Biotech selloff leaves Wall Street disillusioned

After 5 years of a raging bull market, more than 140 IPOs and tens of billions in proceeds, there is a debate on whether the violent selloff in biotech stocks is a hiccup or the beginning of a real correction. I have no idea where the sector is heading in the coming weeks but it seems like the overall sobering experience coupled with this month’s selloff changed Wall Street’s perception around biotech. Investors are finally realizing drug development is fraught with uncertainty and that biotech is an attractive but not infallible segment, which is why I expect the correction to continue in 2016.

Biotech valuations are still rich and factor-in limited risk (e.g. clinical failures, longer timelines, biosimilars, drug pricing etc.). Even after a 15-21% fall, biotech is a huge outperformer with an average 5-year performance of 170% for major indices. This is dramatically better than the 67% delivered by NASDAQ over the same period. Such outperformance is justifiable to some extent by real progress, sometimes true breakthroughs (HCV, immuno-oncology, gene therapy etc.) but there is still a discrepancy between real commercial value and valuations.

This valuation gap isn’t new, however, for the first time it is accompanied by a fundamental change in sentiment around biotech as a sector. To me, this is an important warning sign because of all sectors, biotech probably has the highest dependency on sentiment rather than hard numbers.

The wave of biotech IPOs in 2013-2015 is probably the best example for how infallible biotech was in the eyes of investors, especially generalists.  Biotechs have a dream factor very few other sectors do and this enabled companies to raise huge amounts of money in IPO proceeds at high valuations, sometimes with limited or no clinical data.

Initially, biotech IPOs were perceived as a huge success story, cementing biotech’s position as Wall Street’s favorite sector. But in the second half of 2015 the picture started to change as rosy projections hit reality. Despite some phenomenal exits like Receptos and ZS Pharma, most biotech IPOs now have negative returns and even stars like Agios (AGIO), Bluebird (BLUE) and Sage (SAGE) gave back most of their gains. 2015 was still a record year in terms of number of IPOs and overall proceeds but the performance of class of 2015 has been dismal (try to come up with one winner…).

Traumatic experience with DMD stocks

Last month I wrote about how hematology stocks were punished after failing to meet unrealistic expectations. The same is true for DMD stocks Biomarin (BMRN), Sarepta (SRPT) and PTC Therapeutics (PTCT) but in this case the exaggerated expectations relied on shaky fundamentals to begin with. It is hard to believe that at some point in 2015, investors assigned more than $5B to these programs despite various issues and uncertainties which were known at the time.

The desperate need for new DMD drugs coupled with a permissive regulatory environment enabled DMD companies to “sell” their drugs as breakthrough treatments for a devastating disease with a high likelihood of approval. In retrospect, all three drugs had very weak clinical packages but this didn’t bother investors who relied more on wishful thinking and incomplete, vague disclosures rather than clinical evidence.

Biomarin’s drisapersen, which came by way of the 2014 purchase of Prosensa, was the first to fall. Biomarin acquired Prosensa after drisapersen’s P3 failure, which was blamed on trial design issues. Biomarin convinced investors that there was enough evidence in the failed P3 (based on subset analyses) and smaller P2 studies to get the drug approved based on the “totality of the data”. Another term people often used to describe the drug was “approvable” as opposed to “effective” or “proven”. The support Biomarin got was almost religious as investors relied on the company’s successful track record (“they know what they’re doing”) in the field of rare diseases while ignoring obvious questions (see one example from Adam Feuerstein).   

FDA’s review of the drisapersen package was brutal. As part of an advisory panel last November, FDA reviewers easily tore apart every claim and data mining presented by Biomarin, who probably relied too much on anecdotal testimonials of patients and their families. The panel voted overwhelmingly against the drug and last week a formal complete response letter followed.

