Biotech portfolio update – Three readouts and an acquisition

There was a lot of activity in my coverage universe in the last two weeks, including positive data readouts for three companies and an acquisition announcement. However, of the four cases, only two resulted in share appreciation.

Ambit – To keep or not to keep (the CVR)

Two weeks ago, Ambit (AMBI) agreed to be acquired by Daiichi Sankyo in a deal that included a $15 upfront payment and $4.5 in Contingent Value Right (CVR) per share. The CVR represents a milestone-like mechanism in which Ambit’s shareholders may eventually get additional payments equal to 30% of the initial purchase price.

Based on the current share price ($15.38), the market assigns each CVR a price of $0.38, which may turn to $4.5 if all milestones are achieved (a ~11X return). According to Ambit’s SEC filing, half ($2.25) of the amount is payable at FDA approval for relapsed/refractory AML while the remaining half ($2.25) will be paid after approval in first line AML.

 In contrast to other cases where the CVR was registered and traded on a stock exchange, Ambit’s CVR is “not transferable, will not be certificated or evidenced by any instrument and will not be registered or listed for trading.” In other words, the only way to receive the CVR is owning the stock at the day of transaction. This led many to ask whether they should hold the stock and get the CVR or sell it prior to the deal and get a small premium in cash instantly.

I plan on keeping my shares in order to receive the CVRs, which represent favorable risk/reward ratio and timelines. The first milestone may arrive in 2016 based on results from Ambit’s ongoing phase III (QUANTUM-R). First line approval may come 1-2 years later, assuming Daiichi initiates a 1st-line study in 2015. The likelihood of success in at least one of these settings is ~ 50% in my opinion while the market appears to ascribe significantly less value to this option.

Seattle Genetics – Positive Top-Line AETHERA Data but (still?) no survival benefit

Seattle Genetics (SGEN) announced the highly anticipated results of the AETHERA study, which evaluated Adcetris as maintenance therapy after transplant in Hodgkin’s Lymphoma. Despite concerns about the trial’s powering (due to the lower than expected rate of progression events), Adcetris led to a meaningful increase in median PFS with a hazard ratio of 0.57. Further details were not disclosed and are expected to be presented at ASH in December.

Surprisingly, the stock is down 14% since the announcement primarily due to the lack of a statistically significant survival benefit at the time of analysis. Although this can be easily explained by the short follow up (fortunately, HL has a relatively good prognosis and is potentially curable) and the cross-over trial design, it is impossible to rule out the possibility that Adcetris maintenance does not result in prolonged survival relatively to the current treatment modality (after relapse). This led some to suggest that without a clear survival benefit, Adcteris will not be approved as maintenance therapy nor will it be adopted by hematologists who will prefer to expose patients to the drug only upon relapse.

I view the AETHERA data as highly positive and believe concerns over the interim OS data are overblown. At ASH, there is a good probability to see an OS trend in favor of maintenance Adcetris that will mature to a statistically significant benefit with time (next OS analysis is expected in 2016). Even in the absence of a clear statistically significant survival benefit, Maintenance with Adcetris may demonstrate a higher number of potential “cures” (patients who are in long term remission), which should encourage physicians and patients to use the drug as early as possible for longer treatment periods.

Also at ASH, Seattle Genetics is expected to present initial results for its anti-CD33 ADC (SGN-33A) in AML. As I previously discussed,  expectations around this program are high given the fact that CD33 is considered a validated target in AML (Mylotarg) and the new potent payload SGN-33A employs. This is further enhanced by recent remarks by the company’s CEO, Clay Siegall, who stated they are “very excited” and “looking forward” to presenting results at ASH.

Esperion – Homerun data but regulatory uncertainty remains

It appears that the market is finally discovering Esperion (ESPR) following a successful phase IIb of its lipid-lowering drug ETC-1002. The study was a clear success, demonstrating superiority over Zetia (the approved 2nd line drug after statins) in LDL-C and also in hsCRP. ETC-1002 led to a reduction of 27%-30% in LDL which was significantly better than 21% achieved with Zetia. The company also presented preliminary data that showed the two drugs can be given together and have an additive effect. The safety profile appears clear with a notable absence of muscle-related side effects that are associated with statins.

If confirmed by larger studies, ETC-1002’s lipid lowering effect should make it an important option in patients who are either intolerant or not controlled with statins. Being an oral agent with the potential to be combined with approved agents should allow ETC-1002 to be used before PCSK9 antibodies which are highly effective but require monthly or twice-a- month injections. The strong effect on hsCRP could be an important differentiator, as this inflammatory marker is not affected by PCSK9 antibodies.

The only overhang for Esperion is the approvability of LDL-C reduction, as some expect the FDA to require outcome studies to prove a true clinical benefit. This is relevant to all lipid lowering drugs in development (especially PCSK9 antibodies). Amgen (AMGN) already filed its PCSK9 antibody (evolocumab) for approval and Sanofi/Regeron (REGN) are expected to file alirocumab this year, so a definitive answer should be given in 2015. Even if outcome studies are required for approval, ETC-1002’S clinical profile bodes well for achieving this goal.

To my knowledge, ETC-1002 is the only agent in development with a clear effect on LDL (30%) and hsCRP (40%) in statin failures, clean safety profile and oral bioavailability. The scarcity value coupled with the multi-billion potential for lipid lowering drugs make it an obvious acquisition target.

