Could gene therapy become biotech’s growth driver in 2017?

Despite bouncing off a 2-year low, biotech is still an unpopular sector and investors are rightfully concerned about its near-term prospects. Recent drug failures, growing pricing pressure and the potential impact of biosimilars all contribute to the negative sentiment, but the main problem is the lack of growth drivers for the remainder of 2016 (and potentially 2017).

The biotech industry relies on innovation cycles to create new revenue sources. This was the case in the 2013-2014 biotech bull market, which was driven by a wave of medical breakthroughs (PD-1, HCV, CAR/TCR, oral MS drugs, CF etc.). These waves typically involve new therapeutic approaches coupled with disruptive technologies as their enablers.

In oncology, for example, the understanding that cancer is driven by aberrant signaling coupled with advances in medicinal chemistry and antibody engineering led to the development of kinase inhibitors and monoclonal antibodies as blockers of signaling. A decade later, insights around cancer immunology gave rise to the immuno-oncology field and PD-1 inhibitors in particular, which are expected to become the biggest oncology franchise ever.

Gene therapy ticks all the boxes

While there are several hot areas in biotech such as gene editing and microbiome, most are still early and their applicability is unclear. Gene therapy, on the other hand, is more mature and de-risked with tens of clinical studies and the potential to treat (and perhaps cure) a wide range of diseases where treatment is inadequate or non-existent. The commercial upside from these programs is huge and should expand as additional indications are pursued.

As I previously discussed, the past two years saw a surge in the number of clinical-stage gene therapies, some of which already generated impressive efficacy across multiple indications. This makes gene therapy the only truly “disruptive” field which is mature enough not only from a technology but also from a clinical standpoint. Importantly, most studies are conducted by companies according to industry and regulatory standards, in contrast to historical gene therapy studies that were run by academic groups.

To me, the striking thing about the results is the breadth of technologies, indications and modes of administrations evaluated to date. This versatility is very important for the future of gene therapy as it reduces overall development risk and increases likelihood of success by allowing companies to tailor the right product for each indication. Parameters include mode of administration (local vs. systemic vs. ex vivo), tropism for the target tissue (eye, bone marrow, liver etc.), immunogenicity and onset of activity.

Building a diversified gene therapy basket

Given the early development stage and large number of technologies, I prefer to own a basket of gene therapy stocks with a focus on the more clinically validated ones: Spark (ONCE), Bluebird (BLUE) and Avexis (AVXS).

Bluebird and Spark are the most further along (and also the largest based on market cap) gene therapy companies and should be the basis for any gene therapy portfolio. With two completely different technologies, the two companies have strong clinical proof-of-concept for their respective lead programs.

Avexis is less advanced without a clinically validated product, but recent data for its lead program are too promising to ignore.

Spark – Clinical validation for retinal and liver indications

Spark’s lead programs (SPK-RPE65) will probably become the first gene therapy to get FDA approval. In October, the company reported strong P3 data in rare genetic retinal conditions caused by RPE65 mutations, the first randomized and statistically significant data for a gene therapy. The company is expected to complete its BLA submission later in 2016 which should lead to FDA approval in 2017. Spark’s second ophthalmology program for choroideremia is in P1 with efficacy data expected later in 2016.

Earlier this month, Spark released an encouraging update for its Hemophilia B program, SPK-9001 (partnered with Pfizer [PFE]). A single administration of SPK-9001 led to a sustained and clinically meaningful production of Factor IX, a clotting factor which is dysfunctional in Hemophilia B patients.  All four treated patients experienced a clinically significant increase in Factor IX activity from <2% to 26%-41% (12% is predicted to be sufficient for minimizing incidence bleeding events). Due to the limited follow up (under 6 months), durability is still an open question.

Spark intends to advance its wholly-owned Hemophilia A program (SPK-8011) to the clinic later in 2016 with initial data expected in H1:2017. Results in the Hemophilia B should be viewed as a positive read-through but Hemophilia A still presents certain technical challenges (e.g. missing protein is several fold larger) which required Spark to use a different vector. Hemophilia A represents a $5B opportunity compared to $1B for Hemophilia B.

Bluebird

Despite being one of the worst biotech performers, Bluebird remains the largest and most visible gene therapy company.  In contrast to most gene therapy companies, Bluebird treats patients’ cells ex-vivo (outside of the body) in a process that resembles stem cell transplant or adoptive cell transfer (CAR, TCR). Progenitor cells are collected from the patient, a genetic modification is integrated into the genome followed by infusion of the cells that repopulate the bone marrow.  This enables Bluebird to go after hematologic diseases like beta thalassemia and Sickle-cell disease (SCD) where target cells are constantly dividing.

Sentiment around Bluebird’s lead program, Lenti-globin , plummeted last year after a series of disappointing results in a subset of beta-thal patients and preliminary data in SCD, which represents the more important commercial opportunity. Particularly in SCD patients, post-treatment hemoglobin levels were relatively low and although some increase has been noted with time, it is still unclear what the maximal effect would be. Market reaction was brutal, sending shares down 75% in just over a year.

Next update for Lenti-globin is expected at ASH in December.  Despite the disappointing efficacy observed in SCD and beta-thal, I am cautiously optimistic about Bluebird’s efforts to optimize treatment protocols and regimens. These include specific conditioning regimens and ex-vivo treatment of cells that may improve transduction rate and hemoglobin production in patients. Some of these modifications are already being implemented in newly recruited patients and hopefully longer follow up will lead to higher hemoglobin levels in already-reported patients.

The only clinical update so far in 2016 was for Lenti-D in C-ALD, a rare neurological disease that affects infants in their first years. Results demonstrated that of 17 patients treated to date (median follow-up of 16 months), all remain alive and free of major functional deterioration (defined as major functional disabilities, MFD). The primary endpoint, defined as no MFD at 2 years, was reached for 3/3 patients with sufficient follow-up and assuming the trend continues Bluebird may be in a position to file for approval in H2:2017.

Lenti-D’s  commercial opportunity is limited (200 patients diagnosed each year in developed countries) so investors understandably focus on  Lenti-globin, which is being developed for beta –thal (~20k patients in developed countries) and SCD (~160k patients).

Bluebird is expected to end 2016 with ~$650M in cash. Current market cap is $1.7B.

Avexis

Avexis is developing AVXS-101 for Spinal muscular atrophy Type 1 (SMA1), a rapidly deteriorating and fatal neuro-muscular disease. SMA1 is characterized by rapid deterioration in motor and neuronal functions with 50% of patients experiencing death or permanent ventilation by their first anniversary. Most patients die from respiratory failure by the age of two. SMA Type 2 and Type 3 are also caused by SMN1 mutations and are characterized by a later onset and milder disease burden (but unmet need is still significant in these indications). The US prevalence of SMA is 10,000, 600 of which are SMA1.

In contrast to Bluebird and Spark, Avexis does not have conclusive proof it can lead to expression of the missing protein (SMN1)  in the target tissue nor does it have randomized clinical data but the results generated to date are simply too provocative to ignore.

At the most recent update, Avexis presented data for 15 patients who received AVXS-101 in their first months of life. 3 patients were treated with a low dose and 12 were treated with a high dose. Strikingly, none of the children experienced an event (defined as ventilation or death), including patients who reached 2 years of age. All 9 patients with sufficient follow up, reached the age of 13.6 months without an event in contrast to historical data that show an event-free survival of 25%. AVXS-101 also led to a dose dependent increase in motor function which had a quick onset especially at the higher dose.