Sarepta is about to receive a similar treatment from the FDA based on briefing documents released last week (see Feuerstein’s review). The company’s DMD drug (eteplirsen) is a direct competitor to Biomarin’s drisapersen but in contrast to Biomarin, Sarepta would like the FDA to approve eteplirsen primarily based on a 12-patient randomized trial that demonstrated a clinical benefit. Until last week, eteplirsen was perceived as better positioned because functional improvement (6-minute walk test, 6MWD) was accompanied by increased dystrophin levels in muscles (this was not observed with drisapersen) and fewer side effects. But FDA’s analysis revealed many issues making the data set inconclusive on top of being very limited. It turns out that after 3 years of treatment, dystrophin levels reached only 0.9% of normal values and the functional benefit is tricky at best. Eteplirsen’s FDA panel is taking place this Friday.

PTC submitted ataluren (Translarna) for FDA approval earlier this month. Ataluren, intended for a different subset of DMD patients (caused by nonsense mutations), also failed to demonstrate a clinical benefit in a large P3. Nevertheless, the company would like to approve the drug in a subset of patients with baseline 6MWD of 300-400 meters where a statistically significant effect was observed. This subset represents less than half of the patients in the study and PTC claims this subset analysis was prospectively defined with the FDA. (Let’s see how the FDA describes it)

Ataluren’s P3 was designed based on subset analyses of a prior failed P2. PTC looked for patients in which ataluren demonstrated clinical benefit and applied these criteria in P3. After seeing the P3 data, the company now asks the FDA to rely on a new subset analysis. This casts serious doubt on the entire study and it remains to be seen whether this analysis stands up to scrutiny.

Biotechs still offers tremendous value proposition

It is important to make the distinction between biotech companies and their stocks. Most high profile biotechs are decent companies with a solid scientific foundation and as a group they continue to make progress regardless of stock performance. As was the case with other technological leaps, I am sure biotech will eventually deliver, it will simply take more time and actual reward may be significant but more modest than initial expectations. Fundamentally, things have never been better for the drug development industry which now has both the development tools and financial resources to advance the field.

With that in mind, I plan to keep my short positions (BIS) which consists  ~20% of the portfolio. I still intend to be selective and have positions in companies with solid clinical data and depressed valuations as they are likely acquisition targets.  Names I like include companies with clear clinical PoC in P2s like Esperion (ESPR) and Trevena (TRVN) as well as companies with positive P3 data with a relatively high likelihood of regulatory approval such as Exelixis (EXEL) and Amicus (FOLD).

Portfolio holdings – Jan 18, 2016

Biotech portfoio - 18-1-2016

biotech etfs - 18-1-2016

66 thoughts on “Biotech selloff leaves Wall Street disillusioned

  1. Thanks for the NEW post,Ohad ! Besides EXEL, you mentioned FOLD. Will you be adding them to your portfolio? Will you add additional EXEL?

  2. Great post, many thanks for your – at least to me – reasonable assessment of the big picture Ohad!

  3. Ohad,
    I noticed that your portfolio has a chunk of ARQL shares.
    IMO, ARQL is very peculiar company:
    – ARQL’s CEO is financial astute man who negotiated quite good and safe deal with Daicchi but, at the same time, he is a very poor manager, he isn’t scientifically competent.
    – The CMO is quite good but has a very little to say in designing and conducting clinical trial.
    -ARQL’s Tivantinib is quit a promising drug ( I expect it to succeed in the ongoing 2nd-line HCC trial). I think it also has a potential in NSCLC and prostate cancer applications. However, Daicchi is in charge of Tiva clinical trials and they are outright incompetent based of their failed Tiva trials in NSCLC and mCRC settings.

    I would like to hear your reasons for having ARQL in your portfolio.

    Thanks in advance.

  4. bouschka (FOLD/EXEL) – I am still new to the FOLD story so would like to dig deeper before getting in but in principle I plan to buy FOLD. Re: EXEL, it’s a tough one… I guess I’ll add more if the OS update is positive and stock stays under $5.

    Kevin – Thanks, glad you find it useful.

    curiousgeorge (EXEL) – My bet is on acquisition but that’s pure speculation.

    bob (ARQL) – I have a completely opposite view on ARQL. I don’t have high hopes for tivantinib but am excited with the earlier stage proprietary pipeline. I think they have a high quality management team and their clinical development strategy is proving itself. Specifically, the Proteus syndrome angle is brilliant in my opinion.

