Biotech portfolio updates – Esperion, Abeona , Sage and adding two more GTx names

It has been a hectic 5 months here at Pontifax (10 new investments, some yet to be announced) so unfortunately I didn’t have a lot of time to publish new posts. Going forward, I will try to make posts more concise so I’ll be able to publish stuff also during busy periods.Today, I will focus on what I consider to be the three winners in the portfolio in 2017 so far, not only from a stock performance but also from a strategic development perspective. All three will have important readouts in the coming 6 months.  

Esperion – Flawless execution, pivotal readouts in Q2/18

Despite its strong stock performance (+275% YTD), I still feel that Esperion (ESPR) and its management team don’t get the credit they deserve for their flawless execution in 2017. After starting 2017 with poor investor sentiment and great uncertainty about its clinical/regulatory strategy, Esperion is ideally positioned for pivotal readouts next year (Q2 2018). Although risk is still significant I am more excited than ever about Esperion for the following reasons:

Clinical profile continues to hold up– With a database of >700 patients, the effect of bempedoic acid (ETC-1002) on LDL and CRP is seen universally across patient populations (statin intolerant, diabetics, hypertension) and combinations (statins, ESPRezetimibe). Despite inhibiting the same pathway targeted by statins, the drug has a differentiated tolerability profile especially on muscle-related side effects. Long term safety is still a significant risk, as rare safety events require large studies and long follow up to emerge.


Experience with PCSK9 drugs validates Esperion’s market assumptions – CV outcomes data with PCSK9 inhibitors earlier this year continued to validate the LDL hypothesis, and were probably an important part of FDA’s decision to keep LDL reduction as an approvable endpoint. The lower than expected effect size with PCSK9 may grow with more follow up but also suggests that CRP is also an important part of the equation (PCSK9 drugs do not reduce CRP). The lackluster commercial performance of Repatha and Praluent also support Esperion’s long thesis, showing that subQ administration and high pricing are barrierS for patients and payors, respectively. This makes bempedoic acid (especially in combination regimens) an attractive option: oral, well tolerated and relatively cheap.

CRP hypothesis supported by Novartis’ canakinumab – The recent data with canakinumab provided the first prospective proof that inflammation is an important driver of cardiovascular disease. Canakinumab inhibits IL-1 beta, a master inflammatory switch without any major direct metabolic functions. This supports Esperion’s claim about the importance of CRP reduction on top of LDL reduction. Canakinumab had a dose-dependent CRP-lowering effect (see figure below). Bempedoic acid appears to be the only drug in clinical development that inhibits both LDL and CRP (as statins do).

canakinumab - CRP

Source: Ridker PM. N Engl J Med. 2017 Sep 21;377(12):1119-1131.

Competitive threat from CETP inhibitors is gone – Merck’s decision not to file for approval for its CETP program (anacetrapib) followed by Amgen’s decision to terminate its CETP program it had acquired in 2015 leave the stage to Esperion’s bempedoic acid as the only late-stage oral lipid-lowering agent in development.

FDA acknowledges statin intolerant patients as a legitimate sub-population – One major achievement Esperion had is the agreement with the FDA on using the definition “statin intolerant” in order to identify patients who cannot or will not take even a low dose of statins. This group is still tricky to define but the acknowledgement of its existence and need of treatment alternatives is very encouraging. It is still unclear if and how statin intolerance will be reflected in bempedoic acid’s future label.

Esperion expects to have P3 data from four parallel P3 studies in Q2/Q3 2018, which will include LDL and CRP readouts. A CVOT (cardiovascular outcome trial) is expected to readout only in 2022.

Abeona – Three gene therapies now in the clinic

Abeona(ABEO) (+215% YTD) also had a strong year, moving from obscurity to a leading gene therapy company. Like Avexis (AVXS), Abeona’s programs utilize AAV9 to replace a missing protein in the CNS. Although Abeona cannot boast a spectacular clinical data set like that of Avexis (see recent NEJM publication), it has preliminary signs of biological activity in the CNS using biomarkers (which Avexis lacks). To me, from an investor perspective, the two data sets complement each other in validating AAV9’s ability to express clinically meaningful amounts of a therapeutic protein in the brain.

