Biotech portfolio updates – Endocyte and AVROBIO

Endocyte – Surprise acquisition driven by scarcity value

Last week’s acquisition of Endocyte (ECYT) by Novartis (NVS) came as a surprise as Lu-PSMA-617 just started P3 and results are not expected until 2020. This is Novartis’ second radiopharmaceutical acquisition within a year, following the AAA acquisition, making Novartis the undisputed leader in targeted radiotherapy.

The decision to buy Endocyte was likely driven by the commercial performance of Lutahtera (originally developed by AAA), which generated Q3 sales of $56M compared to $24M in Q2. This trajectory in the first year of launch (approved January 2018) proves that radiopharmaceuticals can become meaningful products despite the logistic hurdles.

The resemblance between Lutathera and Lu-PSMA-617 are clear. Both agents target solid tumors and demonstrated a significant anti-tumor effect. Importantly, both are based on small targeting moieties (peptides) and 177Lu as a payload, which translate to a favorable safety profile in contrast to antibody-based products which suffer from a narrow therapeutic window.

Lutathera and  Lu-PSMA-617 could mark the beginning of a new innovation cycle in targeted radiotherapy but from an investment perspective, there are very few publicly traded companies that develop radiopharmaceuticals, let alone companies with the desirable, clinically validated profile (small targeting moiety, beta emitters, solid tumors). Looks like the experience with this class of drugs has been so disastrous that investors will have to wait until more targeted radiotherapy companies emerge. This scarcity value probably played an important role in Novartis’ decision to buy Endocyte so early.

AVROBIO – Another gene therapy cautionary tale

So far, 2018 has been mixed for gene therapy. The only clear positive news came from Sarepta’s (SRPT) DMD program which demonstrated impressive biomarker data in 4 patients but clinical improvement and durability are  still an open question. Most other companies, many of which I hold, published mixed to encouraging data (Spark, Audentes, Nightstar, Ultragenyx). Some, like Krystal (KRYS) presented positive data but sample size is too small to rely on.

The most disappointing readout was from AVROBIO’s (AVRO) Fabry program. As followers of this blog know, I was initially very excited about AVRO’s platform based on the premise of treating rare genetic metabolic diseases with a single ex vivo treatment. AVRO utilizes lentiviruses which integrate into the genome so the vector is not diluted over time as cells divide (as opposed to AAV-based therapies). Blood progenitor cells are collected from the patient, genetically modified to express the missing protein and then re-injected and populate the bone marrow. The concept is similar to that of Bluebird Bio (BLUE) but AVRO’s claim to fame is its mild conditioning regimen which is safer and results in less complications, making it relevant for broader patient populations.

AVRO went public with data from two Fabry patients (see below), demonstrating clinically meaningful levels of AGA, the missing enzyme in Fabry disease, after 12 and 3 months respectively. This data set was enough to support an IPO at a valuation of $450M, which climbed to $1.2B last month.

AVRO - #1Earlier this month, the company provided an update which included additional follow up on the two initial patients as well as preliminary results from a third patient (the first to enroll in a company-sponsored study). As can be inferred from the figure below, both patients experienced significant drops in AGA levels with a troubling trajectory.

AVRO - #2

The trend was also seen with vector copy number (VCN) which is a way to quantify the number of transduced cells in the blood.  As can be seen in the figure below, VCN number tend to fluctuate but are directionally correlated to the AGA levels. The company did not report AGA levels for patient 3 but his VCN value 1 month following treatment was very low. In retrospect, a declining VCN trend had already been seen at the time of the IPO with patient #1 but this was overlooked by investors (myself included).


While the trend is very troubling there is still a theoretical possibility that AGA levels for the first two patients will stabilize and stay within the clinically relevant range (above 1). Personally, I view it as unlikely based on experience with Bluebird’s Lentiglobin. Lentiglobin has had its share of setbacks but a quick look at some of the early data in beta thalassemia provides a clear example of how a good engraftment looks like. Expression reaches a plateau after 6-9 months and stays relatively stable (especially in non β0/ β0).