    Alex – Of the three I like TRVN the best because they have solid clinical data going into pivotal studies. Hopefully, this will be the case for AUPH later this year.

    Ohad

  5. How do you feel about $GLPG?, two phase 3 studies (partnered with $GLD) and a really promising pipeline in CF. Has 1B in cash end of januari and in the next 2-3 years gets $30 dollar/share in milestones from GLD for advancing the phase 3 programs in RA and Crohn’s. EV=770 M which is really cheap

  6. Thank you Ohad.
    Regarding to Tiva HCC non-Asian Ph 3 trial, the interum results are in the next 2-3 months.
    The Japan Tiva HCC Ph 3 trial has PFS as the primary endpoint. Note that in ALL priveous Tiva trials (HCC, NSCLC, mCRC), PFS results were very good!

    Greetings.

  7. Hi Ohad,

    Just read that CEO of ESPR bought shares. Does that mean that negotiations for buyout are off the table?

    Thanks Chris

  8. Any thoughts on $MDVN? Looks like a baby being thrown out w/ the bath water at these prices. Also, for $EXEL, the separation of the PFS KM curves from the ASCO GU poster on the full METEOR population was noticeably better as time went on than that for the PFS endpoint population. This is quantified by the superior HR of 0.52 as well, so there’s a good chance that the OS signal will be maintained.

  9. I completely agree with your take on TRVN. I do not, however, have a good understanding of pricing issues in this context. I assume morphine is pretty inexpensive. Is there a concern that hospitals (or insurers) will not be willing to substitute Oliceridine for morphine because of the expense?

  10. Housheinharousa (GLPG) – The main issue is lack of near term catalysts, which is why I sit on the sidelines for now.

    bob (ARQL) – I don’t have high expectations from the global HCC study and in any case wouldn’t count on early stoppage due to efficacy so early. Interesting point about PFS as 1ry endpoint for the Japan study, this means they could get a quick readout since unfortunately PFS in 2nd line HCC is ~1.5 months.

    Chris (ESPR) – I am afraid so. If a deal had been in final stages of negotiations he wouldn’t have been able to buy stock.

    Wildbiftek (MDVN/EXEL) – MDVN has a ~800M revenue run rate (not including milestone payments) so a market cap of $6B appears cheap but generic Zytiga and Aragon’s drug in P3 are serious overhangs.
    Agree regarding final PFS in METEOR, very encouraging and bodes well for OS but nothing is guaranteed as we all know.

    PaulB (TRVN) – Pricing is a very important point in every hospital-related setting. The rationale for TRVN would be saving hospitals expenses on opioid related adverse events and hospitalization days as well as improving pain treatment which has a direct impact on reimbursement and patient preference.

    curiousgeorge (EXEL) – 50/50 imo.

    Alex – Yes it looks like the pivotal trial. Could have data later this year if benefit is strong imo.

    Not sure about CLDX, for the time being I prefer to wait.

    Ohad

  11. Ohad,

    Let me put this way. In HCC 2nd-line C-Met+ pts:
    – mOS is about 4-4.5 months
    – At 8 months mark, ~90% of placebo pts are gone
    – It is expected that in C-Met+ the Tiva’s mOS line will be just under c-Met- pts placebo mOS (8.5-9 months) or ~7.5-8 months
    – Enrollment started in very early 2014 with goal of 300 pts
    — Enrollment was increased 364 pts
    — Enrollment was done by early 12.2015
    — Assuming enrollment midpoint in 5-6.2015, most of placebo pts are almost gone
    — Consequently, it appears that that only Tiva-treated pts are holding the trial from the interim review.

    The bottom line: it appears that the trial is a success.

  12. Hi Ohad

    Given your assessment that the biotech sector overall is still relatively expensive I was wondering at which levels (roughly) of broader indices like let’s say the NBI, you would consider the sector as fairly/attractively priced again?