Abeona’s lead program (ABO-102) for MPS IIIA (Sanfilippo A) has generated a promising efficacy signal, making it one of the most promising gene therapy programs in development. The company recently started a clinical trial for a related condition (MPS IIIB, Sanfilippo B) for another gene therapy program (ABO-101). A third gene therapy program (EB-101) is expected to enter P3 for a rare dermatology indication (RDEB), unrelated to the company’s CNS pipeline.

During 2017, Abeona provided several updates from the ABO-102 trial (I discussed initial data a year ago here). Overall, updated results continue to look promising and indicate ABO-102 has the potential to alter the natural course of the disease. Findings include:

1) HS reductions in the CSF – Reductions in HS (a toxic metabolite that gets accumulated in MPS IIIA patients) in CSF were significant and dose-dependent. This is the most important biomarker readout as the CSF is thought to mirror metabolite content in the brain.

ABO-102 HS

2) Urine HS reduction – significant but with fluctuations, effect in the low dose group diminished at 180 and 360 days (despite the strong effect in the CSF). The medium dose had limited improvement but the single patient at the high dose had a remarkable 94% reduction.

ABO-102 - HS in urine

3) Liver volume reductions – At the low and medium doses, there were significant reductions after 360 and 180 days, respectively. The patient at the high dose cohort (who had the largest baseline liver volume in the trial so far) had a dramatic reduction already after 30 days.

AB0-102 - Liver

4) Clinical measures – Most importantly, there are hints of clinical stabilization based on the Vineland Adaptive Behavior Scale/test for the low dose cohort. A historical control cohort demonstrated a 14-point decline vs. a 2-point decline for the three treated patients. This observation is also aligned with other brain imaging endpoints that all point at the same direction.

ABO-102 - Vineland

In summary, data are preliminary and limited but all point to the right direction. During 2018, Abeona should have 1-year data for the medium dose cohort and initial biomarker data for the high dose cohort.

Regulatory strategy – Based on recent cases with rare pediatric CNS indications (Avexis’ SMA1 program, Biomarin’s CLN2 program), Abeona may be able to file for approval based on the ongoing study. It is still unclear how many patients and what follow up will be required by the FDA but if data from higher doses corroborate initial findings, the company may have a sufficient data package by Q1 2019 (1 year follow up for 12 patients across three doses). A BTD is likely to come by mid-2018.

Market opportunity and valuation – MPSIII A and B are ultra-rare indications and estimations regarding the relevant number of patients vary from 1500 to 4000, combined. Assuming a targetable population of 2000 and an average cost of $800k per patient, the cumulative commercial opportunity is $1.6B.  The RDEB opportunity is probably similar in size (Higher prevalence but lower cost per treatment). At a market cap of $700M, Abeona’s upside potential is still significant but not huge. Further upside could come from the two Batten diseases programs (CLN1 & CLN3), which are expected to enter the clinic by early 2019.

Lack of AAV9 license from Regenxbio (RGNX) is a risk going forward – Regenxbio holds IP around AAV9 and while Abeona indicated the two companies are in discussions, no agreement was announced to date. While this should not stall Abeona’s clinical development, it represents a commercial risk.

Sage – P3 POC achieved but real value lies in follow-on program

Sage Therapeutics (SAGE) reached an all-time high last week after announcing positive P3 data for its lead program brexanolone (SAGE-547) in PPD (post-partum depression). Brexanolone’s data set were from two P3 trials in severe and moderate PPD, respectively. Although benefit was not as dramatic as observed in P2 (placebo arm performed much better in the P3 studies, as usual…), brexanolone’s benefit in severe patients looks clinically meaningful (~ 5 points on the HAM-D scale) and should support approval in early 2019. Efficacy in the moderate PPD trial was not as robust (2.2 points) and did not reach statistical significance after 30 days.

While last week’s data may open up a $300M opportunity for brexanolone, they should be viewed more as a mechanistic validation for SAGE’s approach of using neuroactive steroids and as a positive read-through to SAGE’s oral derivative of brexanolone, SAGE-217. SAGE-217 is a novel oral drug with potentially superior properties over brexanolone, which is a formulation of a naturally occurring substance administered over a 60-hour IV infusion.

SAGE-217 is viewed by investors as Sage’s real value driver based on its improved properties, potentially superior efficacy (based on prolonged exposure with oral administration) and strong patent protection. It is currently in P2 trials in PPD and major depressive disorder (MDD), two indications that represent blockbuster potential for a novel oral agent.