BLUE - HbA- T87Q

Source : Bluebird Bio , Dec 2015

This is definitely not the end of the road for AVRO, which is already working on improving its core technology. Nevertheless unless the curves for patients 1 and 2 miraculously stabilize, it’s back to the drawing board with a long waiting period. AVRO can still be a good investment long-term but even after the drop it has a market cap of $717M, which I find unrealistic for a company that doesn’t have a viable product. This is another testament for the dysfunctional nature of today’s public biotech market, where valuations are so out of touch with reality. When I look at companies like AVRO and some of its peers like Rubius (RUBY) (Market cap of $1.35B without treating a single patient) the problem is not with the companies but the unsustainable valuations the market ascribes to them.

Biotech portfolio updates

I am adding another portion of the ProShares UltraShort Nasdaq Biotech (BIS) as I think that the last volatile weeks are a beginning of a broad correction. I intend to keep a significant cash position which I hope to deploy next year.

Portfolio holdings – Oct 28, 2018

biotech portfolio - Oct 28 2018- after changesBiotech etfs - Oct 28 2018 - after changes

70 thoughts on “Biotech portfolio updates – Endocyte and AVROBIO

  1. Hi Ohad
    what are the reasons you think this time the correction will be broader?
    every now and then a healthy correction occur.. what’s different now?


  2. I acknowledge these things are very hard to predict so I could be wrong…
    Don’t think there is an objective metric here, it’s mainly the fact we have been in a huge bull cycle for 10 years combined with valuations that don’t make sense to me. Add that to pricing pressure and low r&d productivity and you get a setup for a real correction next year. Lastly, there are a lot of alarming signs in the biotech VC industry that corroborate my sense that things have gone out of control.


  3. Hi ohad, there are still a few questions in the other Thread. Maybe you have time to read and answer. Thank you.

  4. Hey Ohad,
    thanks for the update and the heads up!
    Any chance you looked at ESPR data? they just released!
    thanks a lot!

  5. Ohad
    After this bearish blog it doesn’t look it make sense to ask you about individual stocks.
    So I will just have a question about cancer stocks in general.
    It looks the fields is dominated by the big players. The ESMO was a bloodbath for small / mid size bios. Is there any technology which is still worth holding /following, or we just sell all cancer stocks and forget about the field. I still have a few cancer stocks which are holding, for some odd reasons, reasonably well (XLRN, XNCR, ZYME, AUTL).

  6. Hey Andre,

    Good question!
    Strange thing for me is that I have several stocks that are at 52 week lows, with micro market caps, and I am wondering how they could go even lower? MGEN, MBIO, TRIL, APHB ($7M market cap I believe), CAPR, SNSS, APTO. But its always surprising how low a stock can go…

    Then there are those that had rose (quite greatly) during the last year and have taken a good haircut in October….but are still relatively high.

    Only exception seems to be AUPH and STML, which have been trading in a very narrow range for a while now.


  7. Visionary –

    ONCE – I plan on holding it as a core GTx position but it didn’t go low enough to justify adding more imo.

    SGEN – I think it is fairly priced, the ADC field is a clear disappointment so far but hopefully things will change with new technologies and programs. I like the Nectin4 program in bladder cancer which should gain visibility next year.

    CTMX – I find the data hard to interpret, their technology is still not clinically validated imo. Still quite expensive.

    ZYME – Mixed feelings about this one. I don’t think their lead program is efficacious enough as monotherapy (short durability) but still a very nice poc for their approach demonstrating clear efficacy with a bsAb. I really like their platforms and the bsADC programs, very elegant and differentiated imo.

    Dan (ESPR) – Just saw the pr but didn’t delve deeply into the data. I still think the drug works and it will have a CVOT effect but near term the market will probably be negative on the mortality imbalance (0.8% vs 0.3%) which is probably a statistical fluke but this has to be proven with data.

    andre – I don’t think so as I don’t think investment strategy is a binary thing. One can be more cautious on the market but still be exposed to sticks selectively. Plus, I have no guarantee that my prediction will materialize. I don’t plan to sell all my stocks but instead adjust the proportion of stocks/cash/short ETFs. Of the four you mentioned I like ZYME and AUTL but waiting for a better entry point to add more or buy respectively.