    Many thanks
    Kevin

  13. Hi Ohad,
    regarding ESPR my argument would be, that the depressed shareprice makes a buyout less likely (at the moment). Sounds paradox but for any aquiring company the premium would be to high. Since i can not imagine that ESPR will sell itself cheap. Either company would have big problems explaining to their shareholdersif price is high or low. My guess would be that a buyout contains a very big CVR.
    So Merck: Buyout for 50$ + 25 CVR each upon approval, positive CVOT, and sales exceed 1 billion – come on i am doing your job for you here :-)

    AMBI
    AMBI themselvse once guided that they will have interim results in q4/15 (after half events). Seems like Daiichi Sankyo wants to report and hopefully file upon complete results…

    Thanks as always… Ike

  14. hi Ohad

    QURE with nice (?) trial update in January. MC 375 million approx.
    thinking about buying…what speaks against it aside from shaky market?

    once hyped BLUE on n=1 now back to 1,6 billion, and tons of cash. getting interesting here? last trial updates were not very positive, but do u still see value in the drug?

    any other more interesting GT company you know? which one would you buy?

  15. ESPR
    Hi Ohad,

    Since ESPR initiated HDS add on study, I assume the window of opportunity for BO likely be about 4 to 6 months from now. The outcome from HDS P2 is critically invaluable for assessing valuation for ETC-1002 program. It will determine if Bempidoic Acid can effectively compete with PCSK9 mAB in combination therapy with statins. It will also provide some color to the possibility of 1002 being used as primary prevention therapy replacing statins in Statin Intolerant population. As you indicated this is high risk program, but ESPR management is bold enough to bite the bullet. Then 52 weeks LTS and P3 and finally CVOT.
    HDS P2 is like AD study for ACAD.

    I am curious about inclusion criteria for LDL level after 4 weeks of 80mg Lipitor.
    Since the MOA of 1002 is different from statins, It may work for those with high level LDL despite Lipitor. The efficacy or potency will be the key. How much % of reduction in LDL will be perceived as a meaningful success? May be at least 20%? Can 1002 further reduce hs CRP on top of Lipitor? This at least should be easier hurdle than Zetia in Vytorin CVOT.

    I may throw a towel if P2 HDS is not good and ESPR ends up entering into P3 on their own. I did not realize how important this P2 was until I read your blog.
    Thanks again.

  16. bob (ARQL) – History taught us that this type of modeling is highly unreliable for various reasons (primarily, that patients on the control arm sometimes do better than historical control). Hope you are right of course, though :)

    Kevin (NBI) – Very hard to say. The main problem is that the market tends to exaggerate in both directions so biotechs may be punished beyond what many will view as the right levels.

    Ike (ESPR) – You raise a good point, psychology plays a role in both side of the equation but biopharma companies can pay significant premiums if they truly want it.
    Re: AMBI – I read somewhere there were some delays wit the trial but not sure how much time they lost.

    Christian (QURE/BLUE) – I still have high hopes for both companies and the rest of the GT field. Regarding QURE, results were very good but there are multiple competing programs for Hem B. It would be great to have a GT ETF.

    Gene (ESPR) – I acknowledge the importance of the HDS program (even though so far they couldn’t find an inverse correlation between statin dose and efficacy) but ETC-1002 can be very relevant in statin -intolerant patients who obviously can’t tolerate high doses of statins. ETC-1002 works upstream of statins so it remains to be seen how much more LDL reduction it can induce with really high statin doses (depends on what level of HMG-CoA reductase inhibition is achieved in patients).

    Ohad

  17. Hey Ohad
    what a rough month it has been. Thanks for your overview.
    Some valuations have been down… regarding your philosophy or strategy of picking value and companies close to and with good chances of commercial approval, I am wondering about the following:
    – SAGE – they are in ph3 and results should be out soon…
    – CLVS – the valuation dropped, the PARP inhibitor is in ph3 / I know you distrust management after the big blow up, but is there value there?
    – MRNS – results for some pf their phase 2 are coming fragilex

    Regarding TRVN, it seems this should a high priority drug, considering the deaths and addiction that opiates are causing– the NYtimes showed how overdose deaths have doubled or tripled across america – it was mostly a map of the country showing how much of an epidemic opioids have become…

    – finally reading XENE – valuation is low, but they are really far from a phase 3… what is your take?