RGNX

As with any results from an open label study without a control arm, these data should be analyzed with caution, as they need to be corroborated by large controlled studies (expected to start next year). Still, the data point to an overwhelming benefit in a very aggressive disease.   One of the most exciting aspects of this program is the fact that it is given systemically via IV administration, which implies the treatment reaches the neurons in the CNS. Avexis plans to start a trial in SMA2 in H2:16 using intrathecal delivery (directly to the spinal canal). This decision is surprising given the results with IV administration in SMA1 and the fact that the “BBB immaturity” hypothesis in babies is not considered relevant anymore. (See this review)

AVXS-101’s main competitor is Biogen’s (BIIB) and Ionis’ (IONS) nusinersen, an antisense molecule that needs to be intrathecally injected 3-4 times a year. As both drugs generated encouraging clinical data in small non-randomized studies, it is hard to compare them, however, AVXS-101 has an obvious advantage of being a potentially one time IV injection. Nusinersen is in P3 with topline data expected in mid-2017.

AVXS-101 is based on an AAV9 vector developed by REGENXBIO (RGNX), which licensed the technology to Avexis. Beyond the 5%-10% in royalties REGENXBIO is eligible to receive, data for AVXS-101 bode well for the company’s proprietary programs in MPS-I and MPS-II, two other rare diseases with neurological involvement where BBB penetration is crucial. These programs are also based on REGENXBIO’s AAV9.

Beyond AVXS-101, REGENXBIO has an impressive partnered pipeline which includes collaborations with Voyager (VYGR), Dimension (DMTX) , Baxalta and Lysogene.

Portfolio updates – Immunogen, Marinus, Esperion

June was a rough month for three of my holdings. Immunogen (IMGN) had a disappointing data set at ASCO, Marinus (MRNS) reported a P3 failure in epilepsy and most recently, Esperion was dealt a regulatory blow from the FDA that may push development timelines by several years. I am selling Immunogen and Marinus due to the lack of near-term catalysts although long-term their respective drugs could still be valuable. I decided to keep Esperion as I still find ETC-1002 very attractive and hope that PCSK9’s CVOT data will soften FDA’s concerns about LDL-C reduction as an approvable endpoint.

Three additional companies with important binary readouts in the coming months are Array Biopharma (ARRY), SAGE (SAGE) and Aurinia (AUPH). Array will have P3 data for selumetinib (partnered with AstraZeneca) in KRAS+ NSCLC. SAGE will report data from a randomized P2 in PPD following a promising single-arm data set.  Aurinia will report results from the AURA study in lupus nephritis patients, where there is a strong rationale for using the company’s drug (voclosporin) but limited direct clinical validation.

Portfolio holdings – July 4, 2016

portfolio - 4-7-2016- after changes

biotech etfs - 4-7-2016

148 thoughts on “Could gene therapy become biotech’s growth driver in 2017?

  1. THANK YOU Ohad ! A WONDERFUL and INSIGHTFUL summary on GENE THERAPY and viable companies! A while back you mentioned the possibility of adding FOLD. Do you have any new comments?

  2. Hi Ohad,

    Another through provoking post, thanks for taking the time to do this. Do you think the high overhead of producing the patient-specific drug may be a substantial hurdle for BLUE? I recall DNDN suffered from the drastically thinner margins on Provenge than the industry average. Will they be able to efficiently scale up the production of something like Lenti-Globin?

  3. Bouschka (FOLD) – Thank you. It’s been a while since I looked at them but I still think migalastat is a great drug with a significant market opportunity ($300M) and the early stage programs (DEB, Pompe) are interesting. The main issue is their financial position.

    Wildbiftek (BLUE) – I think that clinical efficacy will be the factor determining Lenti-globin’s fate. Logistics won’t be easy but manageable imo. DNDN really had a margin problem but the real issues there werecompetition from more effective oral drugs and a problematic label imo.

    Ohad

  4. Hi Ohad,
    Thanks for sharing your interesting thoughts! Remarkably it is lacking UniQure, which has unfortunately been overshadowed by preliminary data from Spark while still not enough is known on its safety/durability. Seems to me that UniQure has more plausability on that side, and regulators might agree. Still trusting on UniQure’s superior vector design, pipeline and IP, experience and manufacturing capabilities. Additional data this year will show QURE/ONCE race isn’t over at all, although marketvaluation would suggest so …

  5. DvM (QURE/ONCE) – Agree about the market appears to have made up its mind but as you wrote both programs are early in development and things could change very quickly. Even if we write down the Hem B opportunity I think QURE is definitely a name to include in a gene therapy “basket”, I like the Sanfilippo B data and they have a nice preclinical pipeline.

    Ohad

  6. Very thought provoking post, lots of insight. I’ve been following gene therapy from a different angle for some time, and appreciate your view. From my perspective, one company that has done very well in the space, in terms of capital raise, big pharma interest, and clinical development, yet wasn’t mentioned is AGTC in Florida. Any reason for it’s exclusion?

  7. Tony (AGTC) – Thanks. I agree about AGTC being an attractive (yet quite stage) gene therapy name. I like the balance between partnered vs. wholly owned programs and definitely a name to own as part of a gene therapy portfolio.

    Ohad

  8. Hi Ohad, great article, thanks especially for the AVXS part and the BBB review.

    Some questions (references belong to the AVXS 06may2016 presentation):
    – slide 10 comparison of cohort 1 and 2: even without placebo arm, would you consider the dose dependency shown here a positive sign?
    – slide 11: cohort 2 seems to reach a plateau, do you think, this is because the virus does not integrate (as per slide 5)
    – even if nerve cells are seen as “none dividing”, is the lack of integration negative?
    – as the similar (slower chop intend improvement, but no sign of plateau) results from IONS still show the need for additional therapy, I expect the same for AVXS-101. Would a “genetherapy once, ASO lifetime” regime be realistic?

    Thanks and best regards,
    SAMi

    PS and OT: would you still see ALNY-TTR superior over IONS-TTR after last weeks data, e.g. ALNY-TTR-FAC looking DOA

  9. I’ve been following and writing about the companies and institutions involved in using gene therapy in ophthalmology (including Spark and AGTC). I have a set of tables that lists 42 entities (companies and institutions) involved, including which retinal disease states they are pursuing and where they are in terms of their clinical trials. There are currently 28 ongoing clinical trials and 22 ophthalmic indications.

    For access to the set of three tables (last updated Feb 2016), please see http://tinyurl.com/GeneTherapyTbls

    Irv Arons

  10. Ohad….. Would you include the old AVALANCHE…now ADVM in your basket of Gene Therapy Companies? THANKS!

  11. Hi Ohad, concerning ARRY upcoming data P3 KRAS+ NSCLC: Are you optimistic?

    And secondly concerning ARRY COLUMBUS-trial: Are you optimistic that BINI/ENCO will show a noteworthy better safety profile than its competitors?

    I highly appreciate your work! Thanks

  12. SAMi – Thanks. These are all valid questions but I am afraid data we have are simply insufficient to address them. Yes, it looks like there dose dependence but the first cohort had only 3 patients who were older with more advanced disease.
    Hard to interpret the plateau in patients have <6 months of follow up but I agree that in the earlier patients score seems to stabilize (in so because they reached near maximal levels!). Don't know if it's related to "dilution" of the vector or something else, same goes for combining gene therapy with ASO (we don't have enough data, let's make sure at least one of the works in larger trials...).

    Re ALNY vs. IONS in TTR - I agree about ALNY's FAC data being disappointing, at least FAP results continue to look good. In general, I feel ALNY's technology is superior and potentially safer.

    Irv Arons - Thanks for sharing this comprehensive list.

    Bouschka (ADVM) - Yes I would include it but with limited exposure given the early stage pipeline.

