Esperion and Aerie – Countdown to M&A

At first glance Esperion (ESPR) and Aerie (AERI) have very little in common. Although each company is focused on a clinically validated drug that employs a novel mode of action, the two products are very different: Esperion’s ETC-1002 is an oral cholesterol-lowering drug while Aerie is developing eye drops for glaucoma.

Yet from a market position perspective their situation is strikingly similar. To begin with, both companies address traditional indications characterized by heavily genericized markets and few innovative programs. Both indications require a huge global marketing infrastructure to reach meaningful penetration. In Esperion’s case, even getting regulatory approval necessitates initiating clinical trials in tens of thousands of patients. In other words, both companies must secure a partner or an acquirer by year end in order to extract maximum value from their drugs.

Esperion – Attractive value proposition despite long timelines

Esperion’s ETC-1002 is the only oral LDL-lowering in development with clear efficacy in humans. The drug is still ~3 years from approval (phase III start in Q4:15), but the commercial opportunity coupled with multiple expected de-risking events should lead to a transaction (most likely an acquisition) in 2015.

Clinical hold finally lifted – The first and perhaps most important event was removal of clinical hold after positive two-year carcinogenicity data. The hold, which was based on weak PPAR activation observed with ETC-1002, limited treatment duration to 6 months and prevented Esperion from starting pivotal studies. Esperion submitted the carcinogenicity data in late December/ early January and the FDA’s ultra-short response time (Feb 2, 2015) implies the package was spotless.

Important readouts expected in H1:15 – Additional catalysts include detailed results from a phase II combination study with Zetia (March 2015) for which top-line results were already announced. The company will report top line results from two additional randomized studies as add-on to statins (March 2015) and in patients with high blood pressure (Q2:15), respectively. Positive results (20% decrease in LDL-C) will corroborate the effect seen to date and pave the way for a broad registration program.

By Q3:15, Esperion may have a phase III ready asset based on 3 large phase II studies (600+ patients in total) and regulatory clarity. At that point, Esperion will strike a licensing deal or get acquired given the regulatory requirements for approval (long-term outcome studies in 30,000 patients). As a single bullet company (Esperion has two preclinical programs but their value is negligible due to their early stage), an acquisition looks more likely.

The list of potential acquirers is limited to large companies with a cardio-metabolic franchise and a global marketing infrastructure. These include companies with traditional lipid lowering assets such as Merck (MRK) and AstraZeneca (AZN) as well as companies with PCSK9 programs including Amgen (AMGN), Sanofi (SNY) and Pfizer (PFE). As an oral agent, ETC-1002 is expected to be slotted before PCSK9 antibodies and will probably be reformulated with statins and/or Zetia. Given the importance of PCSK9 antibodies to Amgen and Sanofi, it is hard to envision them acquiring a direct competitor such as ETC-1002 (even though eventually the two classes could address different patients across the spectrum). This makes Merck and AstraZeneca more relevant as acquirers. Lilly (LLY), which has a CETP inhibitor in P3 and a PCSK9 antibody in P2 is another potential suitor.

Aerie Pharmaceuticals – Imminent P3 results

In contrast to Esperion, Aerie is closer to market with its glaucoma drug, Rhopressa. The drug is in three phase III studies (Rocket 1-3), the first of which will have data by May 2015. All trials compare Rhopressa to Timolol, a commonly used 2nd line drug in patients who fail prostaglandins. Rhopressa demonstrated clear efficacy (5-6 mmHg reduction) in two phase II studies after a 4-week treatment. If this activity is corroborated in phase III, it could easily beat Timolol. Except reproducibility of phase II results, the primary risk in the phase III studies is durability of response (primary endpoint measured at 3 months).

