Biotech portfolio update – Array, Morphosys, Onyx and Synta

Array Biopharma – Following Puma’s footsteps

Last month Array Biopharma (ARRY) announced a licensing deal with Oncothyreon (ONTY) for ARRY-380, a selective HER2 kinase inhibitor for the treatment of HER2+ breast cancer. ARRY-380 is regarded as an insignificant program, evidenced by the modest deal size ($10M upfront) and the lack of market reaction, but this could change once investors make the connection between ARRY-380 and  Puma Biotechnology’s (PBYI) neratinib (EGFR/HER2 inhibitor). Although neratinib is more advanced, backed by more clinical data and probably has broader potential, ARRY-380’s selectivity profile could differentiate it in certain clinical settings. As the market is clearly excited with neratinib (Puma has a market cap of ~$1.6B), some of the excitement could eventually be tunneled toward Array as well.

Renewed interest in HER2 kinase inhibitors

HER2 kinase inhibitors are making a comeback largely thanks to Puma Biotechnology, who is developing neratinib, a dual EGFR/HER2 inhibitor for HER2+ breast cancer. Today, targeting HER2 with kinase inhibitors is playing a minor role in the HER2+ breast cancer arena that has been dominated by HER2 antibodies from Roche: Herceptin, Perjeta and Kadcyla. GSK’s (GSK) Tykerb is the only approved kinase inhibitor for HER2+ breast cancer but it is not commonly used due to an unfavorable clinical profile (mild efficacy and safety issues). It is typically reserved for patients who progress on HER2 antibodies (3rd/4th line patients).

Puma’s neratinib (licensed from Pfizer in 2011) is similar to Tykerb in its spectrum of activity (both drugs are dual EGFR/HER2 inhibitors) but as an irreversible inhibitor, it is considered more potent (also more toxic) with potentially broader clinical applications.

Puma is positioning neratinib as an improved next-gen HER2 kinase inhibitor with the intention of replacing Tykerb in 3rd/4th line HER2 breast cancer as well as getting the drug approved in settings where Tykerb is considered ineffective. These include HER2+ breast cancer with brain metastases and 2 niche indications where HER2 is not amplified but mutated (small subsets in breast and lung cancer). Puma is also evaluating neratinib in early-stage localized HER2+ breast cancer.

What ARRY-380 has to offer?

As a selective HER2 inhibitor, ARRY-380 has the potential to be a safer and more effective alternative to neratinib in certain clinical settings. Its main advantage is in the selective targeting of HER2 with limited activity on EGFR. This is an important differentiator in HER2+ breast cancer, where HER2 plays a significant role while adding EGFR inhibition has a questionable benefit.

Historically, when Tykerb and neratinib were developed, targeting both EGFR and HER2 made sense as a way to overcome cross resistance. Today we know that inhibiting both targets is problematic in HER2+ breast cancer because it adds toxicity and precludes complete HER2 inhibition. This explains Tykerb’s modest benefit (no survival benefit) and problematic safety profile (gastrointestinal [GI] toxicities) compared to the HER2 antibodies, all of which extend survival and are well tolerated.  Interestingly, there is no approved combination of selective EGFR and HER2 drugs as past results showed increased toxicity and no clear added value. A recent study which evaluated Perjeta (HER2 antibody) with Erbitux (EGFR antibody) concluded the combination was too toxic.

Although Puma’s neratinib looks more potent than Tykerb (cross-trial comparison) and has potential utility in new indications (tumors with non-amplified HER2 but with HER2 mutations) it is basically more of the same with respect to HER2+ breast cancer. Like Tykerb, it is associated with a high degree of GI toxicities that may limit market adoption (especially with the regimen pursued in the current phase III). ARRY-380, on the other hand, is very safe and can inhibit HER2 potently without causing side effects. This also makes it more suitable for combination regimens, which is the preferred route for HER2 kinase inhibitors.

Is ARRY-380 potent enough?

The biggest question regarding ARRY-380 is whether it is efficacious enough relatively to Tykerb and neratinib. Array reported phase I results which demonstrated activity in several advanced HER2+ breast cancer patients but it is still unclear whether the theoretical ability to hit HER2 harder coupled with improved safety profile will lead to clinical superiority.

ARRY-380 only has a limited data set from a phase I trial. The trial recruited 50 patients with HER2+ tumors, the majority of whom had breast cancer. As expected, the drug appears to have a differentiated safety profile with minimal skin and GI toxicities. Activity at the highest dose (20 evaluable patients with HER2+ breast cancer) included 2 confirmed PRs, 1 unconfirmed PR and multiple cases of tumor shrinkage.

How does a modest objective response rate of 10% stack up against competition? As monotherapy, Tykerb and neratinib led to response rates of 4-8% and 24%, respectively. At first glance, ARRY-380 seems to fall at the lower end of the spectrum but it is important to remember that its phase I included patients who were more advanced. In particular, all patients failed prior Herceptin and the vast majority also failed Tykerb. In contrast, Tykerb’s and neratinib’s results were generated in far less heavily pretreated patients, all of whom were Tykerb-naïve.

Oncothyreon and Array are expected to start several combination trials which could have top line data as early as Q4 2014. The most straightforward route to registration is replicating neratinib’s phase III design in 3rd/4th line patients in combination with Xeloda. Another potential route could be HER2+ breast cancer brain metastases.

Summary

In summary, ARRY-380 clearly has activity in last line patients and future combination trials are needed for showing its true clinical relevance. Puma’s neratinib, which just started phase III, has a 2-year lead but ARRY-380 unique selectivity profile might make it a best-in-class HER2 inhibitor (At least in HER2+ breast cancer). As ARRY380 starts to generate results, investors might start to assign more value to the drug, especially in light of the excitement around Puma.

From a valuation perspective, ARRY-380’s deal adds another phase II program to Array’s partnered pipeline, which is becoming increasingly hard to track. I counted 10 active partnered programs, including 2 programs in phase III. With additional 4 proprietary programs, Array is one of the most diversified biotech companies and probably one of the cheapest (~$580M market cap).