Sage is expected to report P2 data in MDD for SAGE-217 by year-end, which should have a significant impact on the stock. Positive data will open up a multi-billion opportunity in a market that has seen little innovation in decades. Negative data will probably push the stock towards the floor valuation provided by brexanolone in severe PPD (~$1.5B). A P2 study in PPD is also expected to read out shortly afterwards in Q1/18. This trial involves treatment for 14 days with SAGE-217 (in contrast to 2.5 days with brexanolone), which might lead to a more pronounced therapeutic effect.

Portfolio updates

Staying loyal to the gene therapy basket approach, I am adding Nightstar Therapeutics (NITE) and Krystal Biotech (KRYS). Nightstar is becoming a diversified gene therapy play in ophthalmology with a P3-ready program in choroideremia and a P1 program in XLRP (competes with AGTC/Biogen’s program).  Krystal has a preclinical program for DEB that in contrast to Abeona’s program, involves injecting a virus with the relevant gene (COL7A1) directly to the patients’ skin.

I am selling Trevena (TRVN) and ArQule (ARQL), which I won’t be able to discuss going forward.

Portfolio holdings – Nov 13, 2017

Biotech portfolio - 12-11-2017 - after changesbiotech etfs - 12-11-2017

22 thoughts on “Biotech portfolio updates – Esperion, Abeona , Sage and adding two more GTx names

  1. Hi Ohad

    glad to see a new post..
    why didn’t you add more XENE?
    and what about increasing ONCE?


  2. Alex –
    XENE – I still plan on adding at these levels, the recent update from Genentech was quite disappointing.
    ONCE – Thinking about adding before ASH, waiting for approval decision first which might trigger a “sell on the news” trend.

    Mike (KRYS) – This is a high risk bet with low valuation (hence the low exposure). There is experience with HSVs but not for this setting as far as I know, their prospectus includes encouraging data in patient cells so tropism looks reasonable but hard to predict clinical effect and durability especially for a non-integrating virus


  3. Ohad–
    Thank you for your insights.
    I am trying to understand the market for Kura. At best, 5% of HNSCC with H-ras (if clinicians look for it). The preclinical data in AML looks exciting, but the AML-301 study in unselected pts showed only 8% CR, so hard to believe they are targeting NPM1/DNMT3A which are half of adult AML–at best, maybe the MLL-menin mutation. Do you see this differently and does 5% HNSCC and 10% adult AML justify continued investment at these levels? Thanks—Gary

  4. Gary (KURA) – HRAS+ H&N probably represents a ~3000 patient subset, which IMO justifies the current valuation and beyond.
    Agree that tipifarnib’s AML data are weak.In AML, I am optimistic about the Menin-MLL program for MLL-rearranged leukemias.


  5. I see you held onto AGTC despite its SP getting beaten up. Is there any short term data that can give the SP a lift out of the 3’s and into 4 -6 range? It’s book value alone is somewhere just above 6. Thanks Ohad


  6. Luigi (AGTC) – I don’t see any significant near-term catalysts as the XLRS program looks irrelevant and the ACHM and XLRP programs will take time to generate data. I still plan tohold the stock as part of the GTx basket.

    James (Denali) – Smart and very well funded. I am intrigued by the LRRK2 program and the decision to pursue it despite potential pulm toxicity. Based on the S1 they definitely did a lot of work to identify a Tx window and alleviate concerns. I am sure they have good explanations, Ryan Watts is last author on that paper:

    Valuation will probably be too high anyway for a P1 company but good to see traction in CNS.


  7. Hi Ohad,

    Always look forward to your new columns especially when its a stock I own :-).

    The NY Times article and Nature articles on the boy with JEB was really amazing and quite actively mentioned on my twitter stream. Its a shame the treatment seems to have been first tried over a decade ago (I linked the original 2006 paper below). It sounds like a similar approach to EB-101 though they are treating a smaller area on the body and seem to have better durability (the child being active in soccer for example). At the R&D day the presenter said she believed the efficacy could be better in children than adults treated thus far. Is it fair to compare the results or are there scientific reasons why JEB and RDEB are very different? Is there a reason larger areas of the body couldn’t be treated with EB-101 as well?

    Older Paper:

    Thank you,

  8. Ohad–

    SNSS- do you think they will have some data at ASH this year?
    CALA- any thoughts on the CB-839 + Opdivo SITC data?



