    I think the Akt program is very attractive and could be best in class due to a better therapeutic window which will allow stronger pathway inhibition. A lot depends on finding the right patients/ drugs to combine with.

    I plan on holding despite my losses as the company has sufficient cash, a p3 asset and 2 proprietary programs for hot targets.

    alex – I think the market needs more time before resuming a wave of price appreciation.


  14. Hi Ohad,
    Thanks for this excellent post.

    I have two gamble stock: Targacept and Anthera.
    What do you think?
    Valuation levels are so low that I think the risk / benefit is very interesting for this two biotech that arise on a path of redemption.


  15. Hi Ohad, on Array, Im not sure either why Filasenib has become their key pipeline drug. They recruited Michael Needle for this sole purpose and Im pretty sure Kevin resigned because of this (though conjecture on my part). What makes them see Filasenib as a blockbuster. Expectation that Kyprolis + Fliasenib becomes standard of care for double refractory MM?

  16. Your thoughts on cobimetinib data…I do like that primary end pt.for their p3 is pfs

  17. Caesar – Thanks! I haven’t looked at TRGT or ANTH for a while. Of the two I prefer TRGT which has most of its valuation covered by cash (always a good thing to have no enterprise value) and 2 p2b readouts in Alzheimer and overactive bladder. The Alz program is particularly interesting because the MOA (alpha-7 nicotinic receptor agonist) is validated by EnVivo’s EVP-6124.

    Bill – I am very interested in OMED scientifically but their valuation is too high imo. This could change next year but until then I prefer to enjoy their scientific publications.

    Manish (ARRY)- The way I see it, filanesib could become a success story only if the AAG hypothesis proves to be true. A positive readout from the p2 with Kyprolis will make filanesib much more attractive, though.

    Robert (EXEL) – Cobi’s P1 results are very positive if you look at the numbers but the problem wit these single arm small studies is that they always over-estimate the drug’s true efficacy. Therefore, I view the data as a positive indication but nothing more.

    JZ (VSTM) – I am not particularly excited with their scientific rationale and patient selection strategy. Their clinical data is limited and the stock is too expensive imo.


  18. Ohad,
    a far as I can remember TD-5619 was the Alzheimer and Schizophrenia program of TRGT with the same mechanism like EVP-1614. In December 2013 TRGT stopped all trials with TD-5619. The actual Alzheimer program is named TD-1734 and an alpha4beta2 NNR subtype. Please can you check. Thanks.

  19. hi Ohad,

    KBIO is now valued approx. at cash

    This was reported about KB004

    what do you think, low valuation justified?

  20. Hi Ohad,
    What’s going on with CLDX in your opinion? Keeps dropping. Is valuation still high?
    Thanks, Chris

  21. ad KBIO:

    KB-001A CF data pushed back to early second quarter of 2015

    so, will need to raise cash soon i assume

  22. About Targacept
    TC-5214 in phase 2b for overactive bladder, and TC-1734 in phase 2b for mild to moderate Alzheimer’s disease with top-line results expected in mid-2014 for the two studies.
    Yes toby, TC-1734 is a modulator of the alpha4beta2 neuronal nicotinic receptor subtype.

  23. Does anyone have a credible explanation for the undervaluation of Curis?
    I do not understand all the disinterest in the stock obeserved for almost a year?
    Is it subject indirectly to the interest to immuno-oncology?

  24. Toby /ceasar – Thanks for the clarification, turns out I am not up to date…

    Christian – KBIO’s valuation is low but I can’t ascribe a lot of value to the EphA3 program until more activity is seen in EphA3+ patients. The anti pseudomonas program is more attractive but meaningful readout is 1 year away.

    Chris – CLDX took a serious blow but valuation is still not cheap imo. Will wait to see CDX1127’s results at ASCO before considering to add more.

    caesar – CRIS’ problem is that its proprietary pipeline is early and still doesn’t have a clear route to market based on efficacy. Their IAP program will take time to generate data following the clinical hold.