    Ohad

  13. Hi Ohad,
    would be courious to hear your thoughts about GNCA:
    Some invesotors raised doubts about the results of the 12 months study (especially results in genital lesions) because thre was no placeboarm. Others say that there is no real reason to have one since comparison to baseline is enough to show an effect. Do you think the data is robust?
    As you might know VICL had some hard to exlain difficultties with their study in genital herpes where placebo outperformed their treatment arms statisticly significant (viral shedding) and also showed remarkable effect compared to baseline.
    Thanks Ike

  14. Ohad
    did you have a chance to look into MDVN presentation about their PARP Inhibitor .
    What is your opinion about:
    – market size – 30B (slide 53)
    – activity and PARP trapping (slide 14)
    – selectivity and off target toxicity (slide 24 $ 25)
    You liked the TSRO data, but it looks that MDVN may have superior drug, if I understand their presentation correctly.

  15. Ike (GNCA) – Unfortunately I haven’t formulated a strong opinion there. Not sure I would call the data robust…

    Andre (MDVN) – Hard to say as the differentiation with PARP trapping is still on paper or in preclinical experiments. Talazoparib is 10-100 fold more potent in trapping but how that pans out in the clinic is unclear to me.

    Ohad

  16. Hi Ohad
    any news/ thoughts / updates about FMI ?
    what do you think on selling it?

    Thanks

  17. Hello Ohad,

    Fantastic post as always. I feel this time period is one of an initial wave of gene therapy ventures that is currently assuming the most risk.

    What are your thoughts on attribution of fludarabine to JUNO’s ROCKET deaths this past week? Any evidence to link fludarabine to previous CNS swelling in non-CAR-T chemotherapy trials?

  18. Ohad

    LIFE had 90m in cash as of March 31st and practically no debt and stock is trading at a 65m market cap,assigning negative value to their pipeline.make sense?

  19. Alex (FMI) – I plan on holding them as I am still a big believer in tumor profiling and FMI’s position in that market.

    Garry Xo – Thanks. Unfortunately I prefer not to comment on the CAR/TCR field.

    Dave (LIFE) – I still like the science which is very novel with potentially far-reaching implications but like most novel discoveries development risk is very high.

    Ohad

  20. Hey Ohad
    time to take a look at CLDX again, their metric study in TNB will read out pretty soon, phase 2 was quite good for TNC and high expression p value 0.003
    also, broad pipeline. I know you were not impressed with their io cd 27 candidate, but what about Glemba?
    Thanks
    Dan

  21. Ohad
    SAGE data are impressive – 70% remission with at least 30 days durability.
    They are expanding Ph 2 . Could they use it as a registration trail?

  22. Dan (CLDX) – I was originally more excited about glembatumumab in breast cancer but now view it as a high risk program given the subset analysis they used in the previous P2 and the small numbers. The agent clearly has activity but it is unclear to me whether the response rate signal will translate to PFS/OS.

    Re: SAGE – Very nice, indeed. If I were MRNS I would do a quick trial in PPD but I don’t see a reason to own the company today.

    Andre (SAGE) – Impressive results but I doubt the trial can be used as a registration trial. Regardless, looks like they plan on pursuing this indication with the oral drug (currently in P1).

    Ohad

  23. Ohad, from previous earnings CC, Sage had wanted to use results of 547 to inform them what indications 217 (the oral version) is suitable for, including trial design. But after the strong PPD results, they seemed to have changed their mind for 547 by doing an expansion study.

    I see this quote from here : https://www.thestreet.com/story/13636098/2/sage-therapeutics-drug-eliminates-postpartum-depression-in-mid-stage-trial.html

    “The positive results from the phase II study support Sage’s hypothesis about SAGE-547. Looking ahead, the company is starting an expansion study looking at different doses of SAGE-547 and also enrolling women with moderate and severe postpartum depression.
    Sage’s CEO Jonas says the data from the expansion study, if positive, will be shared with regulators to determine if they are suitable for approval filing.”

  24. Ohad

    Can you share your insights regarding biotech valuations in general?we have traded in a very narrow range of 240-285 in the IBB for almost a year.do you see a test back to lows or can you see a breakout as sector has been relatively flat for 2 years.

  25. Mcbio316 – Don’t know them well but the focus on mitochondrial proteins is very interesting imo. LHON data aren’t as spectacular as ONCE’s data for a different indication but the delivery challenge is obviously higher.

    ohmsonite (SAGE) – Thanks, I wasn’t aware of that. One important factor is oral vs. IV administration, which could be important in the outpatient setting.

    Dave (IBB) – I am still pessimistic for the remainder of 2016 given the lack of catalysts, dynamic biosimilar landscape and pricing pressure. Hope things improve in 2017 (hopefuly with gene Tx leading the sector)

    Ohad

  26. Chris (TRIL) – I like the target CD47 and the fact they might have an agent with limited binding to red blood cells but I prefer to wait to next year as I don’t think they’ll have meaningful data this year and based on competing programs, I don’t expect an efficacy signal early on in P1.

    Ohad

  27. Ohad, ARQL announced pre-clinical data on a next-gen BTK inhibitor after hours yesterday. They claim the drug targets the C481S-mutant BTK at sub-nanomolar levels. This is apparently a big cause of ibrutinib resistance. I am assuming acalabrutinib (from AZN/Acerta), which is much further ahead (P3?), also targets this mutation. I would assume another player could still have interest in a next-gen BTK, even one that’s further behind, but it will be interesting if ARQL can try and differentiate their BTK from acalabrutinib. For starters, ARQL drug is reversible whereas acalabrutinib is irreversible.

  28. Hi Ohad,

    Any thoughts on the NASH biotechs e.g Genfit/Intercept? Everyone seems to think it has huge market potential.

    James

  29. mcbio316 (ARQL) – I think their Btk program is interesting but I wouldn’t ascribe a lot of value to it until I see more data. The compound is clearly active against the C481S mutation in the biochemical assay but in cellular assays the difference from ibrutinib is not that clear plus the poster doesn’t include an in vivo model in this setting. Not sure acalbrutinib inhibits this mutation but Genentech’s new Btk program (GDC-0853, also non-covalent) clearly does and it is already in P1.

    http://meetinglibrary.asco.org/content/168131-176

    Alex (HRTX) – I like their post-op pain program, not that optimistic on the CINV product though… In any case they are too expensive imo.
    Re: ARQL see above.

    Not sure about MRNS, perhaps tailwinds from SAGE’s PPD’s data.

    James – Sorry, not very familiar with NASH. Agree about market potential.

    Ohad

  30. Ohad

    You haven’t commented regarding TRVN in a while.with the failure of the heart drug,and with the stock somewhat depressed, would seem like a good time to start positioning for the olicerdine data and probable run up leading into the 1st qtr of 2017.what potential do you see for the pain drug if and when approved?

  31. Really nice work Ohad – as always. I became a recent follower of your posts, but here to stay if you keep cranking out these types of quality manuscripts.

    I’m curious what you think about PTC Therapeutics, Sarepta, and others racing in this gene editing space. You mentioned that the first gene therapy approved could be Sparks’. PTC was approved in countries across the world (albeit conditionally).

    Also, curious to see if you are diversifying your gene editing portfolio with others as well… to de-risk.

    Thanks a ton.
    Nick

  32. Hi Ohad

    Do you have an opinion on CTMX (CytomX)? Especially their technology and current valuation.

    Many thanks
    Kevin

  33. EXEL
    Hi Ohad,
    It almost doubled since your report since Feb. Do you think there is more room to run with sales data for Cabo and possible pay out of convertible debt? Or current valuation being too rich and overbought in case of no BO? Do you think the potential market size for Cabo is still underestimated in view of excellent OS data in RCC? Especially if Cabo will be used eventually for Opdivo failure as well, isn’t it like Cabo will be used in majority of second line cases?
    June was so rough for me with ESPR and MRNS.
    Regards,
    Gene

  34. Hi
    Ohad

    Arry- what is the next catalyst for ARRY, seems to be not going anywhere. What is the risk level for owning this stock at current price.