    – what is you take on the moonshot led by Biden, it seems that the FDA will accelerate en further approval of drugs?

    Thanks for your solid work.

    Dan

  18. Hey Ohad, great blog man keep up the fantastic work.

    My question to you is, if you had to go long one of the following, which would it be? KITE, JUNO, BLUE

  19. Dan –

    I am long SAGE but I don’t consider it to be cheap. Likelihood of success is high but this is already baked-in into valuation.
    Regarding CLVS – I still like their PARP strategy, not sure yet the drug is truly differentiated from olaparib.
    MRNS – I don’t have high expectations from the FXS study, P3 results in mid-2016 are going to be a huge event. I feel comfortable owning the stock going into readout given the low valuation and optionality in status epilepticus.
    TRVN – Addiction is more related to chronicopioid use (oral) which is less relevant for TRVN’s indications. Still, plenty of issues with opioid use in hospitals so value proposition is clearly there.
    XENE – Agree valuation is very low but they don’t own their NaV1.7 programs so upside is limited. Still feel comfortable owning the stock.

    Not very familiar with the moonshot program but it sure sounds positive.

    Johnny – Thanks but unfortunately I prefer not to discuss CAR/TCR companies.

    Alex (AGEN) – I think they have been doing a great job expanding their checkpoint pipeline but valuation is still too high imo.

    Ohad

  20. Hi Ohad,

    I recall that that ARQL interim look doesn’t have a futility look. Can you confirm that?
    KPTI has an EV of about 50M and while there may b tolerability questions for the drug I think the XPO1 drugs are active and there may be a path forward. Therefore there should be decent upside for the stock from here. What are your thoughts regarding XPO1 as a target? Obviously that would present some upside for STML as well.

    Are you familiar with the gout space at all? If so CBAY has a P3 ready gout drug. Would appreciate any thoughts on the space and their drug if you are familiar.

    Regards

    Rick

  21. Hi ohad. Any thoughts on FMI? Do you still have high hopes for the company? $50 a share seems like such a distant memory. Thanks for your insight as always.

  22. Hi Ohad,Long time no see. The only and unignorable question about TRVN’s phase 2 trial is the high emergency analgesia rate in the morphine group. Historical data I found on papers is about 4%. Maybe patients were administered unadequate dose of morphine to show the superiority of their own drug.
    I suggest shorting TRVN rather than longing.

  23. a long time AEZS shareholder, they have 2 drugs in phase 2 (late 2016) and recent insider buying but top executives. Do you have any insight you can share. As always thank you for all the great insightful info shared with us over the years

  24. Hi Ohad,

    I’ve been following your blog for quite a while now and always enjoy it. I was wondering if you had an opinion on Oncomed (OMED) following the failure of one of their PII programs?

    Their market cap is ~$300 M now with $270 M in cash and several programs in the clinic.

    Thanks in advance.

  25. Rick –
    ARQL – This is my understanding as well.
    KPTI – Indeed, one of several companies traded close to cash. I like the novel mechanism but was disappointed they didn’t share new data from the MM study at ASH. This implies initial activity was not corroborated.
    Sorry, don’t know CBAY well.

    Dan S. (FMI) – I liked their JPM presentation and am still optimistic about their long term prospects. I plan to hold them in 2016 given low expectations, global expansion via Roche.

    owen (TRVN) – From what I understand they used clinically acceptable doses. In their recent trial they let patients control dosing and demonstrated similar analgesic effect with fewer side effects, an attractive value proposition in itself.

    roy (AEZS) – Sorry don’t know them well.