  25. Hi Ohad,

    Nice selection of stocks that have recently come down in value. A lot of smaller biotechs have been beaten down such that the enterprise value are seem really low. For example OXGN, and OGXI have EV’s that are about 30M, 18M. They both have interesting catalysts coming up. OXGN could present detailed Ovarian cancer data and could also announce they are filing an MAA in europe while OGXI could have success with OGX427 in bladder and even perhaps have success in the 2nd Prostate cancer trial with OGX011. Any opinions on whether its worth putting in some money in these two stocks?

  26. Manish/Ohad: On ARRY, I’m a former long but no longer saw the appeal and sold out after last ASH. Regarding filanesib, Kyprolis has not got off to a great start I don’t believe and there are questions on the safety front so it doesn’t seem a great sign to me that filanesib seems to be largely wed to Kyprolis. Also, now there is the uncertainty with NVS acquiring rights to cobimetinib and what that reads to MEK162. Even on the partnership with AZN for selumetinib, there could well wind up being further uncertainty there if PFE deal for AZN goes through. Will PFE have the same commitment to selumetinib? Too much uncertainty for me to re-visit ARRY at this time I think.

  27. Mcbio?!…..”Also, now there is the uncertainty with NVS acquiring rights to cobimetinib and what that reads to MEK162.”

    Cobi and NVS???…think u may have misspoke

  28. Richard – I am not a fan of either OXGN or OGXI. OXGN’s ovarian cancer data was positive but teh trial was relatively small and the drug’s MOA lead me to suspect that this is just a statistical fluke. Re OGXI, I don’t think their antisense drugs are potent enough and have the required PK to affect metastatic cancer. This is also a good example of promising p2 data that cannot be corroborated in larger studies.

    mcbio – I actually think that Kyprolis will be a commercial success following positive p3 data from FOCUS and ASPIRE. While NVS might choose trametinib over MEK162, I find it hard to believe PFE will let go of selumetinib as they don’t have an internal MEK inhibitor and RAS mutated tumors are high on their list.


  29. Hey Ohad
    the innno-o race is on. More deals announced today: INCY and AZN and the BMY CLDX….
    What’s your take?

  30. Ohad
    INCY IDO+Yervoy 38% response rate, but the stock is down 13% AH?!?
    CLVS got a serious completion in AZD9291, but the stock is up 8%?!?
    Is it really so bad for INCY?
    Anything else surprising (to you) form the ASCO abstracts?
    thanks –andre–

  31. Dan- All these combination studies are in the right direction but there’s a long way to proving that those drugs are additive to PD-1 antibodies.

    andre –

    I was also disappointed wit INCY’s abstract. Initial response rate is defintely higher than what you would expect with Yervoy alone but durability doesn’t appear promising at first glance (A good immunotherapy generates durable responses, like with PD-1). People’s expectations were too high (some predicted 50% response rate), perhaps the 50mg cohort will demonstrate better durability but even then the small sample size makes it tricky to assess efficacy. On teh other hand, Jefferies issued a note explaining why the results are robust and PFS is 8+ months.

    Jakafi’s p2 in pancreatic cancer is more important imo, at least now we know the patient selection biomarker.
    CLVS’ abstracts didn’t have anything materially new. AZD9291’s abstract is very good with data for 200 pts. It’s hard for me to compare it to CO-1686, both drugs look very active with distinguished safety profiles.

    It’s all about expectation management – INCY got into ASCO with a lot of optimism whereas the market was skeptical on CLVS.

    Still going over the abstracts, will try to publish a preview post before I leave to ASCO.


  32. AZD9291 vs CO1686: Agree both drugs are very active but with different AE profile. AZD9291 continues to show 1st and 2nd generation EGFR inhibitors AE profile of rash, diarrhea, and ILD. It seems to me CO1686 hyperglycemia AE at higher dose resembles some AKT inhibitor’s impact on glucose metabolism.

  33. If anyone have an opinion on Anthera, it would be intersting to share.
    I said previously that it will be probably the time for Anthera with an incredibly low value.