    Does ARRY still have 100% institutional holding?

    Can you share your expectations with this stock.

    Thank you

  35. rp (SPHS) – Sorry, don’t know them well.

    Dave (TRVN) – I am still positive about olicerdine as I view it as a de-risked agent that could fulfill a true unmet need and replace opioids in high risk populations. Although not a perfect comparator, I view PCRX’s Exparel as a good benchmark for the commercial opportunity and unmet need (acknowledging that Exparel is indirectly competing with opioids). Exparel is generating $250M in the US based on limited use that will likely be expanded and is given once. I believe TRVN is looking at a $1B opportunity globally and plan to add later in 2016.

    Nick (PTCT) – Thanks! I am not optimistic about PTCT and SRPT, I just don’t think the drugs work. Just to clarify, these are small molecules, not gene therapies/editing drugs. Gene editing companies are very exciting (EDIT,NTLA) but too expensive IMO.

    Kevin (CTMX) – I like the technology a lot but not the current valuation.

    Gene H (EXEL) – I am still bullish about EXEL although I am not sure how Q2 sales will look like (cannot be significant given approval in April). I hope to see them paying back some of the debt with the Ipsen money ( additional 60M after EU approval) and Japan deal already in Q3 which should remove a major overhang. If CABOSUN data demonstrate a real benefit over Sutent then I agree that cabo should become a very popular drug in Opdivo RCC failures. HCC is becoming more interesting following positive data with regorafenib.

    Ruhu (ARRY) – The major event for ARRY this year is P3 data for selumetinib in kras+ NSCLC. It’s a high risk binary event but the P2 had an encouraging signal so I feel comfortable owning shares going into the readout. Positive results coupled with recent data for EXEL’s cobi in CRC with PD-L1 could make MEK inhibitors very popular. Needless to say, ARRY is a very high risk stock just like any other small cap biotech.

    Ohad

  36. Ohad, timely news out of BMRN today with their strong Hem A data. Curious what impact you think this has on the other Hem A players, in particular ONCE. Are they too far behind (yet to even enter clinic whereas BMRN will be in pivotal trial soon) or will there be a chance to differentiate or otherwise room for a few players here? Would be curious to hear more on any differences in vectors that BMRN and ONCE are using for Hem A. I did see some commentary on whether or not the BMRN data might even be too much of a good thing and might raise questions on LT safety issues.

  37. HI Ohad, you think gene editing companies like EDIT and NTLA are too expensive. I believe so too. What would be in your opinion ,an interesting share price for these two to consider to get in? Thanks

  38. Ohad
    BIIB/IONS had good Ph 3 data today. Does it effect your opinion of AVXS?
    They have advantage of one time treatment, but may have difficulties to find pts to complete the trails, after competitors treatment is approved.

  39. mcbio (BMRN/ONCE) – BMRN’s data were very exciting because they show impressive expression and clinical benefit (bleeding rate) in Hem A, which is more prevalent and challenging for gene therapy. While BMRN clearly have a lead in HemA it’s still early days and the market is probably big enough for more than 1 product.
    The issue of differentiation among the different vectors and genetic constructs is very complex with many open questions. BMRN and QURE use AAV5-based vectors which appear to be less potent and require higher doses. This may have safety implications and necessitate co-treatment with steroids at least in some settings. ONCE’s proprietary vectors are also AAV-based but are believed to be more potent, as evidenced by the low doses they use. DMTX has liver-specific vectors and could have P1 data soon.

    Alex (AUPH) – I certainly hope so but this event is very binary. Don’t think Neovacs is a direct competitor.

    Richard Baker (ADXS) – Sorry don’t know them well

    Lgonber (EDIT/NTLA) – As both companies are still far from the clinic they would have to go down by at least 50% in order to make the risk worthwhile imo.

    andre (AVXS) – I don’t think AVXS will have a hard time penetrating the market or getting patients if their treatment continues to show this level of disease stabilization/improvement. If AVXS works, it should become the preferred treatment option.

    Ohad

  40. Hi Ohad

    Any thought on ACAD , They have P2 result in Q4 this year for ADP.

    Thank you

  41. Thanks for your thoughts on the editing companies. Agree with your price targets. Are you still bearish on IBB? It has had a big run since end of JUne from 240 to 298. looks like sentiment is positive and many bios closed at HOD. I
    Thanks again for your opinion

  42. $EXEL What do you think of the earnings ? When do you anticipate the Japan deal being done ?

  43. steve (ACAD) – Sorry, don’t know them well.

    Dan (SAGE) – Thanks for providing the link, I wasn’t aware of this program. In any case, I don’t think it should be viewed as a competitor for SAGE because SAGE is developing NMDA agonists whereas AV-101 functions as an NMDA inhibitor.

    Lgonber (IBB) – Yes I am still bearish on IBB as I think the fundamental challenges (pricing, biosimilars, few big drug launches) will take their toll.

    curiousgeorge (EXEL) – Numbers were very good imo, implies a strong launch and dispels concerns about Opdivo geting all the 2nd/3rd line patients. If we factor in inventory buildup and the 9 weeks on the market, annualized run rate is $100M, which is pretty nice.
    Hard to speculate about a deal in Japan, don’t know why it’s taking them so long but the quarterly numbers should give EXEL leverage at the negotiation table imo.

    Al (EXEL) – Thanks. Now we need to hope the company will use the opportunity to pay back some of the convertible debt later this month.

    Ohad

  44. $EXEL What is your price target this month for Exelixis and towards the end of the year ? How do you anticipate the arbritration battle ? I think Exelixis will win it by the way, the lower price on Cobi is quite obvious. Do you think they will pay them back in stock or cash or a combination of both ? Can they pay them back in 2019 with just the amount they borrowed ?

  45. $EXEL
    Hi Ohad, Congrats to all in Exel. Finally I was able to put MRNS and ESPR mess behind. I decided to hold all my shares in Exel. The only thing bothers me is what’s gonna happen in the short term IF they convert 2018 debt with ALL stock conversion. The co’s valuation will stay the same,but what about the valuation of my holding? 10 – 20% cut? Is my concern legit? I’d like your opinion in sp move in case of ALL stock conversion. TIA. Gene

  46. $EXEL
    http://m.news.bms.com/press-release/bristolmyers/bristol-myers-squibb-announces-top-line-results-checkmate-026-phase-3-stu
    Thoughts:
    1) BMY will look at EXEL more closely for combinations due to their 1L failure in lung cancer using Opdivo. RCC, and Lung are two top markets for IO drugs and Exelixis presumably works in both. There was a mention of potential in lung cancer combination trial during the earnings call.
    2) Japan deal could be made now that earnings are out, they might be asking for more money due to Cabosun now being pursued for FDA approval for 1L RCC albeit confidentially.
    3) After Japanese deal, and Ipsen European payment Exelixis might have a larger sum of money to pay down the convertible debt in cash and stock combination.
    4) Potential bidding war for Exelixis between BMY, Pfizer, and Roche.

  47. $EXEL
    1) BMY will look at EXEL more closely for combinations due to their 1L failure in lung cancer using Opdivo. RCC, and Lung are two top markets for IO drugs and Exelixis presumably works in both. There was a mention of potential in lung cancer combination trial during the earnings call.
    2) Japan deal could be made now that earnings are out, they might be asking for more money due to Cabosun now being pursued for FDA approval for 1L RCC albeit confidentially.
    3) After Japanese deal, and Ipsen European payment Exelixis might have a larger sum of money to pay down the convertible debt in cash and stock combination.
    4) Potential bidding war for Exelixis between BMY, Pfizer, and Roche.

  48. $EXEL Cabosun being pursued as 1L was mentioned in the earnings call without them directly saying they are filing for approval so i am assuming they are doing it confidentially to set lower expectations and reveal the outcome only when it is there. This has been their practice since the Comet failures.