    Ohad

  26. Immunogen is reporting a $10mm milestone for Anetumab Ravtansine entering Phase II for second-line mesothelioma (post platinum + pemetrexed), and it was stated that this trial was designed to support registration. Despite having 50% ORR in second-line (n=10), the trial’s primary endpoint is PFS; do you think this could give any read on the final design for FORWARD I and II for IMGN853?

  27. KPTI MM data: What updated data were you expecting at ASH2015? Original Selinexor + dex in MM ph1 study had only 2 patients ongoing at ASH2014 update. KPTI initiated registration directed trial STORM in early 2015, the company stated at the time it wouldn’t release STORM data until at 80 patients of interim which is expected in mid 2016.

  28. Wildbiftek (IMGN) – No I don’t see any readthrough as these are different indications. The news about anetumab are very encouraging and the data included some phenomenal responses but to me IMGN853’s efficacy profile is more promising.

    JQ (KPTI) – Thanks I wasn’t aware of the fact they explicitly said that. I would be happy to see 10-15 more patients before starting the potentially pivotal trial.

    Ohad

  29. Hello Ohad,

    Medigene is entitled to receive 40% royalty payments from Amgen’s drug Imlygic. Will this be a meaningful income source for Medigene in the future?

    Thanks Toby

  30. Medigene
    Toby, they will get 40% of the royalties paid to Catherex because they own(ed) 40% of Catherex. They will not get 40% on Imlygic sales. Royalty rate is undisclosed as far as i know…

  31. Medigene: Thanks Ike. Please read the press release of Medigene again. They will get direct “sales-based milestones for Amgen’s Imlygic” and “royalty payments on the sale of Imlygic”. Yes the rate is undisclosed.

  32. Ohad
    Earlier this week we traded to your prediction of a 25+ correction in the bio sector based on the IBB.Are you contemplating taking off some of your BIS or do you feel there will be more pain ahead?

  33. Ohad…, Like dave above ,I am interested in your opinion on the SUBSTANIAL correction that has occurred. I have a list including AGIO,BLUE, BPMC,JUNO,MGNX and ESPR. Do you feel that it is too early to start small positions? THANKS in advance!

  34. Toby/Ike – Thanks for the clarification, 40% royalty rate is indeed too high.

    gene mc (ESPR) – I agree that many patients who are defined as “statin intolerant may not need drugs like ETC-1002 but there will still be a fraction who need a new drug that acts like a statin but doesn’t have the statin side effect profile. In a market of tens of millions of patients in developed countries, even a 0.5% market share is considerable.

    Ken, Alex (ACAD/DSCO) – Sorry don’t have a concrete opinion there.

    dave – I am still concerned about biotech as a sector because I think it will take a while for investors to rebuild trust with the sector (even though fundamentally the industry has never been better). I plan on holding my BIS position for the coming months and hope things cool down by the summer.

    Bouschka – I like all the names you mention, of which I hold only ESPR because it is trading close to cash and has global rights for its drug. I plan to wait several months until markets stabilize.

    Ohad

  35. Hi Ohad,

    Exelixis announced stat-sig OS benefit for Cabo in METEOR this morning. What do you think are the chances this OS benefit makes it to their label? The FDA considered their application sufficiently complete for review, but I seem to recall that their submission was being on a rolling basis.

  36. Hi Ohad,

    MPSYY: what do you think about re-entering Morphosys in the coming months? They are getting fundamentally cheap after those known failures (gantenerumab prodromal failure, Celgene gives MOR202 back) and after building a “rounding top” pattern in the chart.

    IMGN: If Mirvetuximab soravtansine really is successfull in high an medium expressing FRα ovarian cancer in later line as monotherapy and first line as combination therapy, what are your sales estimates? The co itself estimates 500 M in later line patients with only about 4000-5000 patients in US/EU. In earlier lines there are globally 240.000 new cases. IMGN told us, that about 50% of the patients are high or medium expressers. So if IMGN captures only 20.000 patients of the earlier lines then this could be a 2-3B blockbuster drug. If the manage to reach 50.000 patients then it is a 6B drug. What is IMGN worth then in market capitalization? Current MK is only 800M. Is this a 10 bagger potential? And why does the market ignores it totally? Am i overlooking something?