Morphosys signs lucrative deal with Celgene

Morphosys (MOR.DE) announced a huge licensing deal with Celgene (CELG) for MOR202, a CD38 antibody for the treatment of multiple myeloma and other blood cancers.  The attractive economics ($92 upfront payment and $60M equity investment) demonstrate the excitement around CD38 antibodies following promising results with Genmab’s (GEN.CO) CD38 antibody, daratumumab. Daratumumab, which recently recveived breakthrough designation from the FDA, is leading the race, followed by Morphosys’ MOR202 and Sanofi’s/Immunogen’s (IMGN) SAR650984.

At the moment, daratumumab is the only anti-CD38 antibody with published results. The other 2 antibodies are in phase I for 2-3 years but no data have been made available from these trials. As a result, it is unclear whether they also have promising activity. Genmab insists its antibody has superior properties and management has been using every opportunity to downplay competition. Genmab even produced its own versions of MOR202 and SAR650984 in order to show daratumumab’s superiority in certain preclinical assays.

The deal with Celgene, which has the largest myeloma franchise in the world, is a very positive indication since Morphosys had to share all the data with them. Nevertheless, until results are available this is only a hypothesis.

For Morphosys’ investors, the deal with Celgene is transformational as MOR202 is the company’s most important asset. If one assumes MOR202’s results are as good as those of daratumumab, Morphosys is still undervalued. If results are not as good, it will have an impact on the stock but the downside is still limited thanks to Morphosys’ large partnered pipeline and the strong cash flow from licensing deals.

Amgen’s bid for Onyx could start a bidding war

Last week, Amgen (AMGN) disclosed a $120 a share offer for Onyx, which was immediately rejected by Onyx’s board of directors. Onyx also announced it is seeking alternative offers with better terms, a standard step following an initial acquisition bid.

As I discussed earlier this year, Onyx is in a unique position with 3 commercial assets and a royalty stake in a promising late stage assets (Pfizer’s [PFE] palbociclib). It is clear that for a company like Amgen, Kyprolis represents the most attractive asset as the drug is expected to grow rapidly in the coming years and Onyx has global (Ex Japan) rights for the drug. Kyprolis’ current run rate is ~$250M and is expected to be a $1.5-$2B drug by 2018 providing positive readouts from 3 pivotal trials.

For Amgen, Kyprolis is a perfect fit given its attempts to branch out from supportive care hematological treatments to therapeutic hematology. In 2011, Amgen acquired Micromet for its lead agent blinatumomab for ALL which is expected to reach the market next year. To date, Amgen has been unsuccessful in introducing new cancer therapies and despite some positive phase III readouts for 2 programs (T-Vec and trebananib), the market is skeptic about their value.

Amgen’s initial bid is likely to encourage other bidders to try and acquire Onyx. This dynamic typically leads to a slightly higher price tag, which, is predicted to be in the $140-150 range ($12B valuation) based on a flurry of analyst reports. Even assuming Kyprolis is approved for earlier lines of multiple myeloma and factoring in a better than expected launch for Stivarga, a valuation of $12B (including ~$7 per share cash position) looks like a good offer.

Synta – Good news, bad news

Following the sharp decline in Synta’s (SNTA) shares, it was encouraging to see insider buying including almost 3 million shares that were bought by board member Bruce Kovner and 50 thousand shares bought by the CEO, Safi Bahcall. This does not guarantee anything but when insiders buy shares it usually means they think the price is attractive.

Last week, Jefferies’ Thomas Wei issued a note with several interesting observations following a meeting with Synta’s management. With respect to the phase II (GALAXI-1) results, he brought up geographic imbalances between the two arms as a possible explanation for the “diminishing” survival benefit.  The control arm had a higher proportion of patients from eastern geographies, who appeared to be less advanced than patients in western geographies (survival of 8-10 vs. 5 months for the 2 groups respectively). In the ongoing phase III, the two arms will be geographically balanced.

As I discussed on last month’s post, the most reliable finding is always a straightforward ITT (intent-to- treat) analysis, which is clean and unbiased. ITT analysis of GALAXI-1 showed a clear survival trend on the verge of statistical significance as well as a statistically significant PFS benefit. If replicated in the ongoing phase III, ganetespib’s survival benefit will resemble that of Avastin (see figure below). This assumes no impact from Synta’s decision to limit enrollment in the phase III to patients with less aggressive disease who appeared to derive a more substantial benefit in the phase II.

ganetespib vs. AvastinCross trial comparison between GALAXI-1 and Avastin’s label

2 additional points from the report are a complete response from the company’s ongoing triple-negative breast cancer trial (we already know there is another PR in that trial) and a forthcoming licensing deal in Asia.

On the bad news front – It appears that ganetespib is not potent enough as a single agent in ALK-mutated lung cancer. Although no results have been published from an ongoing monotherapy phase II, I conclude this based on: (i) the company’s decision to develop ganetespib only in combination regimens and (ii) the fact that read out from the CHIARA  trial (1st line ALK+) is no longer listed on the clinical milestones slide in Synta’s presentation. Importantly, ganetespib still has value as an add-on to ALK inhibitors, which is being evaluated in an investigator-sponsored trial.

Portfolio update

We are selling a third of our position in Celldex (CLDX). I am still bullish on the company’s phase III programs but this looks like a good opportunity to lock in some profit (660%) as well as minimize exposure to a single position that accounted for over 10% of the entire portfolio.

 Portfolio holdings – July 7th 2013

Biotech portfolio - July 7th 2013 - after changesbiotech etfs - July 7th 2013

 

 

167 thoughts on “Biotech portfolio update – Array, Morphosys, Onyx and Synta

  1. hi Ohad

    thanks for the update!

    I am really wondering whether CELG would put 92 million upfront on the table if they had not already seen some convinving signs of efficacy. On the other hand, they might just be very afraid of losing out to J&J.

    Well probably only data will tell us … Let’s hope the datacomes up to the deal.

  2. Hi Ohad

    thanks for the update! Very useful as always.

    Do you have an opinion on the CART technology by Novartis and the University of Pennsylvania?