Aerie plans to file for approval in mid-2016 after it has results from the three studies. Positive readout in Rocket-1 (May 2015) will be viewed as indicative for the other trials and could trigger a partnership or an acquisition. Aerie is also developing Roclatan, a fixed-dose combination of Rhopressa with Xalatan (most commonly used 1st line glaucoma drug). Based on positive phase II results for the 2-drug formulation, Roclatan is expected to start phase III in mid-2015 and has the potential to become a popular 1st line option.

The list of potential acquirers is even shorter in Aerie’s case. Two obvious candidates are the ophthalmology giants Alcon (Novartis [NVS]) and Allergan (Actavis). Valeant (VRX), which recently acquired Bausch and Lomb is another potential suitor.

The big question – Is M&A already factored in?

The key questions investors need to ask themselves is whether a takeout premium is already priced in, especially for Esperion which climbed from $16 to $66 in six months ($1.02B market cap). Aerie is up “only” 65% in the past six months and has a $665M market cap.

From a market opportunity perspective, Esperion appears better positioned as there are millions of patients who could theoretically benefit from a new lipid lowering drug. A recent piece from four CVS executives provocatively claims that PCSK9 antibodies could cost the American healthcare system tens of billions and beyond. Regardless of the feasibility of this scenario, their calculation definitely demonstrates the opportunity represented by patients who are either not adequately controlled by available drugs or are intolerant to statins. Even when conservatively assuming there are only 500,000 patients who need a drug like ETC-1200, the market opportunity is still in the $2.5B range in the US.

The initial market opportunity for Rhopressa is estimated at ~$700M in the US, which could double with Roclatan. But for what Aerie lacks in market opportunity, it compensates with time to phase III readouts (2015) and FDA approval (2017). In addition, safety risk for topical glaucoma drugs is lower compared to a drug that has to be given systemically such as ETC-1002. Another distinguishing factor is the lack of competition from other new treatments, whereas ETC-1002 will compete with PCSK9 antibodies (at least in some patient populations).

In order to reach a hypothetical acquisition target, I assume peak sales of $2B and $1B for ETC-1002 and Rhopressa, respectively. Using a sales multiple of 8, which is below industry average for smid-cap  and recently acquired biotechs (Intermune, Cubist), an 80% probability of success and a 25% discount rate  results in acquisition price tags that are 60%-70% higher than current prices. Therefore, both stocks can go higher in 2015 but they don’t look like multi-bagger opportunities.  Personally, I plan to keep my holdings and be opportunistic in adding more shares in the coming months.


P.S. – I am attending the TAT congress in Paris next week and will probably have limited availability to answer questions from Friday onwards.

 Portfolio holdings – February 22nd, 2015

Biotech portfolio - 22-2-15biotech etfs - 22-2-15

80 thoughts on “Esperion and Aerie – Countdown to M&A

  1. Thanks Ohad,
    well written and focused article.
    There was a press release this week about AERI. Rhopressa may have disease modifying effect by arresting fibrosis.
    Clearly the Phase III data are currently more important but when they are announce and if positive, such disease modification can give an edge to AERI and may increase their potential BO value.

    Any M&A thoughts about SAGE? They might be closer to acquisition than ESPR.

  2. Ohad, what do you think of the RGDO/Tobira merger? Do you see value in the combined entity?

  3. CLDX – received BTD for Rindopepimut. Does it mean that FDA believes in the Glioblastoma Data?

  4. Ohad

    quite impressed with your track record.are there any stocks in your portfolio that are multi bagger opportunities?
    Also, with the biotech indexes at all time highs,are you hesitant to put more money to work at these lofty levels or do you think besides a normal correction that the sector looks healthy for at least thru the end of the year?

  5. Ohad,

    Sorry for the non-sequitur: any thoughts on how Panobinostat’s approval on only stat-sig PFS + ODAC rejection affects Cabo’s chances in prostate cancer?