  49. curiousgeorge (EXEL) – It depends on whether they can get money from EU approval or Japan deal and repay a significant portion of the convertible debt. If they do, the stock could continue to climb towards 13-14 imo.

    Gene H. (EXEL) – IMO it would be inconceivable to repay the debt in shares when they have so much cash and burn rate will be reduced dramatically this year.

    James Eslea MacDonald (BMY) – Amazing, that’s probably the biggest biotech news in 2016 to date. It was clear all along that PD-1 antibodies have differential efficacy based on PD-L1 expression, BMS relied on the effect in PD-L1 high expressers to be strong enough to push the entire population to a stat sig benefit and got it wrong.

    curiousgeorge (EXEL) – Not sure BMY’s failure will have an impact here. Agree about te strong launch being able to lead to a rich deal in Japan. It is still unclear whether they will be able to file in 1L RCC based on CABOSUN, to me they sounded quite cautious on the call.

    Ohad

  50. Bespoke Investment Group analysts note that the bear market for biotech is now over. Since June 27, the industry index is up 22.6%, which is above the +20% threshold for a new bull market. The analysts note the recent bear market was the longest on record for Biotech at least going back to 1993. The median bull has been a 51% gain. Biotech bulls have historically lasted roughly one year — which bodes well for the current bull, since it’s just 37 days old.

  51. Ohad, Thanks for your great comments. Any opinion on Heat Biologics (HTBX). It’s recently doubled but still way down for the year. Earnings out this week. Thanks

  52. $EXEL If they were to pay back in cash what do you think is the payback amount ? When do you think they will be able to pay back that amount given their cash flow, and existing cash reserves ?

  53. $EXEL Assuming Japanese deal is at 100 million upfront payment, and 60 million from Ipsen that is 160 million. Assuming they make 60 million for 1 quarter that comes to 240 million. Assuming cash repayment is around 300 million, that leaves 60 million short. It means they might want to increase the Japanese upfront payment to 160 million or Genentech is told by JAMS to cough up $150 million and give 20 percent royalties on exUS for contract breach regarding Cobimetinib, that gives them plenty of room to repay the debt in cash. All in the realm of optimistic possibilities. Realistically, it is fairly obvious that Genentech intentionally lowered the price of Cobimetinib to an unfair amount so my gut tells me that they will win the JAMS claim. The question is how long does it take for JAMS to decide on arbritration ? What do you think of all the scenarios i have posted ?

  54. $EXEL I don’t really know how JAMS settles this disputes so the $150 million punitive charge and 20 percent royalty ex US is a guess based on some news articles about other companies having settled such disputes before.

  55. Howard Partner – Agree about sentiment being much better but I still don’t see how the field can grow in the coming 6-12 months.

    Wood Beal (HTBX) – Don’t know them well but in general I am not a big fan of their approach.

    curiousgeorge (EXEL) – I hope they will repay at least $150M of debt (60M from Ipsen after EU approval and 100M from cash position). Burn rate will go down dramatically going forward with the potential to reach break even next year so I am not concerned about cash position in the short run.

    Ohad

  56. Hi Ohad
    Congrats on EXEL and thanx again for your invaluable help.
    I’d like to revisit a past comment I made months ago about the down side of investing rather than trading in BIS.

    On 1/12/2016 IBB closed@ 296.20 and BIS@ 36.96
    On 8/04/2016 IBB closed@ 296.15 and BIS@ 30.87

    That’s some serious loss due to time decay.

    Regards
    Gene

  57. Gene Mc (IBB/BIS) – Thanks. You are correct, using leveraged short ETFs have this inherent drawback. I still think it’s a plausible “hedge” if one believes the sector will underperform in the near future.

    Ohad

  58. $ESPR What do you think of the conference call ? Is there still a risk of FDA rejection in Phase2meeting ?

  59. Ohmsonite (ARRY) – Thanks, CRTh2 has been around for a long time but couldn’t really take off, not sure why as the rationale and preliminary clinical evidence are there. In any case , Array has other issues to deal with today…..

    curiousgeorge (ESPR) – There is always a regulatory risk especially in ESPR’s case although expectations today are so low that I doubt there can be meaningful negative surprises. Most important data point is CVOT with PCSK9 early 2017.

    Ohad

  60. Hey Ohad
    What are implications of failed azn study for ARRY… nothing seems to work for them…
    Dan

  61. Dan/Mark (ARRY) – Have to admit I believed the P2 data were reliable…at a market cap of 500M given the long term debt and lack of dramatic near term catalysts I prefer to get out of the stock.

    Ohad

  62. How about the NEMO NDA that ARRY is thinking. Maybe it will not be approved or doesn’t add any value.

  63. HI Ohad, regarding ARRY, what about phase 2 ARRY 797 data in September. If its positive, it could recover some of today’s loses don’t you think? Aren’t you optimistic about that data readout?

  64. Ohad
    LOXO now has 100M larger cap than ARRY including 170M cash – shows the higher value of the targeted therapies. Sad, but ARRY mgmt lacks vision.

  65. Alex (ARRY) – At this market cap and following the NSCLC failure I don’t think it’s likely.

    Ruhu (ARRY) – I actually think it has a decent chances of getting approved but commercial value is still limited imo.

    Lgonber (ARRY) – Agree, that could be a true wild card.

    Andrey (ARRY) – Agree about LOXO’s strategy of going after highly selective inhbitors of tumor drivers. All of their molecules were created at ARRY but the commercial implications are limited.

    Ohad

  66. Looks like EXEL has no desire to pay convertible debt down with cash. I dont understand how this is good for the common shareholder. Upside is I think they are a strong buyout candidate.

  67. @JH: It sounds like the deal they negotiated w/ a couple of large holders doesn’t mention paying the remaining outstanding interest on those bonds; I wonder if that means they are now spared those cash payments on the ~$168mm face.

    If you read the prospectus for the bonds, a redemption of the bonds by Exelixis triggers a bond holder’s right to convert to stock (within a 2 day window), so they wouldn’t have saved the shareholder from that dilution upon redeeming.

  68. I would have to see how much money in interest they saved. I Still dont view it positively. But I will be happy if they pay off the remaining 100+ million in cash. Overall they need to really clear out debt and sign Japanese deal.

  69. $EXEL It seems to me their aim might be to get rid of the convertible completely. SO they might have selected bond holders like Bakers Brothers to negotiate with and give them common shares, and use new money coming to be able to pay the rest of it. It is actually a good move. Because the average 50 day share price will not be that high if that is what is used to calculate the payback amount to the remaining bond holders in cash. Dilution might lower the price, and hence lower their eventual payout after the Japan deal happens and before ESMO.

  70. Ohad, I came across a recent Swiss IPO called GeNeuro that is targeting a human retrovirus for MS. They think it could be a fundamental cause of MS. Have you heard of such an approach and do you think it has any merit? They are partnered with Servier but kept U.S. and Japan rights.

    P.S. I decided to bail on ARQL in front of pivotal P3 tivantinib data. I don’t like how management barely even discusses the pending data anymore and the shift to focus on discussing the early-stage drugs seems like a bit of a red flag to me. But, we’ll see…you never know I guess. The clincher was they seemed to guide that there won’t be any meaningful new data reported on their other drugs in front of the pivotal tivantinib data.

  71. jh (EXEL) – I am also quite frustrated by the fact they issued shares at such a low price but I want to believe they didn’t have a choice according to the agreement they had with the debt holders. I think it will take 6-12 months until they become a buyout candidate as one of two things needs to happen: Strong RCC launch with >170M in 2017 sales OR positive HCC data (still a long shot but I am more optimistic following rego’s data).