    Could this be an even greater breakthrough than with the PD1-mabs?

    The first results with CART-19 seem to be very good and this technology could probably be applicable in many tumor diseases.
    I have read an analyst’s opinion according to which in the long run a sales potential of up to $10 billion is possible.

    Probably this is the future key technology in the field of immunotherapy!?

    (I am aware of the fact that Novartis does not fit your investment style, but I think the CART topic could be very important.)

    Thanks!

  3. Ohad,

    Regarding ARRY, while I agree that they are ” one of the most diversified biotech companies and probably one of the cheapest” do you think their last public offering put a ceiling on any stock appreciation over the next year or two? Having the provision of the notes being convertible at an effective stock price of $7.05 beyond 2017, while the stock has already been over $6.50 in the last 52 weeks, one would think this will keep buyers away unless there are some big news events. Thoughts?

    Thanks as always.

    Dan S.

  4. Indeed CARs are very hot right now.
    Clinical results for CART19 were impressive, particularly in CLL.
    Like everything, CARs have strengths (profound and durable effect) and weaknesses (logistics, autologous therapy, safety, cost).
    In addition, good clinical results have been observed to date primarily in blood cancers (CD19 CARs), it remains to be seen how CARs perform in solid tumors using various targeting moieties (antibodies).

    Actually, I am quite aware of the field as one of our portfolio companies, Kite Pharma, is developing cellular immunotherapies for cancer, including CARs.

    http://www.kitepharma.com/eACT.html

    Ohad

  5. I totally agree. As a shareholder I would rather get diluted by straight equity offerings.
    Nevertheless, I believe that eventually the market will realize ARRY’s true valuation is much higher than $7.

    Ohad

  6. Ohad,

    Thanks for the update on ARRY’s 380. My question is, if the drug is as potentially good as you say that it is, why is it that ARRY had to do a deal with such modest upfronts and with a company like Oncothyreon?

  7. Any thoughts on which small caps are presenting data at ASH? I know ARRY and TGTX will have important data. Others to consider?

  8. Ohad,

    do you see value in the partner of ARRY: ONTY? Is there a chance that the Stimuvax trial with Merck KGaA and negative Phase III data will have a comeback due to positiv data of a subgroup?

    Toby

  9. If you’re a fan of CART then BLUE is worth keeping an eye on as they’re the only public small-cap biotech I am aware of that is involved in this space. Stock has had a nice run post-IPO and they are very early in the space so not sure about risk-reward here of the stock.

  10. Jefferies has a $22 PT on SNTA :-) I did not get into SNTA because of their history with elesclomol but am considering adding here. When do you expect any meaningful data from the PIII trial? Thanks, and great post as always

  11. That’s a good question I don’t have a definite answer, but you could have asked that about neratinib 2 years ago. Pfizer gave it away almost for free and now it supports a valuation of $1.8B…

    I guess a lot has to do with the fact ARRY-380’s activity is still an open question. As an investor, I view it as a free call option even if I assume there is only a 20% chance for ARRY-380 to have comparable or better efficacy to that of neratinib. Large partners might look for something more advanced with more meat on the bone.

    Also, it looks like the industry has given up on HER2 kinase inhibitors following the bad experience with Tykerb. The right kind of data set could change people’s mind, though.

    Ohad

  12. I hope to see more data from INFI, IMGN’s CD37 ADC, results from 3 CD38 antibodies and perhaps Genentech’s CD22 and CD79b ADCs.

    Ohad

  13. Don’t know. The numbers for the relevant subset look impressive but I don’t know how reliable such an analysis is.

    Ohad

  14. Hi Manish,

    They should have p3 data in late 2014 early 2015 (depends on recruitment and event rate). They’ll have 2 interim analyses in before that during 2014.

    Ohad

  15. Ohad
    You wrote: “If one assumes MOR202′s results are as good as those of daratumumab, Morphosys is still undervalued.”
    Both Genmab and Morphosys are almost equally valued – about $1.5B.
    Do you mean undervalued compared to Genmab or in general based on the CD38 potentials. If in general, does it mean that you consider also Genmab undervalue?
    thanks–andre–

  16. With valuation about the same and assuming MOR202 and daratumumab wind up with similar results, presumably Morphosys would represent a better risk-reward given a much deeper pipeline than Genmab?

  17. mcbio
    Genmab has 5 platforms (Ofatumumab; Daratumumab; Inclacumab (RG1512), Teprotumumab, HuMax®-TF-ADC with 3 Ph-III and 5 Ph-II trails.
    Morphosys has 3 major platforms: anti-GMCSF, anti-CD19) anti-CD38, with 1 Ph-III and 7 Ph-II.
    So I am not sure which one has deeper pipeline.
    –andre–

  18. In addition to the numerous partnered programs in the clinic, Morphosys identifies 21 partnered programs at the pre-clinical stage, 3 proprietary programs in discovery, and 35 (!) partnered programs in discovery. See: http://www.morphosys.com/pipeline . I don’t think Genmab comes anywhere close to that number.

  19. I think both are undervalued based on the CD38 programs alone. There is a lot of upside potential for Genmab and Morphosys in other programs. Morphosys’ pipeline is broader but Genmab typically retains larger stake in the different projects (e.g. the ADC programs with SGEN)

    Ohad

  20. Ohad, if I remember correctly you were rather pessimistic about Morphosys’ MOR208.

    Has anything changed here recently, could it have value?

  21. No, it’s still hard for me to get excited with another CD19 antibody. MOR208 looks less potent than competitors and it is also behind in terms of development stage.

    Ohad

  22. Well, they could if they knew Puma would be worth this much today! They either gave away or returned rights to their partners quite a few drug candidates during the period they did thorough evaluation of the portfolio. I don’t think they were thinking about taking the time, finding maximum value for their candidates, just wanted to close the book in typical big pharma fashion.