    Pazdur specifically cited Panobinistat’s distinct mechanism of action in an article as a reason for its approval. Cabo seems to be the only VEGFR inhibitor class drug that works, COMET-1 was on just as refractory a population, and it has at least as much phase 2 evidence backing it up. Against it though is a plethora of extremely good treatments in late stage prostate cancer that already exist, and I’m not especially familiar with the PANORAMA-1 trial and what sub-group analysis they were talking about; but the numbers from the ASCO GU abstract for patients with visceral mets:

    Doesn’t seem to be a part of the COMET-1 pre-specified protocol.

  6. andre – Thanks. I agree, indication of disease modification could be dramatic down the road if the company proves this in a more substantial manner (don’t know how exactly it can be demonstrated in humans).
    Re: SAGE, I don’t expect an M&A for them in the foreseeable future. It sounds like they would prefer to do a pivotal SRSE study on their own.

    Richard (RGDO) – I am not a big fan of chemokine inhibitors, which work great in animals but to date all failed in humans (with the exception of Mozobil, a CXCR inhibitor). Therefore, at the current valuation, I don’t think it’s attractive although some of their preclinical data is encouraging.

    andre (CLDX) – Yes, it means the FDA has a very favorable view of the data. Still need to wait for updated survival data later in 2015 to know if they’ll be able to file for accelerated approval.

    David – Thanks. That’s always a hard question to answer because I never know which stock will be the star and I am always surprised by how things turn out. By definition,smaller companies have a better likelihood to generate 5-7x return but they are also the riskiest. In my opinion, current valuations are generous so it will be hard to see dramatic returns in the coming year.

    Wildbiftek (EXEL) – Panobinostat’s approval is a huge surprise (not sure it will become an important myeloma drug, though given the problematic safety profile). I don’t see any read-across to cabo in prostate cancer because we are talking about different indications. In prostate cancer, overall survival is a must whereas in myeloma PFS is an approvable endpoint.


  7. Ohad,
    Regarding FMI:
    1. What do you think about the earnings report?
    2. What do you think about their prospects for 2015, as reflected in the conf call?
    3. I don’t usually go for quick trades, but it seems with only hours left for the tender offer, it’s easy money to just grab shares in the current market price and hand them over to Roche for $50. But of course, that doesn’t seem realistic, so what am I missing here? I do plan to hold on to my existing shares for the long run.

  8. Mike (NLNK) – Bottom line I think it will fail. Not a great believer in cancer vaccines and in this case earlier stage results were underwhelming imo.

    Aviv (FMI) – The number for Q4 and FY15 were positive but not that surprising (I wonder what was Roche-attributed portion in the 2015 guidance). Regarding the tender, Roche will only buy 40%+ of shares so there are still shares it won’t own after the tender. Not familiar with technicalities here.


  9. Ohad
    Do you have an opinion about LBIO? Their TIL Ph 2 data in 2nd line metastatic melanoma look solid and durable.

  10. Hi, Ohad.

    Do you listen the CC for EXEL, they said NCI will do the initiation of a new combination trial of cabozantinib with the PD-1 inhibitor nivolumab or the combination of nivolumab and ipilimumab in patients with genitourinary cancers, including bladder cancer. in addition, there will more results readout in 1H 2015. what do you think of EXEL now?

    Thank you.

  11. Ohad

    Can you be more specific about what you don’t like about cancers vaccines?seems like median disease survival of 15 months in phase 11 in pancreatic was good, given the tough indication. Happen to have owned nlnk for some time and was surprised at your comment.

  12. Hi Ohad, I held on to ARRY after some frustrating years because of what you blogged. Can I make a donation in your name to a charity of your choice? Let me know. Thanks. –Bill

  13. Ohad.I looked into the transcript of the Morphosys earnings call. It looks that 202 is not their main focus. They will present Ph 1 data on ASCO, and no new development this year. In the Q&A section they acknowledged the significant DARA advantage in technology and timing, so they sound like giving up 202 as mono-therapy and initiating pomalidomide & lenalidomide combo studies with MOR202.
    In the last update you said that 202 is the most important asset. With this new development, are you going to reconsider your Morphosys position?