  8. Hello Ohad

    thanks for all your thought-sharing – really inspiring!

    Ohad, Innate Pharma had a pretty strong deal with AZ last week. Sitting on a lot of cash now, not much Enterprise Value.

    What’s your opinion on them?


  9. Hi Ohad,
    Could you write a few words on why you use BIS for hedging? I’ve been trying to hedge my biotech portfolio too lately (even before the drop) and I find BIS a strange choice. It’s a leveraged short ETF, meaning you’re getting more or less double the protection vs. the amount invested but you’re also getting double the loss when your core asset goes up in value. So you’re basically nullifying the effect of the IBB on about 25% of your portfolio (without cash). Why is this preferable to put options that provide downside protection without a lot of loss potential?

  10. NITE, MeiraGTx and AGTC and Biogen pushing XLRP through the clinic.

    Do u still like the NITE platform moving forward…their lead asset seems promising?

    I added a small starter on the dip $nite

  11. Ohad, if you could explain why you choose BIS over LABD, that would be appreciated. It looks that LABD has a higher daily volume, and its holdings look to be more transparent than BIS’s.

  12. Ohad
    AMRN has a mkt cap of 7B, ESPR has a mkt cap of 1B. Does that make sense to you? Would you be a buyer of ESPR after the latest release of data.

  13. Hey Ohad,

    Would love to hear your thoughts on Marker Therapeutics (MKRK) after their merger w/ tapimmune. They have some pretty interesting data where they show > duration of complete responses in lymphoma vs CD19 CARs

  14. Apologies, RE Marker the ticker is MRKR — Also would love to hear if you have any thoughts about Zosano (ZSAN) in Ph3 for migraines and Intec (NTEC) which has a Ph3 delivery system to improve Carbidopa/Levodopa in Parkinson’s patients.

  15. Hi Ohad, Fellow Bloggers,

    Have you had a chance to look at SELB data? The stock has cratered over the past week following the results.

  16. Ohad

    XENE has a net cash position of 120M and a mkt cap of 220M and a compound that has a 300M commercial opportunity. Do you still view them as being undervalued in what you predict may be a couple rough months ahead for biotech’s. And with your success in calling several takeovers in 2018 would they be high on your list of companies you see as a potential buyout in 2019?

  17. Christian (IPH) – Agree, looks like a good deal for that stage of development, my main reservation has to do with their targets and the focus on innate immune cells, which is still not clinically validated imo.

    Ted Strail (BIS) – I chose BIS because it’s an easy and straightforward tool, not involving options. I like the fact it is inversely correlated to large biotechs which are more linked to the overall market. I still plan on holding smal mid cap biotechs selectively, hoping to get one or two winners although this group will surely go down in case of a market correction.

    Kay Lee (DRNA/ARWR/ALNY) – Indeed , very impressive recovery although still not much happening beyond liver diseases. I like DRNA’s PH program which could be differentiated than that of ALNY but waiting for a better entry point.

    Robert goulet (NITE/MGTX/AGTC) – I like XLRP as an indication but still unclear whether one of these programs is superior. I still like NITE and thinking about adding if stock goes down because it provides good optionality for the next XLRP readout. Not so confident about the choroiderremia program because P3 is based on a small data set.

    Hiroshi (LABD) – The reference ETF for LABD is XBI so these are smaller biotechs. Don’t have a strong position against it as a hedge, just a different exposure profile.

    dave (AMRN/ESPR) – AMRN should be worth significantly more than ESPR because it has great CVOT data while ESPR has only biomarker data (which are approvable but still less important than outcome). I still believe in ESPR and think the drug is effective and safe, might add more next year.