  23. Ohad
    ALNY and ISIS are both running very well. Currently they have rich valuations (ALNY – $2.3B, ISIS – $3.1B). It looks that the RNA is a hot space.
    There is a small company – Tekmira with only $75M cap but they hold a key technology (LNP delivery) important for the ALNY success. Do you have an opinion about this company?
    thanks — andre–

  24. Many see TKMR as a cheap exposure to ALNY’s pipeline.
    From what I recall, they are eligible to receive royalties for ALN-TTR-02 (but not ALN-TTRsc) and the PCSK9 program. The main concern should be what happens if ALNY decides to pursue both FAP and FAC with ALN-TTRsc.

    If one assumes they will keep the 2 indications separate, then TKMR could generate several tens of millions a year.

    Ohad

  25. Ohad,
    Nuts and bolts portfolio question: Is there a reason there are 3 different purchases of
    ARRY and SNTA, but all at the same price? Not sure I follow the logic.
    Thanks!

  26. Science is exciting but pipeline is too early for me. Most advanced program is in HCV, which is going to be a very well addressed market so the value proposition for RG-101 is unclear to me.

    Ohad

  27. Each position was bought at a different time point. The price you see is the current price, not the price paid at the time (this can be concluded by the “% gain” column.

    Ohad

  28. Ohad,

    Any comments on the collaboration between Array and Loxo oncology announced this morning? This caught my eye “Array is eligible to receive up to $434 million in milestone payments and to receive royalties on sales of any resulting drugs”.

    Thanks,

    Dan S.

  29. ohad…do u know much about whats going on with the rest of exelixis pipeline…looks like a nice handful of partnered programs but I never hear

    anything other than GDC….r these dead in the water?

  30. Don’t think it has a dramatic impact but it’s always good to have another program in the pipeline especially when you’re not paying for it.

    Ohad

  31. KBIO – Their market cap is relatively low but the setbacks in their anti-infective project makes them less attractive imo. The GMCSF antibody is behind Morphosys and GSK although the target is considered more validated.The next catalyst is results in asthma early next year but there are several other antibodies already in p3 based on good p2 data (IL-13, IL-5 etc.) so Kalobios’ results need to be spectacular in order to get people excited.

    TTHP – I don’t follow them.

    Ohad

  32. Ohad, ARQL disclosed yesterday at JMP that they will present data at ESMO on the P3 NSCLC MARQUEE trial showing “substantial improvement” for the tivantinib MET-high arm on OS. Thoughts?

  33. FWIW, in the summary slide of the JMP presentation, ARQL seemed to kind of leave the door open for future trials of tivantinib in NSCLC (and CRC).

  34. Interesting comment on ARRY 502….they mentioned to the likely that they will meet top line results….i think this trial finished up a month ago….hmmmm…do they know something?

  35. Ohad
    Agios set-up the price range $14-16. They will offer 5M shares and expect to raise $75M.
    The science is great and the CELG commitment is impressive ( $178M investment so far plus $12.75M – 0.85M shares at the IPO price .
    They will have $470M cap at $16 (the same as the initial EPZM cap)

    Do you know when they will start trading? I am looking to buy some shares the open.
    thanks –andre–

  36. I do not remember where I just remember hearing it and it struck a cord…u can go back and download the presentation on arry’s site

  37. Christian I found the quote

    “And then as you may know, we have Asthma program, it’s CRTh2 which we have indicated will be sharing top-line results this summer on and so that would be coming up in the not too distinct future, we believe we are still on track to deliver those top-line results this summer. So lot of very important catalyst. So as a reminder, just jumping into the data and some of this has been presented recently seeing it a move through quickly but wanted to be available.”

    Now I’m not sure if deliver means ‘sharing’ that data or ‘meeting’ the data points…not as clear a statement as I originally thought

  38. Robert, you’re reading way too much into that IMHO. They’re just saying they will present the data, good or bad, this summer. FWIW, at JMP Koch talked about attributes of 502 that may make it good, including lack of drug-drug interactions, and he said it would make the “perfect” drug to combine with others. That’s only if data is positive, of course, and there’s no guarantee of that.

  39. hello all,

    what do you like about ASTX?

    Their HSP90 inhibitor, unlike the SNTA-one, still seems to have a few minor issues with ocular toxicities? What else is known when comparing ASTX vs. SNTA HSP90?

    Regarding the few partnered programs, is anything known about milestones and royalties? Haven’t read anything specific.

    thanks!

  40. It’s on my watchlist and I intend to get in this summer if price goes down.
    A well diversified small molecule story, similar to ARRY but less advanced partnered pipeline.
    Their Hsp90i does have ocular toxicities which is why I prefer SNTA but ASTX have a well designed program especially in ALK+ lung cancer. In addition, comparing Hsp90 inhibitors is more tricky than other targets because different drugs may have a different spectrum of inhibition for a given set of oncogenes.
    Not sure how much they disclosed about financial terms for partnered programs.

    Ohad

  41. hi Ohad, thanks for your comments. mcbio316, do you also have a few comments reg. ASTX, I thing you gave a considerable position. thanks!

    ——-

    by the way Ohad what is your take on TEVA? they have been in consolidation mode for a long time…

  42. Christian, ASTX is indeed one of my larger holdings. I have about a double in my position but haven’t sold a single share and don’t intend to do so until we get greater clarity on SGI-110 (starting w/AML r/r data at ASH in December), for better or worse. SGI-110 is by far the reason I’m long ASTX. Think of it as a 2nd gen Dacogen (has already shown activity in patients who no longer respond to Dacogen or Vidaza). Unlike Dacogen, however, ASTX is pushing 110 into solid tumors as well. Speaking of Dacogen, Dr. Reddy’s launched generic Dacogen but that hasn’t hurt ASTX shares at all (some viewed that as an overhang). Good to have that out of the way now.

    Regarding ASTX’s Hsp90, I don’t have great hopes and assign very little value to the program (would love to be proven wrong). They are behind SNTA but the one differentiated thing ASTX is doing is they are pursuing prostate cancer in combo w/Zytiga. I don’t think SNTA is doing that at all. So, if Hsp90 shows any utility in combo w/Zytiga (ASTX calls approach “dual hit” on androgen pathway I believe), ASTX could well be in good shape here; just not sure how likely this is to work.