  14. Ohad

    Abbv buy PCYC in $21billion, which company do you think will be the next PCYC?

    Thank you

  15. Hi Ohad,
    what do you think of Neurocrine Biosciences? Looks like they have iron in the fire.

    Thanks for your opinion!


  16. andre (LBIO) – Agree, results are very strong. Competition from “next generation” treatments such as immune checkpoints or CARs/TCRs is something to consider here (since 1ry market is melanoma).

    Mike – IDO is probably the hottest target in immuno=oncology right now. I wonder if BMS based their decision based on actual clinical data with nivo.

    steve (EXEL) – Still didn’t have a chance to listen to the webcast. Basically, P3 results in RCC in May make everything else marginal. PD-1 combination may not be that easy in terms of tolerability based on experience with Sutent/Votrient. I am still trying to make up my mind about getting back in before the RCC data.

    David – The main issue with cancer vaccines is that it’s hard to know if they work without a large randomized data set. Survival in small single arm studies are unreliable.

    William/druz – Glad to hear that and appreciate the good will but I prefer not to get involved on that front.

    andre (MOR) – I still think MOR202 is their most important asset. Didn’t listen to the CC but you can cound on Celgene not to give in easily.

    steve – Very hard for me to justify the PCYC deal. People are looking for the next candidates with marketed or late stage oncology drugs: Genmab, INCY, SGEN, MDVN etc.

    Alex (AVEO) – No, I stopped following them.

    Martin (NBIO) – Sorry, don’t know them well.


  17. hi Ohad

    CNAT chief medical officer resigning – does not sound good at all with NASH data ahead!?!

  18. Hey Ohad
    how’s Paris?
    Since you mention m&a in this latest post, and considering the PCYC buyout, I wonder if your thinking regarding CLVS changed (meaning adding shares) as they have two drugs that are close to finishing pivotal trials and could be on the market soon (before ESPN and possibly even AERI).
    Hope you are well!

  19. Christian (CNAT) – Don’t know if that should change overall thinking (it adds a little bit more risk on the already very high risk).

    Richard (CCXI) – I have looked at them in the past but don’t have a concrete opinion.

    Alex (APTO) – Yes I am following them, so far decided not to get it due to early stage and MOA (which is novel but unproven).

    Dan (CLVS) – Paris was awesome and the meeting was also great. I agree about CLVS as an imminent M&A target now that they have put the hyperglycemia concerns to rest. The recent deals (PCYC, Flexus) teach me I lost the ability to predict what a reasonable acquistion price is. Using PCYC as a benchmark, CLVS can certainly be taken out at a 70-100% premium, not including lucitanib.


  20. didn’t CLVS already want to shop itself a few years before?

    they are certainly one of the more likely take-out candidates

  21. Hey Ohad
    glad you enjoyed paris… no, do not get down on that, nobody, I think, predicted such high valuation for PCYC.

    There is news out for CTIC – a potential Jakafi competitor drug in phase 3… what’s more the company already has an approved product on the market. Valuation is around $400M. Any ideas if this is one to keep an eye on?



  22. Hi Ohad

    Wonder if you had a chance to listen to Arql CC and thoughts as stock has doubled over last few weeks.Still has a low enterprise value.Would this be a position you would add to at this time.



  23. Christian (CLVS) – CLVS tried to shop themselves when they had immature data packages for 1686 and rucaparib. Today they are on the verge of commercialization with a favorable clinical profile. I can certainly envision a situation where they get acquired today.

    Dan (CTIC) – I was very surprised by market reaction as their drug may be relevant at least for patients with low platelet counts. In the general population, Jakafi’s safety and efficacy may be superior, myelofibrosis represents a big enough opportunity for a niche drug as well. I suspect the horrible reputation the company has didn’t help either.