    Alex (GNCA) – Yes, I like the technology, surprised other neoAg companies don’t have it, but I was more interested in cell therapy rather than vaccines so at the moment too early for me.

    Rob Preasant (MRKR) – Not familiar wit them but sounds like an intriguing approach that doesn’t involve T cell engineering.

    Sorry, don’t know ZSAN and NTEC well.

    Les (SELB) – Didn’t have a chance to look at the data but doesn’t look great at first glance.

    Dave (XENE) – Yes, I still like them at these levels because they have two de-risked programs validated by human genetics and a potentially quick route to the market in orphan indications.


  18. Ohad, $PIRS is only valued right now with about 80 mio. for the fully-owned clinical/preclinical programs, the co-development rights with AZ, Servier and SGEN, the approx. 5 billion biobucks, the potential milestones, the anticalin technology…..

    This valuation seems very prudent despite still missing clinical PoC for the two lead programs – what do you think?

  19. Hi Ohad,

    Have you had a chance to look at AVEO’s results? 52% ORR look OK to you? Their Ph3 update is expected mid 4Q. Insiders have bought a huge number of shares at current levels ($2-2.50) so they seem to be very positive about the outlook.

    Anyone else holding AVEO with more inputs/insight?

  20. Interview with CEO of ESPR on CNBC. He said the recent results released (trial with 4000 patients) alleviated the earlier safety concerns :-). Pricing of $3500 per year compared to more expensive PCSK9 drugs of $4500-8000 and Lipitor (?) of $108 per year. Said the company would consider global or regional partners for selling and is looking at strategic options as well. Indicated that his wife is a candidate for this drug and is looking forward to its approval :-). Shares are up nicely today with the rest of the market :-).

  21. I know Ohad cannot comment on ARQL – anyone else who is still holding it in their portfolios have any idea why it is dropping so heavily after such sizable insider activity and no major negative news on the Earnings Report? Will appreciate any input.

  22. ARQL – INSIDER TRADES – 700K at $3.20-3.50 and 181K at $5.50 (their recent public issue pricing) in June/July. Stop Limit triggered decline of $.62 this morning was a buying oppty. ASH in December will likely have some results.

  23. Hi Ohad,

    Have you any opinion on NDRA? Looks like their testing gear will be useful to all the NASH players.

  24. Hello Ohad,

    it seems that ADVM’s vector for rare diseases (though in preclinical models seemed effective) has flunked ph1- this puts the entire rare disease development into question (same vector). Wich is too bad.


  25. Hey Ohad,

    Are you going to review the ASH abstracts? It seems TRIL and FTSV have some positive ones that may point to a use for their anti-CD47 drugs.
    Thanks for your insight, as always!

  26. Hey Ohad,

    is NewLink, $NLNK, back from the dead? Late breaker at SITC and looks like very robust ASH abstract for AML.
    Trading well below cash as well.


  27. Hello Ohad,
    Are you familiar with Karyopharm Therapeutics (KPTI)?
    I read an article yesterday (Avisol Capital Partners) and initiated a position this morning and then read that they will be presenting with at least 10 oral/posters at ASH 2018.
    Their home page “Targeting Disease at the Nuclear Pore” also piqued my interest. They are also a USA/Germany/Israel company. Any comments? Thanks.

  28. Hi Ohad,
    SAGE with the strictest black box warning for the loss of consciousness issue. What is that going to be
    doing to the valuation?

  29. AFMD

    Do you like the ASCO abstracts? Amphivenas drug looks nice too.

    Do you like the bispecifics?


    Where do you See the stock Price in a few years with positive cvot?

  30. Hello Ohad,
    In the spirit of ECYT any opinion on PGNX. They have a radiopharmaceutical that targets PSMA, that just went into Phase 2 trials.

    Thank You!!!


  31. SAGE halted all day last Friday with scheduled meeting
    with the FDA panel, result very favorable and up $10 after hours.

    AVXS, FMI, ECYT all great endings!

    Thanks, Ohad.