    Wildbiftek (EXEL) – Since they can technically repay notes in cash only from Aug 15, I hope they will announce some redemption of debt next week but that’s pure speculation.

    curiousgeorge (EXEL) – To me, getting rid of the debt is a top priority and as you mentioned, the 2016 setup has plenty of catalysts to leverage for that (EU approval milestone, Japan deal, ESMO and potentially HCC data).

    mcbio316 (ARQL) – Haven’t heard of GeNeuro, quite a provocative approach…

    Re ARQL – I tend to agree there and also plans to reduce exposure prior to P3 readout and then get back in for the Akt and FGFR readouts in 2017.

    Ohad

  72. ARQL: I think the valuation of ARQL is already low. Everybody thinks that P3 tivantinib will fail. So maybe this will be no major event and the P3 tivantinib readout is at least an interesting lottery ticket.

    Ohad, a question to the German biotech Medigene. For some time they try to find a partner for the solid tumor indication with their TCR technology. But there is no success message until today. What is your opinion about this fact?

    Thanks.

  73. Hi Ohad,

    EXEL: Note that they said on the conference that they would be transparent about the interims for CELESTIAL (so they haven’t occurred yet.) They will presumably be consistent with what they have done in the past and announce full enrollment as well.

    RESORCE (OS over 33 month time frame): began May 2013, enrolled 573 (2:1 over 178 locations) and read out by May 2016. (7.8 months median OS for placebo arm 10.6 months median OS for regorafenib arm)

    CELESTIAL (OS over 38 month time frame): began August 2013, will enroll 760 (2:1 over 106 locations), and targets 621 events (so interims at 310 and 465 events.) Has not fully enrolled and first interim at 310 hadn’t occurred as of early Aug 2016.

    It’s hazy at present but CELESTIAL is probably going to fully enroll soon and it seems like a good sign for efficacy that the first interim hasn’t occurred yet. They originally planned on a readout this October and this has since been pushed into 2017.

  74. Hey Ohad
    How. Ome you are not con in ed. Y HTBX technology? Their ComPact platform seems like an elegant solution, providing the possibility to enable wide antigen targeting combinations with just one therapeutic. Moreover, considering BMY’s recent p3 failure, isn’t it obvious that such technologis will be added to checkpoint inhibitors? ThAnks! Dan

  75. Hi Ohad,

    AUPH has had a bit of a run-up into data expected later this month. What do you see as the expected range for the stock upon read out? Given that they need to raise money before the end of the year, how much upside do you think is left?

    Thanks,
    sherk

  76. Ohad, just curious where your 5-10% royalty rate RGNX is due from AVXS on AVXS-101 is from. Has RGNX formally disclosed that or is that your best guess? Also, do you think that is typically the rate they are due on their other partnered programs?

  77. Peter – $EXEL It keeps the redemption value of the remaining bonds low so they can redeem the bonds at a lower payout. You would have to read the terms of the bonds in the prospectus to try to figure it out, it is complicated.

    $OCUL – What is your opinion ? Do you think the product is useful ? Can their single center trials pass FDA ?

    $ARQL – Aren’t there any meaningful third quarter catalysts ? I think there are based on FGFR inhibitor data coming out in 3Q.

    $LIFE – What do you think of their platform, insider buying, and Bakers position ?

  78. AUPH – are you going to sell now?
    No dose response, death imbalances and need for financing …

  79. $LIFE Tang Capital Management LLC increased stake by 47% He has a profile of picking bullish biotech stocks. Checkout insider monkey.

  80. Hello … Back to the subject of your last posting. Any comments on the prospects for the new P1 study combining Tivozanib and Opdivo in RCC? The claim is that Tivo should perform better than other anti-VEGFs in combination therapy, due to lower overlapping toxicities. Chris

  81. Toby (ARQL) – Yes, expectations for the METIV study are low but I still think the stock will take a hit if the trial fails. Sorry, don’t know Medigene’s TCR technology well.

    Wildbiftek (EXEL) – I am cautiously optimistic on CELESTIAL based on the RCC data and the fact that both Nexavar and regorafenib (pan-VEGFR inhibitors) prolong survival in liver cancer. Beyond that, I wouldn’t read too much into delayed interim analyses, which can go both ways.

    Dan (HTBX) – Yes there is obviously room for complementary technologies to PD-1 but I am not sure this is the right approach.

    sherk (AUPH) – Still didn’t hear the webcast (just got back from vacation) but I will take the market reaction as a reliable indication. i.e. it doesn’t look good.

    Kenny (BMY) – Don’t have a strong opinion there, not covering big pharmas.

    mcbio316 (RGNX) – In their 10K they disclose royalty rate of mid-single to low-double digit. What I am still trying to understand is whether royalties are due after the original AAV9 patent expire.

    curiousgeorge
    OCUL – Sorry, don’t know them well.
    ARQL – Yes they should have more data this year for both FGFR and AKT in cancer and Proteus but the METIV readout is much more meaningful as a P3 data set.

    LIFE – Yes I still like the platform as a very high risk bet. always good to see insider buying.

    Dan G/Alex/ande (AUPH) – Still didn’t hear the webcast (just got back from vacation) but I will take the market reaction as a reliable indication. i.e. it doesn’t look good.

    Richard Baker (SNDX) – I was somewhat cautious on their P2 data, looks like they are using the immuno-oncology hype.

    Bouschka (TRIL) – I like CD47 as a target and recent activity with other companies certainly makes the area super hot but so far clinical data is very limited with Forty Seven’s mAb. TRIL’s approach of using Sirp-Fc could be differentiated safety-wise given its RBC sparing profile (still needs to be proven in humans)

    Chris (AVEO) – I still think tivo could be the best tolerated VEGFR inhibitor when added to PD-1 backbone. Still remains to be seen if combo is better than sequential treatment.

    Richard (KPTI) – I think I’ll sit this one out given the recent negative readouts in my portfolio and other biotechs.

    Ohad

  82. Ohad, can’t recall if I mentioned before but I’m long a small-cap Polish biotech called Selvita. Today they announced that the FDA accepted their IND for what they are calling the first dual PIM/FLT3 inhibitor for AML. Would be curious to hear your comments on this approach. This is their lead drug but they have a pipeline of novel drugs to follow (2nd targets CDK8 for cancer). Attached is their most recent presentation which details how they think their lead drug is differentiated from other AML drugs: http://selvita.com/images/pdf/PPT/selvita%20corporate%20overview%20bes2016.pdf .

  83. Ohad,

    Do you have any thoughts on PTLA and their Factor Xa inhibitor antidote? Just received a CRL, but I’m debating if this is a buying opportunity for something that is an un-met need that will eventually be approved.

    Al

  84. $LIFE I think they can get approval based on a P2 since there is no approved treatment in the disease area they are targeting. They have a P1/P2 on going at the moment, and it is a multi center trial with 20 patients and a placebo control arm. I am thinking that if they can prove that it works they get approval.

  85. Fyi about LIFE, Baker Bros. dumped their entire stake of 2 million+ shares. Obviously they had been by far the largest shareholder.

  86. On LIFE, I like that they are doing what seems to be completely novel work but the prior data didn’t seem all that convincing to me (particularly MRI). I’m willing to wait for some more definitive data even if that means “paying up.”

  87. Hey man
    Hope your vacation was good . I was just wondering what your thoughts were on AUPH after you’ve reviewed the latest releases

    Thanks
    Tom

  88. $LIFE John Day, Director, Neuromuscular Division and Clinics, Stanford University name is on one of the clinical trials Evaluate Safety and Biological Activity of ATYR1940 in Patients With Early Onset Facioscapulohumeral Muscular Dystrophy (FSHD) High profile individuals from respectable universities are careful to put their name in association to drugs they don’t think will work.
    Kennedy Krieger Institute; The Johns Hopkins University School of Medicine, they are participating in another trial.