    Dave (ARQL) – Yes, I listened to their CC only yesterday with great pleasure. They are making progress on all fronts and the news about efficacy with the FGFR program (cholangiocarcinoma) as well as initial signal with the Akt program are very encouraging. Agree that valuation is still very low given the number of shots on goal (even if we ignore tivantinib). The only thing preventing me from adding more is fear of a general marker correction in the near future.


  24. Ohad, agree on ARQL. Have enjoyed the recent rebound but am still holding on to my shares in hope of further upside. They indicated in CC that interim readout for P3 tivantinib trial is likely to occur in the “first part” of 2016 FWIW.

  25. Ohad

    You had mentioned xenoport as a company you were watching almost a year ago,amongst numerous others that have all performed quite well. Can you give us a update on Xp23829 and would they also be a takeover candidate in this bio frenzy market.
    I, for one am extremely surprised how well the IBB has held up over these last couple of turbulent days in the market.I gather you are as well.

  26. Mike (CRBP) – Their focus on CB2 as a target makes me somewhat skeptic, this approach has been out there for many years for every possible indications. Don’t know them well but that’s my initial thought there.

    mcbio (ARQL) – I am not sure what the right strategy would be when we approach that time point. Personally I am more excited about the earlier programs than tivantinib.

    Dave (XNPT) – I still think that a BG12-like agent has a lot of value even if it ends up as a niche product with several ~$200M sales. Two things bother me here:
    1 – The landscape has changed with at least two additional programs in mid/advanced stage testing (ALKS, FWP). Biogen also has a follow on program.
    2 – Even if XNPT’s psoriasis trial generates positive data, there will always be concerns about lack of clear POC in MS.
    At the time I thought they should be acquired by one of the MS players (Teva, Merck Serono, even NVS). I still hold this belief and will consider adding later in the year.


  27. Hey Ohad
    thanks for the reply.
    have you monitored HTBX? They had a couple positive news (and the recent shelf offering), in particular the preclinical data which shows achievement (with one therapeutic) of co-secretion of gp96-lg and OX40L-Ig, which in turn activate CD8+ T-cells.

  28. Ohad

    Looks like Mrns will trade slightly lower tomorrow on 4th qtr financials and business update.not sure if you have had a chance to review,if so has anything changed from what you had expected?would seem to be a buy on any sell off

  29. hi Ohad

    I dont know whether you have ever looked at weight loss market. OREX seems to me the best choice of co with recently launched drugs, and valuation does not seem out of control at first sight.

    any opinion on OREX and weight loss pills market, respectively?


  30. Alex/Milos (MRNS) – Agree, they appear to be a very lean organization relatively to the amount of clinical trials they are running.

    Dan (HTBX) – It’s been a while since I reviewed their data, will take a look.

    Mike (EPZM) – I find the deal unusual because usually, these deals end with the originator getting all rights to the drug at a low cost. This time, EPZM paid a decent upfront plus Eisai is keeping JP rights, which implies it is still interested in the product to some extent. Hard to explain stock reaction which started with a 20% fall to a sharp rise that day…

    Re STML, not aware of anything new fromtheir direction since they announced the XPO1 deal. It would be interesting to see data for more chronic treatment later this year.

    Dave (MRNS) – Other than the pushout of the P3 readout by 1-2 Qs, nothing materially changed. I intend to add more if the stock continues to go down, good risk/reward following based on SAGE’s proof of concept in SRSE and MRNS’ P2 data.

    Christian – I don’t follow the weight loss segment closely. If I had to pick one name I would go with ZFGN.


  31. Hey Ohad
    what next for ESPR given this morning’s positive results? Is there a chance of a M&A before the meeting with FDA?

  32. Hey Ohad
    just noticed that ESPR has already $1.7B market cap, which was your projected acquisition price…

  33. Ohad

    Great call on Espr. Any thoughts on ariad pharm?activist is trying to oust CEO.valuation seems high at 1.6 bill. with all the issues they have had with iclusig.are you familiar with there lung drug AP26113?seems to be a possible competitor to Clvs and azn but company seems to move at a snails pace.