Exelixis – Robust efficacy for cobi but differentiation remains unclear

 At ESMO, Roche and Exelixis (EXEL) presented positive results for cobimetinib in combination with Zelboraf in melanoma. Results were robust with a 3.6-month PFS benefit (9.9 vs. 6.2 months, HR=0.51) and a positive OS trend (HR=0.65) that will likely become statistically significant with additional follow up.

The data were clearly positive and should lead to approval of cobimetinib, but the drug does not appear differentiated from GSK’s (GSK) MEK inhibitor, which led to a similar PFS benefit (11.4 vs. 7.3 months, HR=0.56) when combined with GSK’s BRAF inhibitor (Tafinlar). GSK’s combination also led to a statistically significant improvement in OS (HR=0.69). The only clear difference was in the side effect profiles, as Roche’s combination led to more photosensitivity whereas GSK’s combination led to a higher rate of fever.

Without a clear winner, it remains to be seen which combination will be more commercially successful. On the one hand, Roche is the global leader in oncology and BRAF+ melanoma in particular. On the other, GSK’s combination is already approved in the US. Assuming a 50-50 split and a global opportunity of $600M for MEK inhibitors in BRAF+ melanoma, Exelixis should generate ~$100M in annual revenue. (30-50% profit split in the US plus 10-15% royalties ex-US).

Exelixis shares continued to slide despite the positive results and the imminent revenue stream expected to begin next year. This can be explained in part by the lack of clear differentiation from GSK’s Mekinist, but the most serious overhang for Exelixis is its significant debt ($380M). Until this is resolved, it will be challenging for investors to attribute real value to its pipeline.

Portfolio update

We are selling our position in Exelixis given the lack of clear differentiation for cobimetinib in melanoma.  We intend to consider getting in again once the debt issue is resolved (expected to occur in the coming months). We are selling our position in Celldex (CLDX) as well as Synta (SNTA), and a portion of our Incyte (INCY) position. With 40% of the portfolio in cash, we intend to selectively add positions in the coming months while maintaining a significant cash position in light of the rich valuations out there.

Portfolio holdings – Oct 5th 2014

Portfolio - 5-10-2014 - after changesbiotech etfs - 5-10-2014

89 thoughts on “Biotech portfolio update – Three readouts and an acquisition

  1. Re CLDX, the decision was based on valuation and what I consider to be limited efficacy with CDX1127. The P3 programs (EGFRvIII vaccine and the GPNMB ADC) are still attractive imo but readouts are relatively far.
    Re SNTA, until they focus on molecularly defined subsets of tumors, it will be hard to generate value imo.


  2. hi Ohad

    IMGN now below 10 bucks. it would be great if you can post something about the company

    i saw that royalty on their cd38 sanofi mab is really very limited, so not worth much to them.

    you see any value in BT062 where they have opt-in right?

    how would you value kadcyla royalties?

    what do you think about their 3 proprietary clinical assets? (tox etc)

    i am still wondering why Roche decided to go with SYEN technology though the obvious success of kadcyla

    thanks a lot!


    PS: the c-kit ADC LOP628 should enter phase 1 soon (november), any opinion on this one? conditions with Novartis are favourable for them as I remember

  3. Hi Ohad,

    For EXEL, what do you think about the scenario of success in METEOR before next July? The topline powering assumptions require 259 PFS events among the first 375 patients enrolled, and if they’re guiding year end for full enrollment of 650, chances are they have had the number of patients necessary for some time. Their estimates are 5 months for Everolimus and 7 for Cabozantinib, but we could see somewhat higher PFS numbers for Cabo.

    For their debt, they have an option to extend their Deerfield loan of 100 million originally due next July to later this decade but the interest per annum would be about 15%. A restructuring would probably be advisable before rates rise, but I wonder how much this could affect share price.

  4. Christian – IMGN is still on my watchlist and I am following it closely. Imo, in order to move higher they need to show at least one proprietary candidate with a decent clinical profile. I think this can happen with either the FR or the EGFR progeram but as you stated, there might be tox issues preventing them from reaching optimal doses. The CD38 program has unfavorable economic terms but it’s better than nothing (could generate several of tens of millions a year in royalties). BT062 – The solid tumor study is very intriguing. Nice to see Novartis is pushing the first ADC, I assume terms are much better. Sanofi has another ADC (CEACAM5) in p1.

    Wildbiftek – I am cautiously optimistic about the RCC program based on their p2 data but this was a small single arm trial. Agree, this trial may be overpowered if you expect to see PFS similar to what the P2 showed. Hard to predict regarding exact timing, not sure what kind of interim analyses are built into the design.
    Re: the debt, they will probably re-negotiate terms but they don’t have a lot of leverage until they have the RCC data in hand.


  5. Thanks Ohad.

    RE: IMGN, do you know if the terms for their CD-19 program (SAR3419) with Sanofi is similar to Kadcyla? Couldn’t find much on this.

    Also, what do you think the timeline for a conjugated version of their CD-38 MAB is? Presumably this would have better royalties because of the conjugation technology.

  6. RE IMGN CD38 royalties, from annual2014 PR:

    “As a naked antibody, SAR650984 is not covered by ImmunoGen ADC patents, and Company inventions specifically related to this antibody were assigned to Sanofi with the product license. Accordingly, ImmunoGen expects the royalty rates on sales of SAR650984, should it be successfully developed and commercialized, to be in the low single digits.”