    Finally, I don’t think ASTX gets much credit for the partnered pipeline with the key ones being the BACE inhibitor partnered w/AZN and the CDK4/6 partnered w/NVS. MRK recently had positive early data for their BACE so I think that bodes well for the field (imagine room for a few of these if successful). As Ohad said, not certain on royalties. I imagine ASTX will be due double-digit royalties on partnered pipeline but I can’t confirm that.

  43. They are trading at a market cap of $520M, which feels a little bit high vs. ARRY ($630M for a much broader and advanced pipeline).
    I will try to to add around $4 if possible, have no idea whether it will reach that price or not, though….

    Ohad

  44. Richard
    Oncothyreon raised good money on the back of Stimuvax and was funneling that into a broad program in its PI3K inhibitor program (PX-866). To date the phase II program has failed miserably and it is likely that they will shelve the program soon. That leaves them with not a lot going on and $70M of cash on hand. In many ways ARRY may view them as a better partner for 380 as it is likely to get the full attention of the company and not be a small cog in the wheel of a big pharma.

  45. Ohad
    What would you be looking for to make you think the analyses would be more reliable?

  46. Just had contact with their IR, i want to share with you:

    -For our partnered programs, we haven’t disclosed many details about the economics because of contractual obligations. But in general, we are eligible to receive in a tiered structure mid-single digit to mid-double digit royalties across our portfolio of partnered compounds.

    -We currently have no co-development rights for our partnered compounds.

    -SGI-110 is wholly owned by Astex and has patent protection through 2025. Eisai has right of first offer for SGI-110, which means that Astex will first approach Eisai for partnering discussions.

    -We have not disclosed specific information about Dacogen sales in the EU, except for a press release issued in October of last year, in which we announced that a $5 million dollar milestone was earned from Eisai Inc., for the first commercial sale of DACOGEN® in the European Union.

    Also: Novartis seems to have taken the option on AT7519 (clinicaltrials.gov)

  47. I dipped into immu since its seems like maybe it could do a continued run based on Adc hype…is this on your watch list?

  48. Hi Ohad,

    Any thoughts on the following?
    “Weakness in shares of Incyte (INCY -3.2%) might be attributable to slide 10 of Novartis’ Q2 presentation which shows Jakavi sales were $33M during the period, below estimates. The drug is marketed by INCY in the U.S.”

    Thanks as always,
    Chris

  49. Yes, they had a slight decrease QoQ but from what I understand this was due to a one time event that led to very strong Q1 sales. Too early to say tell whether the drug plateaued, it’s still hard to judge the overall potential based on the second Q of sales. NVS still sounds very upbeat about Jakavi.

    Ohad

  50. sorry Ohad

    very stupid question. you changed the blog type some time ago. before, everything was listet chronically. now it is listed according subject.

    i read the postings in this thread regularly each day, bit it is hard for me to find new postings if they are in answer to a topic many postings upwards. i can only see the number of total posts and remember from the last look how many it was.

    so, before it was much easier to read for me.

    can i change to this previous view somehow, or what do i

  51. exel got some positive node from kraemer and is up since and infi bouncing back
    got some new money from a building sold. anything attractive right now worth nibbling on? thanks

  52. I am not aware of any fundamental changes with both names. I still view the stocks as attractive but don’t expect anything significant in the near term. For INFI, next catalyst is ASH (December). For EXEL , COMET1 and 2 data around mid 2014.

    Ohad

  53. ARRY tomorrow with CC on 502.

    wondering whether we can read anything into the fact that they hold a CC? i assume they would not organize a CC in case of bad results??

  54. You don’t generally hold CCs for P2 failures so I assume at minimum trial not complete failure.

  55. Agree but it is hard to predict market reaction. The 2 recent cases where they held a CC for p2 data (Selumetinib and ARRY-797) didn’t end up well.

    Ohad

  56. Agree completely Ohad. Not saying there will be big pop or anything but ill still take positive news if that’s how it plays out and hopefully it translates to partner soon.

  57. Any positive read out out for 502 will be good for another 3-4% pop at days end…i do not expect much more

  58. arry looks good…premarket much higher than I expected, lets see where it settles…maybe this could give investors enough confidence to make it run…not sure what this market is worth…or who the players are in asthma

  59. Yeah, Ohad,
    I agree with Christian. It is very difficult to spot new postings, unles omeone starts a new subject. I think the previous chonological order was simpler and easier to follow.
    Thanks! Keep up the good work!
    D

  60. hi Ohad

    thanks a lot, the blog is much easier to read now for regular users!

    I assume reversed order (latest posting shown on top) is not possible..?

    brgds
    Christian

  61. certainly several of these newly IPOed companies are interesting, but to assign billion dollar market caps to them before any human trials seems a but weird.

    ARRY cheaper as some of them, MOR not much more expensive…

    justified??

  62. I have the same impression with the hot IPOs (AGIO, EPZM, BLUE, OMED) etc.
    Backed by great science but it’s hard to justify a valuation of 700M-1B for those companies.

    2 names I find attractive are AMBI and ESPR. Both have good p2 data and clear unmet need for their products and valuation is under $300M.

    Ohad

  63. Hi Ohad,

    Do you see any reason for Genmab pullback? and would you consider adding a second position at these levels?

    Thanks
    Chris

  64. Hello Ohad,

    any opinion on Sarepta and its current valuation?

    thanks!
    Christian

  65. Chris – One reason for Genmab’s pullback could be the excitement around Roche’s GA101 (obinutuzumab). The market now expects it to replace Rituxan and become the dominanat CD20 antibody. Yes, I would definitely consider buying more, as I believe daratumumab could be a huge drug, not to mention other programs which are pure upside.

    Christian – I an still on the fence on SRPT. On the one hand, I think the market misinterpreted their announcement, on the other, valuation is rich and decision is months away.

    Robert – I had no expectations hence I was positively surprise. The company disclosed limited results but imo there is definitely something to work with: a stat significant difference, magnitude in overall population looks lower than other drugs but the trial was short and patient populations are not necessarily comparable, the drug is oral and looks very safe (so far)

    Ohad

  66. Hi Ohad,

    Are you concerned about espr history of the drug? Any concerns on safety? Any thoughts on Oncomed? The price of ambi doubled after ipo. The ipo didn’t do well coz celgene pulled out in the last min. Do you still like their pipeline after the pullout ?