  34. JQ – You are right, all Akt inhibitors lead to hyperglycemia (and skin toxicity) but in that case the toxicity is related to Akt inhibition. In CO1686’s case, this is probably off target toxicity and not a class effect.

    Christian – Not a lot of new data in the abstracts but the class still looks very promising. Dara’s mono abstract disclosed a very high response rate at the highest dose (16 mg/kg, 46%). Sanofi/Immunogen’s antibody reported 33% response rate in dose above 10 mg/kg.


  35. hello,

    anybody finds Tekmira interesting? has had a sharp correction and seems quite cheap compared to peers.

  36. Hi Ohad,
    you had a chance to listen to Ambits presentation at Deutsche Bank healthcare conference? I think it was very interesting:
    – median OS in single arm PII was 6 months (vs. 6-13 weeks from historical controls)
    – PIII has interim analysys: If OS is 6.7 months or higher (and no surprise in control arm/4 months OS) then trial could be stopped early.
    So from what i understand this scenario could be possible since patients in PIII are not as sick as patients in PII and also as you wrote – there is a possibility of bridging to transpant and then maintainace therapy. Also they disclosed to have data from Post-HSCT Maintenance Study at ASH this year. So this will be very important since it could give an outlook on (early) success of PIII – and also much greater market potential?
    As alyways – realy thankful for this… Ike

  37. Caesar – Most important milestone would be data from the IAP program, possibly in December.

    Christian – I think TKMR is becoming interesting given its cash position and the HBV data in chimps. I would wait before initiating a position as I don’t see a lot of catalysts this year ( TTR success already priced in)

    Ike (AMBI) – No I didn’t have a chance to listen the webcast. I agree, there is a reasonable chance for early stoppage at the interim assuming providing 35% of patients in the quizartinib arm proceed to transplant and receive maintenance treatment. Otherwise , the drug’s effect would be limited imo. Agree about the importance of maintenance p2 data this year, they already indicated data are strong.


  38. Please do not join twitter and don’t get suckered in to joining a charlatan sub service. Keep your work pure and independent right here :-)

  39. Hi Ohad,

    Regarding AMBI you wrote “drug generated a CR rate (most were CRi) of 47% in heavily pre-treated patients, an unprecedented effect for a targeted therapy”. When a targeted therapy is used shouldn’t the response rate be pretty high since it is expected that the therapy would be more focused? Also are there any overlaps between the AGIO drugs that target IDH1 and IDH2 ie are FLT3 specific patients separate or would they also be potential targets for the AGIO drugs?



  40. Richard – To date, higher response rates in AML have been observed only with chemo regimens. In biomarker- defined patient populations, response rates are higher and can reach 50%+. From what I recall there is little overlap between FLT-ITD and IDH1/2 mutations so the relevant populations appear distinct. Quizartinib’s activity in FLT3 negative patients make it a candidate for IDH1/2 patients as well but probably in combination with AGIO’s drugs.


  41. Ohad, do you see any reason for AMBI’s extreme weakness here (on very low volume)?

  42. Nothing that I can think of. They are supposed to have a quiet period until ASH without any major news (good or bad). The only exception might be a licensing deal but it’s hard to predict if and when a deal is signed.


  43. Hi Ohad,

    Thanks for your previous response. Do you happen to know if Ambit ever published data from their P1 trial of AC410 the JAK2? Also do you have any thoughts on how valuable the CSF1R compound could be?

    At the DB presentation the CEO mentioned a potential partner should ideally help develop their follow on FLT3 compound so I assume they will enter one in the clinic soon.

    Thanks as always for your insight.


  44. Two more questions. Who do you think will be a likely partner? CELG seems like one candidate since they are collaborating in at least one trial.

    What are your impressions regarding Ambit management? Can they get a deal done?

  45. Hi Ohad,

    I’ve been following you for a while – great job on the blog.

    Re quizartinib (AMBI), I haven’t seen any mention of the required companion dignostic being developed by Genoptix. Could quizartinib fail if a test is not FDA approved? Does the current price reflect this uncertainty?



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