  9. Do you post entries anywhere? By the time I read some of your blog posts, you’re already up a significant amount and entry has been missed

  10. Ruhu (EXEL) – Yes I did (personally) but I’m down ~10%. Very limited excitement around CELESTIAL data, very surprising but perhaps people know something…

    Maurice (ABEO) – Unfortunately I don’t know the field well enough. Basically, it sounds like a group of similar disease with different etiology (mutated gene). Not sure what the limiting factor is for increasing treated surface area. Glad to see the field is taking off, see below another v interesting work on another gene (KRT14).


    SNSS – Don’t know. They started recruiting in July so it will be challenging to have something meaningful.
    CALA – As with all the other PD1 combos, hard to interpret given inherent patient variability.

    Kay Lee – If you refer to changes in the portfolio, I do them only as part of a new blog post. Don’t have any active notification services but I guess one can use RSS feeds.


  11. hi Ohad, CASC (ex ONTY) shows slight accumulation all over the year 2017, at stabilised price-range.

    what do you think of the main and the early programs?


  12. any thoughts on imdz?….lots of heavy insider buys recently

    or an old bio looking to rise from the ashes Cycc?

  13. New here
    1. What are your typical hold lengths or plans? I see you’ve have some unrealized of over 100%+. You don’t get to that without having patience and holding for a looonnng time. When you enter a position, what are your typical hold lengths or plans? When/how do you decide to lock in gains?
    2. I noticed you’ve been buying lots of new IPO stocks in 2016/2017. Example – this blog post has 2 new positions and both are newly listed stocks. Does it concern you new biotech IPOs get listed at such high valuations? Back in the days, new biotechs get listed within valuations under 10mil. Nowdays, everything is already like ~500mil (if not more) valuation by the time it already goes public
    3. I noticed you work for Pontifax. Is this blog following you or Pontifax’s portfolio and thoughts?


  14. hi Ohad,

    XNCR has a lot going on and will have a busy year 2018, e.g.
    – start of own P3 next year for igG4-related disease, where they could be the first (5871)
    – readout SLE P2 (5871)
    – hopefully being able to partner 7195 (asthma), where the subq formulation seems to have less problems compared to the IV-formulation
    – multiple INDs and first readouts for several bispecs
    – Alexion program ALXN1210 (might be a nice follow-on to Soliris) and MorphoSys program (BTD, rather high milestone payments by MorphoSys in their contract despite it was partnered early)

    They are financed until 2020. market cap 1 billion USD, cash 373 mio USD end of September.

    what’s your take on them?

    As I understand you have a not so bright outlook on bispecifics in general?


  15. Kay Lee (EDIT/NTLA/CRSP) – Despite the huge potential and scientific excitement I can’t bring myself to owning any of them at the current valuations. Will try to get in during 2018 as programs make it to the clinic.

    Christian (CASC) – It’s been a while since I last looked at them (SABCS 2016). Hard to interpret their data from a 27-patient arm with capecitabine+Herceptin they used as a basis for a P3 trial.

    Robert goulet – Sorry, not following any of them…

    Steve –
    1 – Don’t have accurate statistics but I typically hold stocks for years, especially the successful ones. The question of locking in gains is a very tough one, wish I could say I have a working method there, missed a lot upside by selling too soon…
    2 – Yes, I am concerned about valuations that seem high (but perhaps not as high as 2 years ago). I added NITE and KRYS despite their high valuation because I want to maximize exposure to Gene therapy. Admittedly, I am less valuation-sensitive with GTx stocks given the disruptive potential and the need to diversify.
    3 – This blog represents my personal opinion only.

    Alex (EXEL) – Don’t think buyout is a likely option. Still considering whether to add it…

    Christian (XNCR) – Agree they have a lot of shots on goal but most are early and the advanced ones are not that exciting IMO. Hard to justify valuation…
    So far bispecifics are a major disappointment IMO, dual targeting of cancer targets isn’t that effective and CD3 engagers have serious safety issues. ZYME has an intriguing dataset though and I hope some of the new IO programs will pan out.

    rodolfo (ZIOP) – Survival data from small uncontrolled trials are very hard to interpret. We’ve all been there too many times (eg CLDX).


  16. Hi Ohad,
    Have been following up on ASMB for some time. Their novel approach to HBV “curing” seems promising although they are still in early stage. Do you follow them? have any opinion?


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