    EXEL: What makes you sure that the lenva/ever combination in RCC won’t be approved? To my knowledge they have breakthrough designation and the combination with ever showed far better efficiacy than Cabo (alone). Ok the safety is one concern, but why no conditional approval? There is still an significant need despite nivo and cabo.
    Second why won’t the physicans prefer the ever/lenva combination over cabo? They know ever very vell, why not stick with it in combination with an TKI?

  37. $EXEL Does the inclusion of OS data effectively block Len/Ever ? To me this is what Exelixis seems to have done.

  38. $EXEL Also, factor in the cost reimbursements, an insurer would pay for Cabo first over a combination therapy or an expensive Opdivo when Cabo has shown to have statistical significance on all three parameters. Also, CaboSun seems to becoming a pivotal trial given that OS is the primary end point, and the protocol was changed in April 2015. This was probably done due to the effect of the drug on the patient population. What valuation would you put on Exelixis if it reads out positive on CaboSun ? I think Exelixis is most likely looking to have this read out also in order to do a deal for ex US rights. In the meantime if anything is cooking in Roche camp for Cobimetinib it will have to come out of the hidden secrets department and see the sunshine.

  39. Ville –

    MPSYY – Still watching them closely but prefer to wait before getting back in. Partnered pipeline is still impressive but proprietary pipeline not as exciting.

    IMGN – I agree with the 20k number as a possible patient pool in theory but clinical data is still premature. ASCO 16 is going to be crucial especially in FR-high patients, where mirv had a 70% response rate so far in a small cohort (10 patients). If they show a similar response rate in additional 10-15 FR-high pts it will be very reassuring and significantly increase likelihood of success with blockbuster potential.

    EXEL – I don’t see the FDA approving lenvatinib based on P2. Cabo’s data package is superior by all means, especially now with an overall survival benefit.

    curiousgeorge (EXEL) – Don’t think having OS in the label will impact the decision for lenvatinib. Even if you assume lenvatinib is approved, it is hard to envision physicians choosing lenv/afinitor over cabo with the available data. Positive CABOSUN readout will definitely be positive but I suspect it will take a full blown P3 to displace Sutent. With nivo potentially moving to 1st line, TKIs may no longer be relevant for newly diagnosed RCC.

    Ohad

  40. Hi Ohad,

    Given that we now know that EXEL has a statistically significant OS for cabo, can you go over some scenarios (and odds) about the future implications of what the final data will look like?

    Thank you for your excellent analysis and blog.

  41. Hi Ohad,

    What will happen to Sunitinib after checkpoint inhibitors potentially displace it in first line metastatic RCC therapy? Would you say that a positive Cabosun result would be sufficient to put Cabo ahead of Sunitinib in the schedule?

  42. Hi Ohad,
    regarding GNCA:
    They will publish 12 months results for 003 in genital herpes later this quarter.
    I thought the 6 monts results were quite good – what were your thoughts?
    What would be good results for the 12 months data?
    And do you find the ATLAS plattform interesting – (if you can comment)?
    Also: Regarding TRVN – Dou have an opionion on TRVN027 in acute heart failure?
    Thnks Ike

  43. Hi Ohad,

    Do you have an opinion on Beigene? They’really IPO’ing today in a tough market with a bunch of drugs in their pipeline with proven MOA. Are their drugs differentiated in any way, in your view?

    Thanks,
    sherk

  44. Also, you had mentioned at one point an interest in Atyr (LIFE), but that the stock was too expensive. With the recent crash, the stock is much cheaper, now…cheap enough to consider?

  45. $EXEL A positive CaboSun can lead to approval for medium to high risk patients without a P3 since it is not completely replacing Sunitib for the initial treatment, and the eventual competition will be Checkpoint inhibitors, Checkpoint inhibitors plus VEGF inhibitors, and they might not all work for medium to high risk patients, and also might be more toxic especially the combinations so this will give Cabozantinib space in first line treatment. If Cabo plus Nivo comes positive then it can compete in that space more completely. But for the meantime it could be possible to displace Sunitib for medium to high risk patients in 1st line therapy, and since there is synergy between Cabo and Nivo, Nivo after Cabo would also be a positive for patients. What do you think ?