  89. $LIFE Polaris Venture Management Co holds its position in Atyr, it also has interesting holdings like below
    OCULAR THERAPEUTIX INC
    ATYR PHARMA INC COM
    T2 BIOSYSTEMS INC COM
    SELECTA BIOSCIENCES INC COM
    GENOCEA BIOSCIENCES INC COM
    BIND THERAPEUTICS INC COM
    TREVENA INC COM
    FATE THERAPEUTICS INC COM real – cheap now
    CERULEAN PHARMA INC COM – real cheap now
    PULMATRIX INC – real cheap now

    What do you think of some of the other holdings ?

  90. mcbio316 – Thanks, will take a look. FLT3 is becoming quite competitive but they have an interesting twist with PIM. As always one has to wonder if hitting another target(s) will have safety implications.
    CDK8 is a target people have been exploring but so far interest appears lower than other isoforms, especially transcription-related CDK7/9.

    Al (PTLA) – Don’t know them well but looks like their issues are manageable.

    curiousgeorge/shark/mcbio (LIFE) – I wouldn’t count on the ongoing open label non-randomized P2 in FSHD despite the clear unmet need. I thought data so far are encouraging with some dose dependent effect with limited treatment duration (anti-drug antibodies are a concern) but agree this is still a very high risk and the market is not being generous with early stage companies like LIFE.

    Tom (AUPH) – Data set is too messy, unfortunately…

    Ohad

  91. $LIFE Are you saying that you would not count on an approval based on P2 ? by stating the following “I wouldn’t count on the ongoing open label non-randomized P2 in FSHD despite the clear unmet need.”
    I think you are saying that the results are encouraging, the antibodies side effect i think has been mitigated by doing intraveneous transfusion.

  92. Hi Ohad, if I understood wel, you sold ARRY after last data readout failure? Art you then confident in COLUMBUS readout, which is happening in few weeks?
    thank you

  93. Hey Ohad
    just curious to know your decision about AUPH; I have sold 1/3 and at the moment plan to keep the rest– but having my doubts. You said the data are a mess… however, given the severity of the indication and the fact there are no better alternatives I am trying to be patient…

    Good news for STML – BT designation by FDA, they are also running 4 different trials for sl-401, and have started ph1 for XPO1 drug candidate. It seems that their valuation might be on the low side? what do you think? any chance of approval of Sl-401 on p2 study they are close to completing?

    Have you had a chance to look into other CNS companies more carefully… namely RLMD and VTGN; both have very low valuation (<$30M) and are reasonably funded; what's more, RMLD has a reasonable pipeline.

    Another company with low market cap that seems interesting is VKTX – they are in the NASH space, as well as a p2 SARM modulator for patients recovering from hip fracture. This is supposedly a significant market, with 300k patients needing treatment every year.

    Thanks!
    Dan

  94. Ohad, $EXEL paid off remaining convertible debt. Company is in a healthy position moving forward – is a buyout in q4 a possibility especially if 1L RCC is accepted?

  95. Hmm, adding onto Steve. If I am reading correctly the PR, debtholders can convert anytime before end of October. So why would $EXEL set the conversion rate for the notes already? Could they have gotten a lower / better rate in the future so that it would be less dilutive? Apologies in advance if I’m misunderstanding the terms but it seems early…unless someone is urging that $EXEL do so earlier

  96. The last three SEC filings after Q2: conversion of $148m debt via dilution via 32m shares; privately negotiated conversion of an additional $48m of debt via dilution 13m shares; today’s cash redemption of remaining $48m debt. Surely someone was in a hurry to payoff the debt (looks like they negotiated 45m dilution and $48m cash- not bad). Do they still have the Deerfield notes?

  97. Steve,
    The last portion could also be issued in common stock. EXEL called the notes, so the holder can request par value of the bond in cash or in stock. I’m guessing stock will be the easy decision. Regardless, important to note, this issuance isn’t fully dilutive as the $275M in debt is now retired. It creates a nice improvement in the balance sheet. Yes, significant increase in float, but not fully dilutive. EXEL will likely now have over $400M in cash at the end of the quarter ($60M coming from Ipsen EMA approval) with only $187M in remaining debt. They should be cash flow positive on organic revenues by Q4, considering no more interest payments on the notes.

  98. Also, the Deerfield notes have some interest payment obligations thru 7/2017, so EXEL is obligated to service the interest on those notes thru that time. No incentive to retire prior to then, so I would expect they wait until next summer and then retire with cash at par value, which is $107M. Then the only debt left would be the Silicon Valley Bank revolver at $80M. That could be retired at any time, if they so choose.

  99. Ohad, thanks for comments on Selvita. Curious to hear any more comments from you if you get time to take a closer look. BTW, speaking of CDK7/9, SYRS claims they have a first-in-class CDK7. Will be in clinic 1H17 looking at AML initially. Not sure if you have looked at them. Seems pretty cheap and good management.

  100. Hi Ohad
    do you think Rucaparib have a decent chance in prostate?
    what do you think on getting back to CLVS?
    thanks

  101. curiousgeorge (LIFE) – Correct , I think they will have to do a new, larger placebo controlled study to get approval. Don’t see how IV administration deals with immunogenicity.

    Richard Baker (TCON) – It’s been a while since I looked at them. Major problem from what I recall they had some anecdotal cases with Avastin but hard to interpret without a control arm.

    lgonber (ARRY) – I think COLUMBUS has a high probability of success given the MOA is validated by two other BRAF+MEK regimens in this population. Unless ARRY shows something phenomenal, I don’t see investors getting excited about it…

    Rodolfo -Sorry don’t know them well.

    Dan (AUPH) – I decided to sell and plan to do it on my next portfolio update (hopefully this Sunday). Lupus nephritis is indeed a very serious disease but the alarming mortality imbalance casts too big of a shadow on the data.

    Agree re:STML – BTD in hand and results continue to look encouraging. Agree they are cheap, not sure about the right timing to accumulate more.

    Sorry, don’t know RLMD, VTGN or VKTX well.

    Steve/Garry Xo/AMC (EXEL) – yes, they got rid of the 2019 debt overhang but at a heavy cost of dilution. Turns out the cash redemption was never a real option which makes me wonder why they didn’t sell shares to begin with and get it over with. They still have the Deerfield notes due 2018 and SVB loan, which they’ll hopefully pay back in cash.
    Personally I don’t think someone will buy EXEL before seeing additional sales performance and/or the HCC data.

    AMC on August 24, 2016 at 2:06 pm said: Edit
    Steve,
    The last portion could also be issued in common stock. EXEL called the notes, so the holder can request par value of the bond in cash or in stock. I’m guessing stock will be the easy decision. Regardless, important to note, this issuance isn’t fully dilutive as the $275M in debt is now retired. It creates a nice improvement in the balance sheet. Yes, significant increase in float, but not fully dilutive. EXEL will likely now have over $400M in cash at the end of the quarter ($60M coming from Ipsen EMA approval) with only $187M in remaining debt. They should be cash flow positive on organic revenues by Q4, considering no more interest payments on the notes.

    mcbio316 (SYRS) – I have been following them since the covalent CDK7 publication in Nature with great interest. I like the super-enhancer approach with CDK7 but tox is an open question.

    Alex (CLVS) – Rucaparib is clearly active but I am not sure it is competitive enough after TSRO’s data. No plans to get back to CLVS.

    Ohad

  102. Hi Ohad
    AUPH – about alarming mortality..
    ” All, however, were assessed by study investigators as being unrelated to treatment, said Neil Solomons, chief medical officer, during Aurinia’s investor call Monday morning.
    Nor were the deaths wholly unexpected, Solomons added. “We know this is a serious and life-threatening illness.” He also pointed out that, of the 13 deaths, 11 occurred in Asia, a finding consistent with other LN studies and “probably related somewhat to patient management and severity of disease in this patient population.”