  32. Ohad, what are your thoughts on the driver behind Parkinson’s disease? Asking as it relates to PRTA and DNLI. PRTA seems to be in the lead targeting alpha-synuclein in a good partnership with Roche. However, DNLI in their latest presentation seems to suggest alpha-synuclein not a driver behind PD (correlation, not causation?) and that LRRK2 is a better target for PD (more upstream). Curious on any thoughts you have here as it pertains to both DNLI and PRTA.

  33. Ohad
    FOLD has a busy GT program for 2019.
    Revenue is growing nicely, a lot of cash to support the advancement of several GT programs. EV is <2B.
    What would be a good entry point?

  34. Ohad

    can you comment on ONCE and SAGE. Both released earnings and a business update this morning and market is responding negatively. Do you think this selloff presents a opportunity for either?

    And specifically with SAGE, do you think the likely black box warning regarding brexanolone dampers your enthusiasm for that drug and and possibly for SAGE-217 as well

  35. Ho Ohad & fellow bloggers,

    Any comments on AVEO? 44% increase in PFS & 26% reduction of risk in progression are significant enough? Stock is down. OS showed no change but people argue that it being a 3rd line treatment that should not matter much.

    XENE – Fingers crossed on results and update :-).
    SAGE – $117/118 seems to be the short term support.

  36. Dave–I hope you don’t mind if I mention a few things regarding Sage until Ohad has time to comment. The conference call is very informative. I would especially recommend the questions by an analyst “Jeff” at 22:30 in the call.
    The loss of consciousness events are predictable, and the patients could self report a change in how they felt. That will be important in the sense that they are not monitored 24/7 for 60h in a hospital room. There is no associated apnea or decreased oxygen levels with these events.
    –One big issue I see is that they will need to treat in the hospital and the drug will cost about 30K. If that is true, hospitals will lose money on a DRG charge and will need to carve out a deal with insurers. That can be a major impediment.
    Sage 217
    Different pharmacology given the oral drug….lower peak concentrations and no LOC events so far. I suspect they will dose the drug at night which will make it even less of an issue. A phase I study looked at an oral suspension, rather than a capsule–which is somewhat between IV and oral. Nonetheless, dosing was limited by sedation rather than LOC.

    I am very interested in Ohad’s opinion, but I think that Zulresso will be challenging both from acceptance and reimbursement perspectives, but I remain optimistic regarding 217.

  37. Hi Ohad, do you have any opinion on Calithera (CALA). Seem to have promising early pipeline relative to market cap. Thanks.

  38. Ohad FGEN’s market cap now somewhat lower at 3.67 billion $. they have obviously 2 real drugs. do you still think it is to expensive?

  39. Hi Ohad,

    VKTX – Any reason for the huge dip? Did you see anything alarming in the ER and updates?

    Anyone else have an opinion? Buy opportunity for a near term trade?

  40. Ohad, I think you commented before on ALPN and were cautiously optimistic on their approach to IO with their lead oncology drug (PD-L1/CTLA-4 antagonist and CD28 agonist) set to enter clinic 4Q19.

    Do you think the initial disappointing clinical data from JNCE targeting ICOS in combo with a PD-1 casts doubt on what ALPN is trying to do? Or will the fact that I believe CD28 is upstream from ICOS make a difference? Or reason to believe that a dual PD-L1/CTLA-4 antagonist will make a difference here? Thanks!

  41. Christian ׂׂ(PIRSׁ) – Agree it is becoming interesting but I still prefer to wait as their interesting programs are still early and the 41BB/HER2 program is high risk with data expected only next year.

    Les (AVEO) – Saw their topline data but didn’t delve deeper. The PFS difference wasn’t dramatic but this time it was in last line patients, the negative OS trend still coming back to haunt them…

    Les (NDRA) – Not familiar with them.

    Dan (ADVM) – Agree, very bad news which means they have to acquire programs to stay relevant, luckily for them they havea a lot of cash.