    I don’t really know why they “expect” that, it should be fixed by a clear contract?…

    RE IMGN Kadcyla from annual report 2014:

    “The license agreement also provides for certain adjustments to the royalties payable to us if Genentech makes certain third party license payments in order to exploit the ADC technology components of Kadcyla, although such adjustments would in no event reduce the royalties payable for any country below the greater of 50% of the royalties otherwise payable with respect to sales of Kadcyla in such country, or 2% of net sales in such country. As of the date of this annual report on Form 10-K, we are unaware of any facts or circumstances that would give rise to such an adjustment.
    Roche may terminate this agreement for convenience at any time upon 90 days’ prior written notice to us. The agreement may also be terminated by either party for a material breach by the other, subject to notice and cure provisions. Unless earlier terminated, the agreement will continue in effect until the expiration of Roche’s royalty obligations.”

    anybody understands what this means?

  7. Hi Ohad.
    Great post. Thanks.
    I was curious as to why you’ve decided not to sell ARRY, since it’s the third MEK inhibitor w/ your rev projection of $600 million for BRAF+ melanoma. I wonder if you’re hoping the ARRY MEK will be differentiated from GSK compound (soon to be NVS) and RHHBY compound, either in efficacy, side effect profile or both? I recall ARRY saying NVS thought the ARRY compound was best in class (prior to their buying the GSK portfolio). Are you thinking the ARRY MEK is differentiated and/or other indications other than BRAF+ melanoma can make ARRY a good value?

    Also, if ARRY gets it’s MEK back from NVS, do you have a view on how much development time/money for combinations w/ NVS compounds will have been lost, or whether MEK 162 it may still be paired with NVS compounds in the clinic?

  8. Wildbiftek – Yes deal terms for SAR3419 are modest, probably in the ballpark of Kadcyla (perhaps slighltly lower). Not familiar with the CD38 ADC program.

    Christian – The clause about Kadcyla is irrelevant as Genentech did not have to license additional patents. The termination part is standard, don’t think it’s relevant today when they have a marketed product.

    Fred – Thanks. I actually like ARRY at this point (considering to add more) as they are looking at a win-win situation. If NVS gives back MEK162, they’ll have 100% rights on a p3 program with broad potential application. If NVS keep MEK162, it will be a strong vote of confidence plus an aggressive partner in place. MEK inhibitors have much more utility beyond BRAF+ melanoma. The pathway is mutated in a lot of tumor types and preliminary data for combination regimens is encouraging. With respect to differentiation, there are preclinical publications that demonstrate some inhibitors have preferential activity on a given mutation but that needs to be validated in patients.
    The only problematic aspect in NVS giving back rights to ARRY is the combination studies. ARRY could find other drugs with similar modes of action but this is a clear setback.


  9. hi Ohad,

    reg. FMI:

    maybe the partnership that Ilumina formed with big pharma to develop a cancer gene test is the main reason for the share price pressure?

    http: //

    ILMN is another calibre than FMI, at least as far as market cap is concerned 😉

    so, how do you see this?

    thanks as always,


  10. Hi Ohad,

    Regarding ARRY, is there any likelihood of the NRAS trial not meeting the primary endpoint? The current enterprise value is ~ 500M taking into account the debt they have. Is the current marketcap pricing in success for that trial?



  11. Hi All,

    Fan of IMGN here. Catalysts seems far off but progress seems very positive over last 1H.

    1. Payload licensing by Oxford Biotherapeutics who worked with Seagen back in 2011
    2. Novartis pipeline progress – notably c-KIT ADC which has ~120 patients enrolled in Phase 1 so they like the data (also worth keeping an eye on the Kolltan c-KIT ADC in preclinic). Next to IND will likely be pCAD ADC.
    3. SNY have pushed 2 more IMGN ADCs into Phase 1 (CEACAM5 which you reference and also CA6 conjuagte). Believe (but don’t quote me) all are DM4 conjugates and that like with Coltuximab Ravtansine Sanofi are using dose fractionation to minimise the associated occ tox.

    Christian – internal pipeline seems solid. For tox they have been quite quiet but would have expected to hear if it was bad. EGFR ADC would be the concern with skin tox and although they don’t specify how they report that the antibody is a partial antagonist of EGFR signaling. Therefore it exhibits low skin toxicity, and demonstrates pronounced inhibition of the growth of EGFR expressing tumor cells. The ADC has DM1 which cell killing that is independent of the sensitivity of these cells to EGFR inhibition. will be interested to see the data.

    Ohad any thoughts on IMGN 779 which is racing through preclinic – like SGN-33a it is CD33 ADC and also has a potent warhead (IMGN’s new IGN monoalkylator). Will be first real head to head between the companies.

    Generally will be interesting to see more of the Phase III data for ADCs generally. esp AETHERA at ASH and also Roche report on MARIANNE (particularly in light of recent pertuzumab data) which is due around year end i believe.


  12. hi James,

    do you know the approximate financial conditions for the ADCs with Sanofi and others?

    With Novartis I think they are quite good (about 200 million USD milestones per program and mid single digit royalties if I remember correctly – although quite a bit of the 200 million will probably be sales-related milestones…)

    What is your projection for Kadcyla royalties at peak sales level?


  13. Alex (FMI) – While most focus on quarterly commercial sales, the big near-term opportunity imo is in FMI providing companion diagnostics to AGIO for the IDH1 and IDH2 programs. This, by itself, has a commercial potential of tens to 200M annually depending on the indications.
    In addition, I expect more companies to partner with FMI, especially the small players with drugs for subsets of NSCLC (LOXO, RXDX, MRTX etc.).
    Then there is CLVS’ rucaparib in p3 using FMI as a companion Dx.