  103. Hi Ohad
    regarding TRVN as their pivotal P3 studies are scheduled to report Q1 2017. Just trying to figure out the possible permutations for results.
    If they show statsig efficacy for pain compared to placebo but not when compared to morphine, do they still get approval?
    If yes, but there is no difference in AE to morphine, can they get approval?
    If yes, how commercially viable a product do they have?
    To me, looking at P2 studies, they have a clearly effective drug for pain, but hard to see a difference in AEs compared with morphine.
    thanks

  104. $LIFE The PK of Resolaris was generally well behaved across all dose cohorts and throughout the study. Anti-drug antibodies (ADAs) were confirmed in approximately 40% of the dosed patients. ADAs were of low titer and had no significant effect on PK. Manual muscle testing (MMT), which measures muscle strength, was performed across 15 selected muscle groups. The composite MMT score showed approximately 0.5% improvement with Resolaris compared to a 1% decline in the placebo treated patients, indicating no reportable disease progression by this technique in either placebo or test article groups after three months of weekly treatment.
    I think the intravaneous method is used now to prevent patients from having injection site related reactions. I suspect that the drug is working, and muscle strength is generally slower to regain, kind of like you have to keep on going to the gym for a while. Mobility was gained and activity independence so that points to the therapeutic effect.

  105. $CLCD has a P3 Migraine readout coming out in 2 weeks, have you looked into their lead drug Lasmiditan at all? Shows anti-migraine effect on par with Triptans, however slightly more AEs reported. Does have a leg up on reaching cardiovascular risk patients since no vasoconstriction.

  106. Array is evaluating different options to advance the ARRY-797 program, including advancing it on its own, partnering the program for further development and commercialization or creating a separate company based on this asset.

    Is this exciting ?

  107. Ohad
    when last year CELG pulled away from the Morphosys collaboration, there were some talks that they are looking into a new approach in MM, and KPTI was in the mix.
    What do you think about their technology – SINE targeting XPO1.

  108. Alex (AUPH) – I know but still…

    RNMD (TRVN) – From what I understand they can get approval based on superiority over placebo but that doesn’t seem to be a viable commercial profile imo. I am optimistic about their chances of reaching similar pain alleviation with fewer side effects vs. morphine based on their P2 but the risk is always there.

    curiousgeorge (LIFE) – There are reasons for cautious optimisim but lets not forget data are very early. I thought they started with IV.

    John (CLCD) – Sorry, don’t know them.

    Ruhu (ARRY) – It’s interesting, don’t think it’s exciting at this stage.

    Chris – Don’t think the CNAT news are that interesting. I like ABEO and plan to add them on Sunday.

    Bouschka (TGTX) – The orphan desugnation doesn’t change my overall skepticism, especially after INFI’s data.

    andre (KPTI) – I really like the approach targeting XPO1 but we need to wait for the myeloma update next week. The market looks more optimistic following the decision to expand the trial but the company’s behaviour is a little bit strange.

    Ohad

  109. Hi Ohad,

    I looked at ABEO and liked them a bit too. It gave me a sense of credibility that P. Flanagin is running the Sanfilippo program as the company itself seems to primarily just license programs and not do much if any R&D in house. One note of cautious if you didn’t notice they just filed an ATM. One problem I had though was they are quite vague on their royalties/future milestones in their filings. I get the sense they paid more but without knowing if its single digit royalties or 50% royalties I have a hard time investing. I emailed (but didn’t call) the company with no success. Do you have any idea on specifics (or range) what their royalty/milestone obligations are?

    Also on a related note I looked at RGNX after your mentioning them and like them a lot more actually. Again the problem I had was understanding their royalty obligations to GSK/U of Penn. The wording wasn’t clear to me Is it only specific to the hemophilia program or do they owe royalties on all licensed programs? To DMTX the filing states the following:
    “Dimension to pay us royalties on net sales, if any, intended to be approximately equal to the amount of royalties that will be due by us to Penn and GSK on such sales. ”
    Other programs did not have that language so while I’d like to think they don’t owe any to take a position I’d want to know for sure. Any help with this is a well?

    Thank you,
    Maurice

  110. hi Ohad,

    three questions on the topic of this post, gene therapy:

    1) can you comment on this AVXS report; interestingly even AF, not known as an IONS supporter, recommended to read it: https://de.scribd.com/document/322662073/AVXS-Report-Limited-Clinical-Data-Rampant-Avoidable-Conflicts-of-Interest

    2) Given the unresolved issues of GT companies (therapeutic effect wearing off + no retreatment possible with the same vector); does investing in “gene-therapy-defeaters” aka GTDs, for example:
    – IONS vs. AVXS on SMA
    – BLCM vs. BLUE et al. with BPX-501 on a variety of indications
    seem like a reasonable idea?

    3) Would you know additional platform-companies with a sound scientific rationale, which could be labeled as GTDs?

    Best Regards,
    SAMi

  111. In your view, is there more to Novartis’ decision to dissolve
    it’s Cell and Gene Therapy unit than the official PR suggests ?

  112. SAMi – UniQure has looked at retreatment, they have a few papers on their website with some mouse and primate data.
    http://www.uniqure.com/news/scientific-publications/

    Successful Repeated Hepatic Gene Delivery by Sequential Administration of AAV5 and AAV1 Vector Serotypes
    http://www.uniqure.com/uploads/Publications/AAV1-AAV5%20readministration%20ASGCT%20poster.pdf

    Successful In Vivo Re-Administration of AAV with the Use of Two-Step AAV injection
    http://www.uniqure.com/uploads/Publications/Readministration%20two-step%20AAV%20injection%20ASGCT%20poster2.pdf

    I think UniQure has gotten a pretty harsh shake from GT investors thinking their Hemophilia B data doesn’t measure up to Spark’s. The company is different than many others though in that they actually do in house research and have in house manufacturing capacity (2 locations). The expectations are quite low for the High dose but I wonder if the dose response will be more comparable to what happened in the BMRN trial where there was greater than an order of magnitude improvement in expression with a 3x increase in dose.

  113. Maurice – Thanks for the info.
    I don’t have ABEO’s exact royalty commitment but I assume that given their market cap any positive signals in the Sanfilippo studies will have a dramatic impact on the stock regardless of royalty rates.
    Re RGNX – I don’t expect their royalty obligations to be as high as what their partners agreed to pay them (typically mid-high single digit). Given their low market cap I feel comfortable owning them solely based on their partnered pipeline with the proprietary programs serving as a free option.

    Alex (AUPH) – The trial is already completed (probably some patients are still on the drug). Not sure what regulators will have to say going forward.

    SAMi – AVXS’ clinical data pack is clearly limited but to me the signal overshadows all the other issues. Risk is definitely there, of course.
    Re: competition, if AVXS-101 truly works, imo it is the only treatment that can offer real long term improvement to patients, especially in their early years. As a single IV treatment, I expect it to become the cornerstone of SMA1 therapy and everything else will be given on top. Also, I don’t agree all the data are subjective, mortality is quite an objective measure…
    Lastly, the conflict of interest issues they raise are real but I wouldn’t base my decision on that.

    I am sure that even if GT is a huge success, it won’t be successful for every indication and there will be a need for complementary approaches. Durability and re-treatment are option questions but even a 2-3 year window could be very clinically meaningful.

    Re-treatment with a different vector could also be feasible given the diversity of current programs.

    rodolfo – NVS was never that big in gene therapy so I don’t think it has a sig impact.

    Maurice – Thanks again for providing the information, I guess that re-treatment is a problem to worry about after we see long term safety and a 2-3 durability window. It shouldn’t be the barrier for GT imo as there will be ways to work around it.

    Ohad

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