    Dan (TRIL/FTSV) – Don’t have time this year for a detailed review of the ASH abstracts. Personally I am not optimistic about CD47 given results to date and CELG’s termination. FTSV’s data are the only ones with me signs of efficacy but they are hard to interpret, especially the combo study with Rituxan.

    John (NLNK) – I think it will be hard to get excited around IDO without a comprehensive data package, likelihood of success are slim imo. They should look for external assets .

    Lawrence (KPTI) – Yes, I have been following them for a while, still on the sidelines as selinexor has activity in myeloma but is not a stellar drug and there have been lingering tolerability issues with the drug. For me , eltanexor is the more interesting program given the limited CNS exposure, looking forward to seeing P1 data.

    Les (SAGE) – For severe post partum depression with IV administration I think the drug will still be used as it will be given in the clinic and this profile is manageable.

    Christian (ADVM) – For now yes although I am not a big fan of their intravitreal approach (a super long shot…).

    Hubbel (AFMD) – Looks like NK is becoming a hot area, I still cautious but the deal with Genentech was impressive. The ASH abstracts look ok, hard to interpret the PD1 combo data but the 50% response rate in CD30+ CTCL looks nice.

    XNCR – Bispecifics emerged as a very challenging space so I don’t ascribe a lot of value to these programs. To me, ZYME has a very interesting platform and could have something clinically meaningful for ADCs by targeting 2 differernt epitopes on the same target. If bispecifics make a comeback than XNCR definitely has a lot of capabilities but so do others.

    ESPR- I think the stock has the potential to reach 150 if CVOT is positive (10-15% reduction) but that’s highly speculative and will take time.


  42. scott (PGNX) – On paper should have been a very interesting program but from what I see clinical data aren’t as compelling, not sure why…

    RM (SAGE) – Thanks, let’s hope SAGE ends in a similar way, need to wait for MDD P3 data next year.

    mcbio316 (PRTA/DNLI) – Personally I think LRRK2 represents a more robust therapeutic approach because patients have activating mutations so this probably isn’t just correlation. Can’y say te same thing about synuclein, which may end up like Abeta, just a hallmark of the disease. So I would go with DNLI over PRTA if we ignore valuations but I don’t think a 1.5B valuation is reasonable for a P1 program.

    Alex (CNAT) – Haven’t looked at it for a while. Biology makes a lot of sense but clinical data were underwhelming last time I checked.

    andre (FOLD) – I like their GTx pipeline but hard to justify valuation right now given sales of Galafold, debt position and stage of programs. I prefer to wait.

    dave –

    ONCE – More delays/ potential issues with the HemA program not a good sign. May pan out long term but I don’t see the urgency to add right now. The Pompe program looks really interesting but need to wait for clinical data, BOLD’s setbacks work in their favor.

    SAGE – Need to wait for next year’s launch in post partum depression and most importantly, P3 data in MDD towards year-end. I am not that concerned about teh black box warning but this indication is so unprecedented that it’s hard to predict the effect on market uptake. Obviously, this mustn’t happen with 217 which is an oral agent for a much broader population.

    Les –
    AVEO – There is also the IP issue (still should get exclusivity though)
    XENE – Sounds like P1s for 901 and 1101 did not encounter serious issues, data expected early Dec.

    Gary (SAGE) – Thanks for sharing this, very interesting. Agree reimbursement may be more challenging but the unmet need is so severe that I expect payors to pay for it eventually.

    Alex (BOLD) – Delay in Pompe program.

    Subb (ABEO/ONCE) – No plans to add for now, waiting for more data or lower stock prices.

    Dan S (CALA) – Still waiting to see clinical proof of concept, so far limited efficacy.

    Christian (FGEN) – Yes, I like the CTGF program but prefer to wait.

    Les (VKTX) – No, waiting to see data soon.

    mcbio316 (ALPN) – Experience with new IO agents has been such a terrible one… Hard to conclde from one target to another but so far none actually work. Hope we’ll get the breakthrough we need soon…

    Ruhu (ESPR) – Topline data already announced so no major surprises, aligned with the profile we are aware of.


  43. hi again Ohad!