    Thank you

  67. Ohad,

    Is this a net positive or negative for ARQL’s Tivantinib?

    “The pharma also disclosed that it discontinued development of onartuzumab (MetMAb) for first- and second-line triple-negative metastatic breast cancer after the compound missed the primary endpoint in a Phase II trial. The monovalent mAb against c-Met proto-oncogene (MET; HGFR) is in Phase III testing for non-small cell lung cancer (NSCLC) and gastroesophageal cancer.

    [There are ARQ197 in Metastatic Triple-Negative Breast Cancer, PhII, NCT01542996, and
    Tivantinib in Treating Patients With Recurrent or Metastatic Breast Cancer. Ph II, NCT01575522]”

  68. Mike – Indeed, safety is my biggest concern regarding ESPR. In these kind of indications, especially if they intend to pursue broad groups such as statin-failures, safety hurdle is extremely high. Small molecules are prone to off target toxicities , which typically don’t present themselves before large p3 trials and sometimes even later than that.
    Regarding OMED, have to adit I was less impressed after learning about the safety issues for the DLL4 program. They have a broad pipeline but still no efficacy signal. Does CELG got anything to do with EPZM?

    Steve – The compound has little to no value imo given the developments with NS5a/b inhibitors. Protease inhibitors such as danoprevir may eventually have a role in HCV but danoprevir is far behind.

    Richard – Good catch. If anything, this is negative to ARQL because it implies cMET does not play an important role in triple-neg breast cancer.

    Ohad

  69. Yeah, danoprevir is not a reason to own ARRY. I don’t assign any value to that drug. It does not stack up well to the competition IMO and you can tell that by the fact that ARRY barely discusses the drug in CCs. I follow the HCV space closely as I’m long Medivir and Medivir’s simeprevir is a much better PI than danoprevir.

    Regarding ARQL, I’m not sure any negative read through to breast cancer based on MetMab results is a big deal. The HCC indication is far more important right now to ARQL and we also know based on ARQL management comments that we will see stat sig OS and PFS benefit in MET-high NSCLC patients for tivantinib arm in MARQUEE trial to be presented at ESMO.

  70. Sorry, just to clarify my prior comments on ARQL, management comments before were that there was “substantial improvement” for OS and PFS for MET-high NSCLC patients on tivantinib in MARQUEE and not necessarily “stat sig.” Need to see the specifics at ESMO but I assume results may not be stat sig since that wasn’t the specific reference.

  71. Ohad Hammer on July 27, 2013 at 1:23 am said:

    Hi Ohad!

    regarding OMED, any thoughts about the 2 others clinical-stage compounds? (OMR59R5 and 18R5)?

    thanks
    Christian

  72. I missed getting into SNTA. Was waiting for it to get into the $4s :-( The study size seems pretty small. Tough to justify a 40% jump, but it could just be the shorts covering. The stock was heavily shorted.

  73. $ARRY & $CELG Announce Strategic global R&D Collaboration: $11M upfront + up to $376M milestone (the partnership is preclinical).

  74. ARRY is on a roll, very nice to see :)

    this company is still quite a lot undervalued in my opinion

  75. Looking at ARRY, I don’t believe your analysis included either their inflammatory pipeline (deal with Celgene announced today b) or the Arry-502 for Asthma program. Wow, I consider these as great bonuses as a stockholder. Any comments regarding valuation?

  76. Hey Ohad

    same as Manish, I missed the boat on Synta. Was thinking about it it last week after the pullback to $5 but hesitated.

    You have mentioned a number of recent IPOS and companies with an incredible valuation onsidering they are in very early clinical stages. I can;t remeber who on this board a few month ago mentioned STML, which had a very successful secondary and then the stock has been up substantially. What is your opinion on their SL-401 program, it looks like they are going to enter pivolal study before the end of the year. Their valuation appreciate considerably in the last six weeks.
    Thanks!

  77. Dan – I was skeptical on STML because they use a highly immunogenic drug that might preclude prolonged dosing but it turns out the drug has good activity in an orphan indication (BPDCN) with just 1 cycle. Filing is probably 2 years away and results to date are from a handful of patients.
    Their cancer vaccine for brain cancer looks pretty good as well, they actualy see objective responses, which is quite rare with vaccines.

    Valuation is not cheap but it’s still reasonable.

    Ohad

  78. Hey Ohad
    Two company I have looked at in the past.
    The first, ADXSD, I sold out last year and it has been a very bad investement:
    but perhaps now a few key events may turn its cahnces around, alothough management has been disappointing. ADXSD (which just had a 125 to 1 reverse stock split). The company is in the immunoterapy field and most of their clincal trials are sponsored by third parties.

    The second PRAN, I used to follow many years ago and I noticed that in the past weeks it has almost doubled market share. I wonder what you think of their science and expertise, and whether they have a chance of succeeding. They have expanded on the alzheimer’s program, and are also pursuing parkinsons and huntington. Their experimental drug is supposed to neutralize the tau and abeta proteins that are thought to be part of the reason the function of our brain slows down.

    Thanks again
    D

  79. got lucky on SNTA last week, had some new money and ohad did not post anything new i was ready to sink my teeth into….so with the drop to 5 level, ohad buying and insider buying i figured its a good bet……..little that i know.

  80. Hi Dan,
    I am not familiar with ADXSD but came across some analyst notes on PRAN (I think MLV covers them).
    PRAN could be an interesting gamble (with a low likelihood of success but huge upside) given their low market cap. They should have Huntington and Alzheimer data this October and next year, respectively, I just don’t know how robust the Alzheimer trial can be given the small sample size and the endpoints they use.

    Ohad

  81. Hi Ohad,

    What do you think of SGEN report Q2?
    Thakns for your great job!
    Dimitri

  82. Dimitri – There wasn’t anything meaningful imo, there were some positive and negative updates on label expansion, compendia listing for CTCL and DLBCL trial.
    Overall, SGEN needs another catalyst to support the stock, this will probably come from its partnered pipeline.