  46. hi Ohad (EXEL):

    Why didn’t they publish the topline data of the OS data of Cabozantinib?

    Do they try to hide that the HR and the OS results are not as good as the nivolumab data?

    In September they seemed to have a better HR (0.67 vs 0,73)… this allegedly advantage now gone?

  47. Hi Ohad.
    How spot on you were when you decided to buy months ago BIS at $20s to hedge your portfolio. I remember at that time you forecasted that BIS would reach $50 by mid 2016. Well, not mid 2016 but in January 2016 BIS reached $49.27 so we can say your BIS target has been reached. Do you expect that after reaching this high, is time now for IBB to start a lift? or by contrary you believe BIS will continue to go higher by mid 2016.
    Congrats
    lgonber

  48. Beokeh (EXEL) – Will try to publish on Sunday what I think the data will look like and the implications. In general, i think this is great news for EXEL and that cabo is going to become a dominant RCC drug in PD- failures.

    Wildbiftek (EXEL) – I think it will take more than a P2 to overthrone Sutent as the TKI of choice in RCC.

    Ike – Hard to speculate re: GNCA. Yes I think harnessing the ATLAS platform for neoAg discovery is an exciting opportunity.
    Re: TRVN – I have zero expectations for TRVN027, my investment hypotheis relies solely on their selective opioid receptor inhibitors.

    Sherk (BEIG) – Agree, their IPO is very impressive and a positive indication. Don’t know their programs too well but couldn’t find anything really exciting in their clinical programs. On paper they claim to have certain technical advantages over approved agents but it’s hard to predict how they will translate clinically.

    Re: LIFE – Yes I still like the biology very much, valuation has come down considerable, close to cash levels. Definitely on my watchlist although I haven’t bought.

    curiousgeorge (EXEL) – I don’t think a positive P2 will be enough to displace Sutent although a positive CABOSUN will certainly help cabo in later lines imo.

    Ville (EXEL) – I guess they didn’t want to jeopardize presentation at ASCO 2016. This is not unusual, done with Opdivo for RCC also for cobi in melanoma. I don’t think this is a negative sign (neither is it positive).

    With respect to overall market conditions, very hard to predict. My feeling is that the sector needs months to stabilize so I plan to get back in around mid-2016.

    lgoner (BIS) – Thanks! I think valuations are becoming reasonable but it’s hard to predict market volatility, people exaggerate in their reactions in both directions so the brutal correction may have a long term impact on biotech. Bottom line, I am not selling my BIS position but certainly not adding for now.

    Ohad

  49. $EXEL This is a second interim look, and not the final analysis for OS, and they spent some p value and got statistically significant OS.

  50. $EXEL Also, don’t you think the population for Meteor was more advanced than the Checkpoint trial so we cannot really compare the duration. CaboSun might be more informative of OS for later lines as u say.

  51. OHAD…. I WOULD APPRECIATE YOUR INSIGHT ON THE RECENT AAVL MERGER! IT APPEARS THEY HAVE CREATED AN IMPRESSIVE SCIENTIFIC TEAM.

  52. Hi Ohad

    Do you follow PIRS (run by several former Morphosys people) and have an opinion on the company?

    Many thanks
    Kevin

  53. curiousgeorge (EXEL) – Agree. The fact they saw such a strong trend and reached stat sig. at the 2nd analysis implies the signal is robust. Based on PFS, yes it looks like METEOR has a slightly tougher patient population but let’s wait to actual OS data.

    Bouschka (AAVL) – Agree and think they are now a diversified gene therapy play, too bad they are so early. They are still traded under cash so definitely a name to watch towards mid-2016.

    Kevin (PIRS) – Sorry ,don’t know them well.

    Ohad

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