    “Christian ׂׂ(PIRSׁ) – Agree it is becoming interesting but I still prefer to wait as their interesting programs are still early and the 41BB/HER2 program is high risk with data expected only next year.”

    well after Q3 call it is clearer to me why stock price had been sinking for some months. 080 basically failed (but I have not had high hopes for this one anyway and they had been downplaying it for long time). 343 delayed and it seems they could not see much efficacy in the first cohorts, so now they are starting dosing in quantities equivalent to clinically used Trastuzumab doses… sounds not too good I would say.
    Also 060 data delayed a little. This program alone would make PIRS easily a multi-bagger from here IF it works.

    market clearly thinks Anticalins don’t work (MC 192 million and cash 30/9 137 million…)

  44. Ohad

    You had mentioned AUTL in a positive light on several occasions, and this week the stock was up over 50%. Is this a reaction to data they will release at ASH, and do you feel it’s 1.5 billion mkt cap is justified.

  45. Hi Ohad, comments on VKTX latest release? XENE drop an add oppty? Which of your other holdings are getting into strong buy territory or this is a biotech meltdown you saw coming with your BIS add?

  46. Hey Ohad,
    Yes, any opinions on the additional data by MDGL and VKTX? how do these two programs compare to another NASH therapies in development?

    Thanks a lot. A lot of stocks are down big (ABEO, NITE) and I wonder if you have any opinions or may be tempted to add.
    Thanks as always for sharing your perspective!

  47. Interesting about VKTX results is that the benefits are so dramatic and sustained in the longer-term (post 12 week treatment) that the drug may just need to be prescribed for a short-term (12 week) treatment course.

  48. Hi Dan,

    VKTX, would be bad news if only short term treatment is required. Like GILD,s drug which heals in a few weeks. They used to price it high but competitors and government pressures results in price drops. New patient populations can of course compensate, which may be true for VKTX. Generally for LDL-C and other fat related issues maintenance doses of statins are common practice even when the levels drop to safe values.

    Looking for a big jump in VKTX SP today and in the next 3 months. The volatility has been scary. Short sellers need to scurry away 😊.

  49. Hi Ohad,

    Very disturbing downgrade of SAGE to Underperform by Leerink with negative comments by Marc Goodman who is apparently the new analyst at Leerink covering SAGE. He has said prospects are not good for both Zulressa and SAGE-217 and cut the Price Target to $80 from $120. Will appreciate your comments.

  50. Hey Les,
    Re VKTX – Yes, in terms of profit and revenues, sure. But in this case I think some people were very worried about long-term treatment and possible AEs, and so the remarkable effectiveness on a 12 week treatment offers another reason why maybe safety risks are not as pronounced as what most critics have been expecting. So I am only saying that this might also be a positive (given drug has also been tested in small population and no ph3 yet).

  51. Thanks Dan. Disappointed at the VKTX performance this morning. Just faded out.

    Ohad, Dan – have you or other fellow bloggers heard of LPCN’s NASH drug? LPCN-1144. They made a presentation on Monday and some say their drug’s performance was also good. Their stock price is $1.65 (dropped from 18 to 10 to current price over the last 5 years).

  52. MDGL dropping like a rock today. ICPT is up but does not seem the money is flowing into VKTX. Not sure whether big pharma is beating down VKTX so they can acquire it for a smaller premium like they did with ECYT.

  53. Hi Ohad,

    The NASH players data is getting confusing. It will be great if you can publish a brief comparison. Do MDGL, VKTX, ICPT, LPCN have drugs targeting the same conditions? The huge drop in MDGL supposedly triggered by VKTX data will not make sense if they are treating different conditions. The differentiation seems key to holding or getting out of one or the other names – or is it too early to call? (MDGL seems to have lost a great opportunity to get acquired when they pegged their price too high – now they are narrowing the gap with VKTX).

    Will really appreciate your thoughts. (And inputs from fellow bloggers). Here is the article on MDGL selling off. (Another bad day for SAGE as well :-(.