    Dan – Didn’t see anything new in particular. One interesting observation is that the company expects a licensing deal soon. Let’s see if they nail it this time.

    Ohad

  83. Ohad
    Impressive Jakafi growth. Your call for $1B Jakafi revenue (ref. “Incyte’s Jakafi is likely a $1B drug”) looks now achievable. I was a bit skeptical at the time of the article, but the earnings call was quite convincing.

    Any opinion about MACK? It is considerably down after the secondary.
    Thanks–andre

  84. Andre- Indeed impressive growth, still not sure what contribution the survival trend had. The most important event is results with Sanofi’s jak inhibitor.

    MACK- i don’t like the stock, think it’s way overpriced and to date all programs generated underwhelming results. They will have a couple of read outs later this year with the HER3 antibody.

    Ohad

  85. Hi Ohad
    Have you followed THLD at all? Any opinions on the therapeutic benefits of TH-302 and on the hypoxia “theory” and the “non-dividing quiescient cells.” It vaguely reminds me of HALO’s solid cancer drug, which affect the “cellular matrix” to enable more powerful delivery of anti-tumor agents. Both are concerned with the “environment.”
    Thanks
    Dan

  86. Ohad any comments on imgn earning release and 2014 forecast? The price came down this morning

  87. Dan – I am following THLD but don’t have concrete recommendations. The scientific rationale is there but I was somewhat disappointed by TH-302’S monotherapy activity. On the other hand they had a positive signal in their panc cancer p2 and p3 will have to at least corroborate results in order to compete with Abraxane. The STS trial should be viewed as a long shot following the ZIOP experience.

    Roy – I thought it was neutral to negative due to the push out of data readout to ASCO 2014. I still like the Folate receptor program best.

    Dan S. – The term “uneventful” best describes EXEL’s earnings release. I thought the $4M in cabo sales were impressive, management did not say how much of that was off label.

    Ohad

  88. AMG151 (ARRY) now officially buried by Amgen. well do not think there were high expectations for this compound.

  89. Hi Ohad,

    When is your next post? and do you plan any changes in your portfolio?
    Thanks,
    Chris

  90. Struggling to find the time to write something this month, so far too swamped with work.
    Wrt to portfolio changes i would like to add more genmab and am looking at a couple of names, primarily AMBI , ASTX and ESPR.

    Ohad

  91. ARRY said again today during CC that, based on FDA guidance, there may be an accelerated approval path forward for ARRY-520 in combo w/PI based on ORR. Presumably they will have to run another trial after the current Phase 2b trials complete, though I do wonder if any chance for AA based on combo trial w/Kyprolis that’s due to read out at ASH in December (combo w/Velcade reads out later I think).

    AMGN return of 151 not a surprise since it showed for some time on clinicaltrials.gov that AMGN had terminated the trial. Always important to pay attention to that site. That said, it’s not like 151 was a key program for ARRY IMO.

  92. Hi Ohad,

    Genmab price isn’t much down from the highs. Whats the mkt cap? Can’t find it exactly. Nice to see the law suite is settled but the fund dumping has hurt the price i think. Do you think it is just undervalued or are you expecting something int from the pipeline? What intrests you in ambi? I like aveo at these prices. Thanks very much.

  93. Mike, Genmab market cap is 8.5 Billion Danish Krone which is about $US 1.5 Billion.

  94. Ohad
    take a good look at NPSP… the company is very well run and they have a product on the market and are about to file the second NDA. They are in the ultra-orphan space. It seems that their two drugs could generate $1B each, given that they have worldwide rights to both.
    I think it is a solid company.
    Dan

  95. Hey Ohad
    regarding INFI…. what do you think of the reaction to the earnings? The stock is going down again today. So much volatility. I was thinking of adding some shares here but I am afraid it might drop down further.
    Thanks, as always, for you opinion!
    Dan

  96. Mike – There is one good reason to own Genmab even at these levels – daratumumab. JNJ have been awfully quiet and I believe they are planning a very aggressive development plan that will become visible in the coming months. CELG joining the CD38 race further incentivizes JNJ to accelerate dara’s development.

    Dan – Will check NPSP out. Re: INFI, I still like the stock based on a worst case scenario of a niche hematology drug with $250M sales only. There is a chance (which is not slim) that IPI-145 will be the leading PI3K inhibitor in hematology. Inflammatory applications are also a bonus same as activity in ibrutinib failures.

    Ohad

  97. Ohad, if you like INFI at ~$1B market cap, I’d be surprised if you didn’t like TGTX at only ~$200M market cap. We still need to see the data on TGTX’s PI3K and we’ll get some later this year but they are talking like it could be QD and may have other advantages vis-a-vis INFI PI3K (e.g. doesn’t hit gamma, which may be linked to safety issues). Also, TGTX plans to combine the PI3K with their anti-CD20. Note that INFI is unable to run such combo trials as they don’t have an anti-CD20. I like TGTX risk-reward much better and am long. That said, it’s clearly a very speculative stock and I only have it as a small holding.

  98. Ohad
    What is attractive in the Ambit programs? How the most advanced for AML (AC220) compares with that of Astex SGI-110. In general Astex programs look more advanced, and most of them are partnered.
    Thanks –andre

  99. Mcbio- INFI is ahead of TGTX plus it has theoretically a best in class drug because it inhibits pi3k-gamma (the flip side is potentially more side effects). Their CD20 program is a burden, not an asset, and therefore a totally waste of money. The CD20 landscape is dominated by Roche and GSK to a lesser extent. I don’t see how anyone, let alone a tiny company, can compete with current cd20 antibodies.

    andre- AMBI has over 200 flt3+ patients including ~70 pts at lower doses. The CR rate is extremely high but durability of response is less great. We’ll get a sense on SGI110 in AML at ASH. AMBI might be able to get approval based on the p2 data (marquibo’s approval in ALL could be a relevant benchmark)

    Ohad

  100. Ohad, I respect ur opinion but disagree. TGTX is not trying to compete with the other big players in front-line setting for CD20. Rather they are pursuing 3rd line where there should be more opportunity for them. They already have CRs in patients who are refractory to Rituxan. Also, there is synergy between CD20 and PI3K, more effective than either agent alone. And TGTX will get to explore this combo whereas INFI will not (unless they do a deal with someone).