  34. Alex, I believe Sage main value driver is currently SAGE-547 (allopregnanolone) which is targeting SRSE. MRNS’s synthetic version ganaxolone is actually targeting epilepsy. And so you can say they are targeting different population. Interestingly Sage also has another compound SAGE-217 that is targeting epilepsy but that’s further down the road.

  35. Alex (MRNS) – The short answer is: not for the time being. SAGE is going after the most severe “epileptic” indication (SRSE) with an IV formulation whereas MRNS is pursuing more common forms of epilepsy in its P3. Given the identical MOAs I expect there would be more overlap in the future. (Thanks, Ohmson)

    denny (KPTI) – I think they are becoming interesting at these levels. Personally, I will wait for a lower entry price. Sentiment around KPTI could also have readthrough to STML, which is developing another XPO1 inhibitor.

    Elyas (ESPR) – Overall results look positive and in-line with expectations (but they did not exceed them). This opens up a significant market opportunity in patients who are not adequately controlled by statins. Near term outlook is now solidified, in anticipation of P3 initiation in Q4.

    Dan (ESPR) – I think there is a reasonable likelihood for a deal before the FDA meeting as development route appears straightforward (i.e following the footsteps of PCSK9 inhibitors in terms of LDL and outcome-focused studies. I plan on holding even at this price level, M&A valuations has become very rich (PCYC, Flexus) and my assumptions are fairly conservative.

    Dave (ARIA) – Thanks on ESPR. Overall, the ponatinib story is disappointing and ARIA’s valuation appears high. AP26113 appears potent in ALK+ NSCLC but has no activity in EGFR+ patients and therefore should not be viewed as a competitor to CLVS.


  36. Thanks
    so for the time been mrns targeting a larger population then sage but sage have X 10 higer market cap? because SAGE-547 closer to market?

  37. Ohad

    Are you familiar with mirati therapeutics?Market cap of about 450m.Orbimed and Baker bros. have both taken quite large positions.

  38. Ohad, have you ever looked at CYTR? Could aldoxorubicin be to doxorubicin what Abraxane is to paclitaxel? Yes, i know the CEO, Kreigsman, is a jerk.

  39. Hi Ohad,

    I had a follow-up question about ESPR. It looks like they have succeed in another very strong secondary offering to raise 175million. I am thinking this is to strengthen their position to run the trials by themselves and as well as strengthen their position in negotiations for either a buy-out or partnership. The valuation will have to be very rich to justify being bought out in the near term at this point. Do you agree with this assessment?

    Thanks as always for all of the insight.

  40. Alex (SAGE/MRNS) – The main reason for the valuation discrepancy is the very strong clinical proof of concept SAGE has. As both drugs are almost the same, I don’t expect this gap to persist for long.

    Re: EXEL, still no conclusions… one thing which is a concern is the very short difference between PFS and OS in the cabo study.

    Robert – Sorry, don’t know them well.

    Dave (MRTX) – Yes I am familiar with them. I like the strategy of pursuing niche MET and AXL addicted tumors but my main problem with them is the broad spectrum activity profile of their compounds (similar to cabo). There are other molecules in development that are more selective. In Axl, they might be the first to show a signal, if AXL fusions really exist (still unclear to me).

    Richard (CYTR) – It’s been a while since I looked at them but my impression was not positive.

    Elyas (ESPR) – A very strong secondary offering, in bright contrast to the previous one which weighed in heavily on the stock. The strengthened cash position will improve their negotiation leverage with acquirers, which will have to pay at least a 30% premium imo.


  41. Ohad,

    Thanks for the all the effort and analysis. In regard to the big question of factoring in M&A is ESPR now at 2.16b fully valued or are you thinking there is still a premium to be considered? Great recent calls on ESPR and FMI. Thanks again.