  54. Hi All,

    Do not see any comments on MDGL, VKTX and SAGE. All dropping furiously. Can understand MDGL dropping on VKTX superiority and SAGE on Zulressa but why is VKTX selling off?

  55. Les,
    Ohad had been mentioning over valuation for the bio sector.
    It’s no different than the high tech which had a big run up including
    a lot of new IPOs since last year.
    At my advisory service, we had 3 stern warnings that the correction would occur in March so I sold almost all my holdings the most of which are in high tech. I started buying little by little when they reach my cheap price.
    As the correction in March did not fully adjust the values and continued higher, we again discussed the identified next leg of it in September to October. It didn’t happen in September but right on time in October and it may go at a slow end in January to April before it clears out.
    Of course, I’m not waiting for the end to start buying as I’ve deployed half or more of my holdings with a strategy to catch the next high tech event in IoT and AI, the same way I don’t want to be out on Gene Therapy and Editing.
    Luckily, I didn’t miss out on AVXS, FMI, ECYT having bought and sold them before for a nice gain. The same with about 2 dozen or more high tech names that really paid off well.
    It’s not going to be as easy as the correction of January 2016 when we knew what stocks were very undervalued and bought them all the way down.
    The market from here is treacherous. Good luck to all!

  56. Thanks for your comments/advice RM. Number of articles about the MDGL/VKTX data elsewhere (nice summaries at Seeking Alpha and Motley Fool). Long and the short of it is that the data applies to 2 different sets of patients and VKTX may (unless FDA okays a direct path to Phase 3 Pivotal) have to go through a Phase 2 to get to where MDGL is (efficacy data on NASH patients). Longer time to market and risk. Conclusions are that VKTX is a better bet given its larger pipeline and lower valuation and a good possibility of its efficacy on NAFLD carrying on to NASH.

    Looking forward to Ohad’s verdict and comments on the market’s confused reaction to both MDGL and VKTX.

    LGND owns stakes in both VKTX and SAGE (besides a huge pipeline and existing revenues) and given its recent drop from 278 to 150 seems it may be a good additional low risk way to invest.

  57. Once Abeo Bold

    The three stocks sold off a lot. Which ohne would you add? Once looks a bit tattered, no good news there, Maybe still to expensive?

    Greetings habu

  58. Christian (PIRS) – Yep, agree sentiment is very negative right now, still worth tracking next year imo.

    Dave (AUTL) – I still like AUTL but prefer to wait until actual data at ASH given valuation. We should focus more on duration of CRs, as the hypothesis behind targeting CD22 and CD19 is addressing CD19 downregulation which is a documented mechanism of resistance.

    Les –
    VKTX – Data look good, agree they are behind MDGL but efficacy is strong and safety concerns removed to some extent.
    XENE – I plan on holding but not to add given the high exposure in the portfolio.

    Dan (MDGL/VKTX) – I honestly believe there is not enough data to compare the two so I prefer to own both. The drugs, both target TRbeta, look efficacious and safe.

    ABEO – Yes, I think it is becoming attractive based on its deep CNS pipeline, more concerned about the DEB program which could be an overhang.
    NITE – Waiting for more data from the RPGR program to make sure steroids can lead to efficacy at higher doses.

    Dan (VKTX) – I still assume chronic treatment is needed to maintainteh effect.

    Les (SAGE) – Stock isn’t cheap but I still plan on holding. SAGE-217’s potential is so explosive I prefer to stay in despite the high valuation.

    Les (MDGL, VKTX, ICPT, LPCN) – NASH is indeed getting very crowded. Not an expert so will probably focus on other stocks on my next write-up.

    Habu (Once Abeo Bold) – Of the three ABEO is the most attractive IMO based on its MPS programs based on AAV9 and the early stage CLN pipeline.
    ONCE – I prefer to wait given the series of negative updates on Hem A, Pompe looks really interesting but still early.
    BOLD – Pompe delay is disappointing but the XLMTM program still looks good imo. Prefer to wait before adding more.


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