    Christian – imo the ILMN deal doesn’t change much :

    Rick (ARRY) – No, success in NRAS melanoma is not guaranteed as data so far are positive but not that exciting. It is always gard to assess what portion of a company’s market cap is ascribed to a given program. If I had to guess the majority of ARRY’s valuation is tied to its 2 MEK programs.

    James – Thanks for your input. Agree about having multiple shots on goal, the problem is that most of them are early and will readout only towards late 2015. The cKIT ADC is very interesting, not that optimistic about the CEACAM5 program and the CA6 ADC is in teh clinic for a long time. I believe you are right about the CEACAM5 program utilizing DM4.
    The EGFR ADC is the most intriguing given the resemblance to Kadcyla, but this has to be proven in patients.
    Re IMGN779 -I expect good data with SGN-33A so this could be an intersting fast follower, they need to move fast though. There are other cases in which both SGEN and IMGN targeted the same receptors (CD19, mesothelin).


  14. Hi Ohad,

    Sanofi and IMGN are taking their sweet time getting their CD19 and CD38 compounds into phase 3. I’m pretty sure the naked MAB will go on to later stage trials for Multiple Myeloma but would like to hear your thoughts on the CD19 ADC. Sanofi canned SAR3419 for ALL earlier this year but do you think development will advance in DLBCL?

    Early results seemed to favor SGEN’s SGN-CD19A but ASCO’s revelations favored IMGN’s with both better ORR and a superior toxicity profile. I think this puts to rest the thesis that IMGN’s linkers are “too leaky” per se as it must be a combination of more factors than just the linker.

  15. Wildbiftek – It is certainly taking a lot of time for Sanofi to put SAR3419 in p3, assuming this is their intention.
    Agree about the CD19 data showing that in general SGEN’s technology isn’t superior to that of IMGN’s. There is of course the variability in terms of different linkers and payloads each company has which could matter clinically. I don’t think either ADCs is superior, look quite similar to me.


  16. Thanks for the update, Ohad.

    What is your guesstimate for the “Effective Time” of the AMBI aquisition as mentioned in the 8-K (dated Sept. 28)? What kind of time frame is normal in these situations?


  17. OHAD…Have you had the time to further analyze Calithera{CALA}? Great management and what appears to be early but promising science! Thanks for your insight.

  18. Ohad, I’m thinking of taking a position in ECYT. My thinking is that the Vintafolide drug had a weak chemotherapeutic, vinblastine, and that was the problem with the drug, not the linker and not the receptor target. The stock is at a 52-week low and the EV is less than $30 million. What do you think?

  19. Hi Ohad!

    have you ever look at vet therapeutics? this seems to be a serious and nicely growing market.

    PETX has a pretty large pipeline (including considerable burn), they IPOed mid of last year. you have any opinion on them?


  20. Bouschka3 (CALA)- I decided to wait until they have clinical data or a more solid patient selection strategy. $130M market cap for a P1 program without data sounds expensive to me.

    Dan – (NSPH) – Perhaps related to the “review of strategic options”?

    Richard – My main problem with ECYT is the short half life of their products, hard to generate a clinical benefit like that imo.

    Christian – No, sorry…


  21. Hi Ohad,

    What are your thoughts on GNCA? Based on T cell antigens which seems to be an attractive field to be in right now. Have you looked at their HSV and other programs? Not exactly sexy fields but seems rare to find small biotechs in these so ripe for buyout perhaps?



  22. Ohad
    I see a recent paper was issued that seems to confirm that Tivantinib is not a true met inhibitor. Do you think the phase II results warrant sticking with ARQL even with no clear MOA for Tivantinib? Does this lessen the chances of phase III success for Tivantinib? Is it mainly ARQ092 that is the potential driver moving forward.


  23. re FMI, certainly competition will go up, especially in the pharma segment. see e.g this one
    http www

    certainly the market will grow a lot in the coming years, but sooner or later serious pricing pressure will occur, and i dont think FMI can sustain the current prices. so, will be interesting to see how quantities and cost of goods sold develop meanwhile.

  24. Rick – Sorry, don’t know GNCA well.

    Declan (ARQL) – Indeed, several groups have found that tivantinib is not a true/pure cMET inhibitor and I believe they have compelling evidence for that. For me, the major source of upside is the Akt program which is still under the radar. The market assigns zero valuation to ARQL’s pipeline so if ARQ092 gets more visibility and credibility it could have a significant impact on the stock. In any case, stocks like ARQL should comprise a small portion of the overall portfolio (2-4%).

    Christian – Agree about market dynamics becoming more competitive but still think there will be good reimbursement for high quality genome profiling kits. Cost is marginal compared to potential clinical benefit imo.

    Steve – I am following them but feel their immune checkpoint pipeline is too early.


  25. Hi Ohad,

    Why do you think Daiichi returned the AKT program back to ARQL? Is there any likelihood of a buyout of ARQL? Or was Daiichi the best bet?



  26. Rick – I don’t know what the basis was for Daiichi’s decision to give ARQ092 back. It may be related to the compound itself, the target, the space or any form of pipeline prioritization. From the data we have, the drug looks like a good Akt inhibitor with a PD profile which is in line with AZD’s molecule.