  101. Why would any currently not approved drug in this space want to explore combination with an unproven drug when they can do combination with already approved rituximab, ofatumumb, and soon to be approved obinutuzumab?

  102. JQ: When one company owns both of those unproven drugs, why would they not want to run a combo of their own drugs?

  103. Because it is much tougher to do combination of two unproven drugs especially one is biologic than to do combination with a known quantity.

  104. Hey Ohad,

    do you have any thoughts about Stemline and Verastem?
    In my point of view, the Stemline-pipeline looks very interesting. The drug candidates show some action and they aren’t partnered. So much up-potential in stock quote. Another point ist, that the market cap ist small (about 412 million $). I only have some concerns about the small pipeline.

    Thanks for your opinion!

  105. Ohad
    Do you have an opinion about Immunomedics?
    Their recent results with anti-CD22 in FL look strong – response rate, complete response rate, remission rate after 3 years.
    Also they reported progress with their ADC program
    thanks –andre

  106. hi Ohad

    MorphoSys seems to be very active in this field of antibodies against GPCR targets (in cooperation with Heptares).

    what do you in general think of this field?

  107. Ohad, listen to AVEO’s presentation at Canaccord from 8/15. Lot of new tidbits: (1) discussion of cMET expression as biomarker for ficlatuzumab as will announce new PoC trial in head and neck cancer (said cMET higher expressed here) this fall; (2) discussed ongoing trial for ErbB3 antibody partnered with BIIB, including the 3 arms and data in first two arms by 2Q14; (3) discussed in more detail biomarkers for ongoing P2 tivo trials (VEGF-C and lack of VEGF-A for CRC and hypoxia gene signature for TNBC); and (4) a new cachexia antibody they hope will enter clinic by end of next year that is an approach no one else has tried that has already generated interest from pharma. Not sure people realize AVEO is much more than tivo but I’m not sure tivo is dead yet either. I’m long post-ODAC (unfortunately at a bit higher level but I’ll hold for all these events).

  108. Hi
    Ohad,

    I am trying to get some ARRY, what do you think is good entry point. I am doing my first investment and have seen this company for 3 months now.

    I see they lost AMGN collabaration drug last month, but I still think they will do good work and get new drug ideas to market, and also they many drugs in pipeline.

    Can you please comment on what you think of this stock – since its a month you have written article on this stock.

  109. Ruhalla,

    I know you didn’t address your comment to me, but I’ll throw in my two cents. I think ARRY is very cheap at these levels. Retail investors are freaking out a bit over the dissolution of the Amgen partnership, but I don’t know of a single long who placed any value on the partnership. Sure, it would have been nice, if something had worked out with the drug, but it’s a tough indication and AMGN is not a major player here. The value drivers for ARRY are the proprietary molecules, 614 and 520, in hematological malignancies, both of which will have data at ASH in December. Also, of course, are the MEK inhibitors partnered with AZN and NVS. (NVS just added a new Phase II trial for MEK-162. It’s now up on clinicaltrials.gov.). Ohad thinks that the Oncothyreon partnership is worth something. And then there is the LOXO partnership; and, finanlly, there is the partnership with Genentech. Some on the Internet think Danoprevir is worth something, as well (partnered with Roche). Getting a partnership for either the pain drug or the asthma drug seems problematic at this time. And cash is a problem. I know that September (not October) is traditionally the worst time of the year for stocks, so you may want to wait a bit, but I think the stock is very undervalued at the moment and I’m going to add some shares.

  110. The ARRAY and Roche with danoprevir I think not come to fruition…abbvie, Gilead and bms hep c drugs are much better and further along, but arry is still a great company

  111. Hey Ohad
    what if there is a market correction? biotech have had a great run so far, any advice on strategies to mitigate against corrections? Thanks
    Dan.

  112. Hello Ohad,
    Would like to know your views on the ONXX acquisition by Amgen. I believe they leveraged unavailability of trial data to bag ONXX for discount to fair price. Do you think this will grow interest in M&A activity with some likely candidates?
    Regards
    DJ.

  113. Sorry for not being available for responding to questions. I hope to publish a portfolio update on sunday and to be more available from then on.

    Ruhulla – I like ARRY very much at these levels, it has so many potential catalysts, the diversification is remarkable. Don’t know about IMUC.

    Chris – I think AGIO is way too expensive even after the correction. I think they are a very cool company with impressive science but still a preclinical one.

    Dan – I also sense te market is high but corrections are very hard to predict. I feel comfortable having 20%-30% of the portfolio in cash.

    DJ Chudasama – I actually think it’s a good deal for ONXX shareholders. If ONXX wanted to get a better price they would have to wait for FOCUS and ASPIRE data next year.

    Ohad

  114. Ohad, good to have you back man. Curious if you saw ASTX’s interim AML data on SGI-110? Kind of came out of nowhere as I didn’t expect to hear anything until ASH. Shares up sharply on the news though the data has been widely criticized on my twitter stream. Big beef seems to be people thinking this data isn’t much better than prior Dacogen data. I’m not sure I agree with this primarily because this was just interim data and I think there is chance for final data to improve because I think HMA response generally improves once patients have had more time on drug. Also, I’m not sure the prior Dacogen data people are comparing to included HMA failures like I suspect the ongoing SGI-110 trial includes. If so, that would make a comparison of the two even more difficult. Curious to hear your comments.

  115. Ohad, with 520 and kyprolis combo do u think Amgen comes back to Array for a comarketing/development deal regardless of the recent diabetes deal breakup?

  116. I wouldn’t assign too much relevance to the fact 520 is being evaluated with Kyprolis. Amgen, just like any other potential partner will evaluate the program on a standalone basis imo.

    Ohad

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