    The only thing ARQ092 and other Akt inhibitors lack is a clear route to market. In that sense, ArQule depends on data generated by its competitors or it can pursue rare genetic diseases based on what they’ll present this weekend.

    btw, Daiichi just bought AMBI, whose lead program was dumped by Astellas a couple of years ago, another proof that when a partner opts out of a program it does not necessarily mean it’s a bad investment…


  27. Ohad, is it a given that simply because Tivantinib is not a “true c-MET inhibitor” that it can’t be effective against cancer? Maybe it has other mechanisms of action in addition to c-MET inhibition.

    Cancer Res. 2013 May 15;73(10):3087-96. doi: 10.1158/0008-5472.CAN-12-3256. Epub 2013 Apr 18.
    Cytotoxic activity of tivantinib (ARQ 197) is not due solely to c-MET inhibition.
    Katayama R1, Aoyama A, Yamori T, Qi J, Oh-hara T, Song Y, Engelman JA, Fujita N.
    Author information
    The receptor tyrosine kinase c-MET is the high-affinity receptor for the hepatocyte growth factor (HGF). The HGF/c-MET axis is often dysregulated in tumors. c-MET activation can be caused by MET gene amplification, activating mutations, and auto- or paracrine mechanisms. Thus, c-MET inhibitors are under development as anticancer drugs. Tivantinib (ARQ 197) was reported as a small-molecule c-MET inhibitor and early clinical studies suggest antitumor activity. To assess whether the antitumor activity of tivantinib was due to inhibition of c-MET, we compared the activity of tivantinib with other c-MET inhibitors in both c-MET-addicted and nonaddicted cancer cells. As expected, other c-MET inhibitors, crizotinib and PHA-665752, suppressed the growth of c-MET-addicted cancers, but not the growth of cancers that are not addicted to c-MET. In contrast, tivantinib inhibited cell viability with similar potency in both c-MET-addicted and nonaddicted cells. These results suggest that tivantinib exhibits its antitumor activity in a manner independent of c-MET status. Tivantinib treatment induced a G(2)-M cell-cycle arrest in EBC1 cells similarly to vincristine treatment, whereas PHA-665752 or crizotinib treatment markedly induced G(0)-G(1) cell-cycle arrest. To identify the additional molecular target of tivantinib, we conducted COMPARE analysis, an in silico screening of a database of drug sensitivities across 39 cancer cell lines (JFCR39), and identified microtubule as a target of tivantinib. Tivantinib-treated cells showed typical microtubule disruption similar to vincristine and inhibited microtubule assembly in vitro. These results suggest that tivantinib inhibits microtubule polymerization in addition to inhibiting c-MET.
    ©2013 AACR.

    I would still hold out hope of Tivantinib showing positive results in HCC. And who knows, maybe there will be an upside surprise from the lung cancer trial in Japan. In any case, an EV of less than zero doesn’t seem right for ARQL

  28. Richard, perhaps microtubule disruption is not that bad in HCC:
    “Gene expression profiling studies have recently shown that microtubule-related cellular assembly and organization is the most crucial event in HCC development, suggesting microtubules to be an important target for therapeutic intervention in HCC…

    Surprisingly, although often considered as the most mature group of MBAs, and with several of these agents currently approved for other oncological indications that are in routine clinical practice, vinca alkaloids as single agents have not been extensively studied in HCC. Vindesine was tested in a Phase II study in 16 patients with advanced HCC but did not show a therapeutic effect. Vinflunine has been studied in a Phase I dose-escalation trial in patients with liver dysfunction… A subgroup analysis was carried out in these patients to estimate vinflunine’s antitumor activity… One partial response (PR) was observed while eleven patients (61.1%) had stable disease yielding a disease control rate (PR + stable disease) of 66.7%. The median progression-free survival was 3.4 months (95% confidence interval: 2.6–6.0)…”

  29. Ohad,

    Great info. Appears I’ll be buying ESPR tomorrow on offering. Did you listen to the AGIO R&D Webcast? Thoughts? And do you know anything about potential AGIO competitor CALA? Trying to get information on this new IPO.

    Thanks again

  30. Sorry just saw your reply to another poster as to CALA. Hopefully they will secure some collaborations with bigger players and I agree with previous post about strong management team.

    Thanks again for a great site.

  31. Hi Ohad,

    Any thoughts on the ESPR financing at $20, when was just trading at $30 a few days ago? I can never understand why a company just doesn’t pull the offer due to bad market conditions and wait a few months for improvement. Do you feel there is value here in the $20 range.


  32. Richard – tivantin8b clearly has some anti cancer activity but if the effect is nit Met-dependent it casts a shadow over the hcc trial in Met+ patients.

    David – ESPR is a good buy at $20, the only question is about the general markets and a potential bio correction. Did not listen to AGIO’s webcast, dont think they compete directly with CALA (different cancer metabolism targets).

    Steve- I would do exactly what ESPR did, who knows if markets will be open in the next couple of months

    Christian – IMGN is becoming a good call option, would still wait to get more clarity on pipeline.


  33. nice news for FMI reg. healthcare coverage. i hope other insurance companies will follow soon.

    bought also into ESPR today; the additional visibility with the recently announced pII results should be worth the 4 usd (16 to 20 usd)

    I could also not resist a first position in MGNX

    leering at IMGN and a few others….

  34. Hi Ohad,
    Any thoughts on prqr in cystic fibrosis space or Atara therapeutics? Thank you.

  35. Enjoyed your writing on the AMBI CVR. I’ve accumulated quite a portfolio of low cost, no cost, even negative cost CVRs from various deals. This is a very underfollowed area of the market as these securities are all different (some are milestone based, some based on sales, some even pay a royalty) and many are non-transferable. Please keep up the writing.

  36. Christian – Agree, this is a very positive surprise for FMI I personally hasn’t expected to occur until mid-15. Following this precedent, others insurers will probably follow. To me the key near term drivers are related to AGIO’s and CLVS’s companion Dx projects (hopefully additional to be announced).

    Michael – PRQR is such a tempting story it is hard not to be taken by it, their valuation is still a bitter pill to swallow for a preclinical company with so much unclarity regarding their MOA.
    Re: ATRA, I started looking into them, at first glance their targets and pathways appear derisked based on XLRN’s and Novartis’ programs in the fields of TGFb/myostatin/activin. Still don’t have a concrete opinion though.

    William – Thanks. Actually I am rather unfamiliar with the field, AMBI will be my first CVR.


  37. Hi Ohad,

    Is the statin intolerance a big factor for ETC-1002? The results show that a total of 177 patients had a history of statin intolerance but did say how many in ETC-1002 and how many in ezetimibe. If there are quite more statin intolerance subjests in ezetimibe group than ETC-1002 group, the results still reliable?


  38. Cloud –
    We haven’t seen the data but I assume that the groups were more or less balanced as this was a known baseline characteristic.


  39. Ohad
    FMI – If the value proposition is based on the success of AGIO and CLVS, isn’t it safer to buy these two companies instead.

  40. IMO the opposite is true, i.e , FMI is a diversified relatively cheap derivative for AGIO and CLVS. For example, even if AGIO and CLVS encounter competition on the market, it may not impact utilization of FMI’s tests as companion diagnostics.


  41. Thanks Ohad, it makes sense. I personally have position in all of them.
    The smallest but by far best performing is AGIO.
    Do you expect AGIO data on ASH? The stock is very strong and it looks that the public is expecting very good data.

  42. Ohad,
    You said you will write up notes on SAGE later ? Looking forward your views.


  43. andre – Yes AGIO should have data at ASH and expectations are high.

    Ruhulla – It might take a while due to time constraints… CNS is not exactly my expertise but SAGE’s data are so compelling so I feel comfortable owning them.


  44. Hello Ohad
    I know you’re short on time.. , if you could just mention briefly why you chose
    stml aeri and sage and their near term catalysts ..
    anyway I’ll wait for the full article..

  45. A question on AMI’s CVRs after reading your article and the other comments. It looks as if simply being the holder of the stock on the day of the transaction creates a “free” option. Therefore, one would think, everyone on the planet should buy AMBI that day at or around the tender price (yes, that’s an assumption) in order to obtain the “free’ option. Am I missing something? And, like others, I am not used to CVRs and closely tracking merger dates. So, another question: is there is a non-obvious and “better” source to watch for advance notice of closing date (meaning some source other than watching press releases and SEC filings ?). Many thanks for any insights.

  46. Hello Ohad,
    do you follow LGND? It has a broad portfolio of royalty assets. Main assets on market are Promacta (platlet boosting) and Kyprolis.
    They also will get (small) royalties from SAGE-547, and the BACE programm from Merck MK-8931 which could be interesting. They outlicensed their Irak4-inhibitor to TGTX recently – do you like that target? Altogether LGND has more then 100 fully funded programs. Thanks Ike

  47. Alex –

    STML has impressive activity in a rare cancer type called BPDCN. Despite the limitations they have in terms of treatment duration (immunogenicity), they could get approved based on an ongoing p2. MGNX has a program against the same target (CD123).

    AERI – Proven efficacy in glaucoma, first new mechanism in decades, will probabl be used with generic latanaprost. Chances of P3 success are high (60%+), obvious takeover target by Allergan, B&L and Alcon.

    SAGE – Impressive efficacy in a high unmet need (SRSE) with potential in other indications. Differentiated MOA vs. other GABA agonists and a follow on oral drug.

    Kirk – The option is not free, its price is 0.50 because you’ll get only $15 per share. Not aware of sources that notify these things in advance, the deadline I got from my broker is Nov 9th.

    ike – Sorry, not following the m closely, will take a look. The IRAK program TGTX took looks very early, hard to say if it is differentiated from the oral immunokinase drugs in development (Btk, PI3K gamma/delta, Jak).


  48. Ohad
    You expressed many times a positive opinion about targeted therapies. Any opinion about TSRO? They have a couple of Ph 3 trails, plus an early ALK+ trail.
    I was looking into RXDX 101 and 102 programs. What do you think about their TrkA/B/C targets and how it compares to LOXO 101.

  49. Can’t find anything on ARQL ASHG presentation, even at company site. Did u hear anything? Expecting a bigger impact from EORTC in November? Thanks for great site & info.

  50. andre – Re TSRO, my impression is that their ALK program is both too early and not sufficiently effective compared to the leaders in this field (NVS, Roche, ARIA).
    Re: RXDX – the main issue I have with their RXDX 101 is that they inhibit multiple targets and may not have the required therapeutic window to potently inhibit the respective drivers (ALK, ROS, TRK etc.). LOXO’s molecule is TRK selective and does not cross the BBB so it could have a superior clinical profile. RXDX-102 looks better on paper because it’s more selective but it is not in the clinic. My favorite asset there is the selective RET inhibitor they recently in-licensed but this program is still far from clinical testing.

    Mike – I was also surprised they didn’t issue a PR. I requested the company to send the poster but still didn’t get anything. Will await their quarterly call next month to hear whether they plan on pursuing this route.


  51. Dear Ohad, I looked at AERI R&D day presentation briefly. Rhopressa does not really look superior to Latanoprost I would say? doesn’t it have to be superior to be approvable? even if approved, it must be priced considerably higher, so commercial success is far from given i assume.

    what do you like about Rhopressa, and in which situations will it be used?

    thank you!

  52. Regarding AERI:

    As a glaucoma patient who has been using these meds for over 10 years I can tell you there is a significant demand for glaucoma meds. with new MOA’s for several reasons: (1) effectiveness (e.g. IOP lowering effects) of existing medications fade, typically after a few years, and some patients tend to need/use these types of medications for decades (in 10+ years I have taken 5 different medications); (2) side effects of existing meds. can be intolerable, so alternatives in this regard are very attractive; (3) many patients (including myself) need more than one drug to get down to target IOP levels; (4) glaucoma market is huge and expected to expand significantly over the next 10 – 15 years.

    IMO AERI very undervalued.

  53. Henry – What I like about Rhopressa is the fact it is a clear effect on pressure in the eye (IOP) and the effect is exerted by a new mechanism of action. Therefore, it does not have to be superior to latanaprost to find its place in the market. It can be used in latanaprost “failures” (patients for whom latanaprost no longer works) or in combination with latanaprost where AERI has a solid p2b data set showing their fixed dose combination (Roclatan) is superior to either drugs alone.

    Steve – thanks for the info and sharing your experience, needless to say I agree with all your assessments.


  54. hi Ohad,

    have you ever looked at AGEN (which acquired 4-Antibody from Germany last year)

    certainly early, on the other hand if you look at Novartis – CoStim….

    thanks as always!


  55. Hey Ohad and everybody

    the biotech sector is up big in the last few weeks- the valuations have ballooned–
    it’s hard to find any bargains now.

    Perhaps AERI is still undervalued, based on the comments in thsi blog. Also, MRTX valuation’s, relative to competitors, is now more reasonable. LOXO? ARRY?

    Do you have anything else on your radar, where valuation is still reasonable (or low?), and there are some near or mid-term events that might drive valuation?

    And what do you think of XOMA? an antibody company with some Ph2-3 studies. XOMA hasn’t been discussed much on this blog.

    Thanks, as always, for your perspective!


  56. Hey Dan,

    I think there are plenty of bargains in small-cap biotech right now: ARQL, AGEN, CPXX, ABLYF, IPHYF, MEIP, ARRY, just to name a few that I follow. I wouildhave AMBI on the list, but they were bought out. (Made a lot of money thanks to Ohad.)

    BTW, Ohad, what do you think of ABLYF?

  57. Christian – AGEN’s immuno-oncology pipeline is too early and lacks differentiation imo. Therefore, until proven otherwise, I would wait to see how the story unfolds. With respect to the NVS/Costim as a benchmark, remember both companies were for sale during the same period and Costim got a much better deal, which is probably for a reason.

    Dan – Agree, hard to find attractive valuations in biotech these days. I like AERI at its current valuation very much. My top pick for 2015 would be FMI, which I expect to be taken out next year. Re: LOXO, I think they are too expensive, prefer ARRY over them but am still concerned by their cash position and lack of clarity over MEK162.

    Richard – ARQL is another good example, I bought more last week in anticipation for more clarity on the Akt program.


  58. Hey Ohad
    Thanks for the reply.
    Have you looked at RGLS? the stock shot up on good results two days ago (very small trial).
    what do you think of mircoRNA as a technology? I am intrigued because of the problems some RNA companies seem to have in delivery of RNA – maybe RGLS technology is more seamless?

  59. Hello Ohad
    about Ambit
    if I get it right, if Ill accept the cash and securities offer from ambit Ill be payed 15 $ per share and recive the cvr ?
    ( new sec-id (isin) : tbd – is it the cvr?)

  60. Alex – Tivantinib’s topline data are expected 2H:16, there could be an interim analysis prior to that. Re: AMBI, you are correct you’ll get $15 + one CVR per share.

    Dan – I thought RGLS’ data set was a great surprise. It remains to be seen whether the specific compound has a place in the crowded HCV market but that’s an impressive proof of concept for their platform and approach of targeting miRNA . Note their delivery is ALNY’S GalNac technology which is already validated for liver delivery.

    Richard – It’s hard for me to get excited with Ablynx’s pipeline, mostly me too undifferentiated programs, with the ITP program being the only exception.


  61. Ohad,

    Any thoughts on GERN? Novel and patent-protected mechanism of action as well as unheard-of results on myeloproliferative neoplasms. The FDA hold for ET seems to be for BS reasons, but that nonsense will be over soon and I think they’re moving on to Phase II trials for myelofibrosis soon, probably early next year. Anticipating that data will be presented at ASH that confirms enduring responses, especially for MF. In addition, there is strong preclinical evidence that imetelstat works well with other drugs, including nexavar, and there are indications that anti-telomerase activity could apply to a wide variety of diseases, from Epstein-Barr to numerous non-heme cancers to psoriasis.


  62. with only jakavi approved isn’t incy have a very high market cap ? even if baricitinib get approved , how they got this monstrous valuation?

  63. Pete – GERN is definitely a story I intend to track given the provocative findings in myelofibrosis but I prefer to do so from the outside for now. The safety issues are not necessarily that trivial although I agree that they are not necessarily a show stopper.

    Alex – I tend to agree about INCY, phenomenal drug, phenomenal company but valuation is rich.

    Dan – I would argue that ALXN is very expensive. One big difference is their ability to block competitors (for now as they are litigating with NVS).


  64. Hello Ohad, Do you follow Affimed? Any opinion on it. Has taken a beating after the ipo. Thanks

  65. Hi Michael,
    Ohad Hammer on September 25, 2014 at 5:29 pm said:
    Affimed bispecific technology is intriguing and have advantages over other formats (tetra vs bivalent). So far the cd30 results are disappointing, show that nk and macrophages may not be potent enough…
    Ohad Hammer on October 6, 2014 at 5:09 am said:
    They had some anti-tumor effect but imo it wasn’t overwhelming compared to other programs in development (bsAbs or ADCs, in particular).

  66. Michael – I still have the same opinion about Affimed. They have a good bispecific technology but the lead program is uninspiring imo. Thanks Toby 😉


  67. Ohad
    Good news BMY and ONO. It looks that nivolumab is very active in NSCLC.
    In September you said that nivolumab and Kyprolis are fully priced in Ono valuation.
    Do this new data change your opinion?In addition they have 6 ongoing Phase III trails.
    It looks to me that Ono is the only one “small” – only 11B – which has very advanced trails in the immune checkpoint inhibitor.

  68. Any change of opinion on ARRY ? After yesterdays call, it looks like ARRY still not sure of what NVS will do. October 7th you said you will add more of ARRY, did you add any after. – Thanks

  69. Ohad, what do you think about Google offering FMI’s services as a health benefit? Seems like another stamp of approval!

  70. andre – Don’t forget Ono has limited exposure to the nivo story with some serious patent expiration expected for some of their marketed drugs. I still don’t view them as a cheap way to get exposure to nivo as I believe success is priced in.

    Michael – Argen-X has a really cool antibody discovery platform but I couldn’t find any exciting programs in their pipeline. The targets they chose (CD70, IL-6, MET) are not very attractive imo.

    Ruhulla – I still think there is a 90% likelihood that ARRY receives binimetinib back and this is a clear positive. I am concerned about lack of visibility and cash balance for the coming months. Long term, I really like ARRY and think it’s a good buy, will try to add more in the coming months.

    Dan S. – Nice PR but don’t forget that Google VC are one of the founders of FMI. The announcement about Priority Health is much more important imo.


  71. hi Ohad, seems that Genmab made a big effort to compare Dara with other CD38 mabs

    see https:

    “…Surrogate antibodies of MOR, SAR and Ab79 were generated on the basis of protein sequences, as published in their corresponding patents families, and were attached to the backbone of DARA….”

    is this a usual procedure, sounds very time-consuming…

    how reliable can the findings be?

    what about this:
    “The most striking difference was observed for the ability to induce CDC, the MoA which is currently believed the most important mechanism of MM cell killing in the clinic.”

  72. Hi Ohad,

    Apologies if you’ve already discussed this. Did you get a chance to the look at the 092 abstracts at EORTC? It looks like MTD have been achieved for all the dosing schemes or is close to being achieved. Data is from April so only 1PR. The GSK AKT is being presented orally for ovarian cancer.

    Any insights from the abstracts would be appreciated.


  73. Ohad, have you ever looked at Threshold (THLD)? The stock hit a 52-week low this morning. Low EV for a company in a Phase III in oncology. Partnered with Merck Kg.

  74. Hey Ohad
    there have been some updates (CCs and ASH)

    Have you had a look at ASH abstracts? Anyhing that caught your eye (positive or negative?)

    Good call on CLDX, they are enrolling the glemba study very slowly. Have you checked out today’s relase on CD27 mab? Seem the only highlight is expansion cohort in hematological.

    What is your take on CLVS? seems they are fireing on all cylinders, two of their drugs going head-to-head with AZN, but possibly with a better profile.
    Nice cudos by Mahaffy to FMI, during the call.

    Thanks a lot!

  75. Christian – They have been showing these data for quite some time with an emphasis on dara’s CDC activity. Still unclear to what extent CDC plays a role in CD38-targeting antibodies.

    Rick – Overall, ARQL will present quite a lot of data at the meeting but based on the abstracts I couldn’t find anything dramatic (positive or negative). The PR in the lymphoma patient had already been disclosed, the additional cases of tumor shrinkage are encouraging but preliminary. Tons of preclinical data with both 092 and 987 (FGFR) including inteersting combination work. In terms of biomarkers for patient selection, didn’t see anything groundbreaking.

    Richard – I am following THLD but don’t have a concrete opinion, sorry…

    Dan – I am reviewing the ASH abstracts and will try to publish something before the meeting. So far, the most impressive data is for nivolumab in Hodgkin’s Lymphoma, remarkable efficacy. Great news for patients! Still unclear how SGEN’s Adcteris will be impacted, could present some risk at least in late stage disease.

    Re: CLDX – So far the CD27 data were underwhelming imo.

    Re: CLVS – Indeed, things are looking good going into EORTC. Key question is whether PFS of ~12 months will be met. Sounded quite upbeat about rucaparib as well and the patient selection strategy (powered by FMI).

    Richard – The immuno-oncology programs are interesting but early, couldn’t find additional exciting stuff in their pipeline.


  76. Ohad,

    What are your thoughts on the new management at Synta and robust m&a background paired with the fact that Bruce Kovner continues to invest and has a large position? What do you think is the potential of their HDC platform?

    Thank you!

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