  42. Hi Ohad,
    Do you follow Regulus Therapeutics? (RGLS) what’s your opinion?

    Thanks as always,

  43. Any views on PRTA — interesting phase 1 results today for PRX002/Parkinson’s and ongoing phase 3 on NEOD001/AL amyloidosis. Thx.

  44. Ohad

    Can you give your thoughts on the hep c space?both gilead and Abbv/Enta have approved regimens.Merck and Bristol both seem to be close to approval for competing regimens,as well as possibly regulus.Any opinion on how this will evolve over the next 2-3 years,and if gild will continue be the big winner.

  45. Hi Ohad, can you follow up on GERN ?, their deal with Janssen and what are the chances of an AA in case any indication Janssen studies in p2 comes up with a desease modifying confirmation?? and if the AE of myelosuppression where overblown and or can it be controlled specially since the FDA lifted the hold?? can that be an indication of controllable myelosuppression? and lastly why you could like or could don’t like the stock?

    Thank You

  46. Hi Ohad,

    Any thoughts on Xenon Pharmaceuticals (XENE). They have a few partnerships (Genentech, Teva) that are proceeding along though early. In particular, the Nav1.7 sodium channel inhibitor (GDC-0276) by Genentech looks to have potential.


  47. hi Ohad

    regarding MRNS, how much risk is involved compared to your other portfolio stocks? I assume less than CNAT or ARQL or STML, but that’s about it?

    when is the next derisking event?

    I am sure you have checked IP situation for SAGE and MRNS, how is it for MRNS?

    what about M&A, it looks rather cheap in comparison to SAGE

    thanks for your insights Ohad!

  48. Pete (ESPR) – I agree it is getting expensive, I plan to re-assess after the hypertension study but my working hypothesis that under the current circumstances where you see companies battling for acquisitions (PCYC, SLXP), ESPR is extremely well positioned. Therefore, I plan to hold.

    Chris (RGLS) – The HCV data are impressive and validate their approach but I don’t see the program as commercially meaningful. Therefore, I don’t view it as a BUY.

    Lisa (PRTA) – Very nice data on synuclein knockdown, althhough I feel people are blowing this out of proportion in the absence of a direct proof for clinical improvement. From a biology standpoint, PRTA did a great job selecting targets and indications, good mix of innovation, unmet need and underlying biology.

    Dave – Not an HepC expert but my personal feeling is that risk/reward is negative as price wars and lower than expected prevalence could impact long term value proposition.

    Juan (GERN) – I don’t have a concrete opinion. The initial disease modification signal is clearly there (but it got weaker at the last update from what I recall). I am out for now.

    Elyas (XENE) – Actually, they look quite interesting with a reasonable valuation and multiple sots on goal. Nav1.7 is a great target, probably the hottest one in pain.

    Christian (MRNS) – I view MRNS almost as an arbitrage opportunity as the MOA risk is relatively low (ganaxolone has p2b data + SAGE’s validation in SRSE) and upside potential is huge. Not sure about IP but from what I understand SAGE has no composition of matter and the compounds are chemically (and potentially functionally) distinct so don’t see a major risk there.
    Plan to add more on Sunday.


  49. hello Ohad

    thanks for MRNS input!

    regarding AERI, doesn’t the red eyes issue bother you? maybe ITEK is an interesting alternative/diversification buy for glaucoma space?


  50. Thanks Ohad. And I want to add my thanks to everyone else’s for your time and generosity in hosting this blog. Your knowledge and objectivity really make it unique on the web. I’ve followed you into FMI, AMBI, and other profitable stocks and have become a better investor generally because of your thoughtful, conservative approach.

  51. Same here ohad, thank you so much .Your hard working and generosity are much appreciated.

  52. Yes, I agree with last comments, Thanks for the time U dedicate to the blog and precious opinions: helpful for all the non-expert investors.

  53. hello Ohad,

    again regarding MRNS: what makes you confident that the responder analysis (ITT) will be successful in the phase 3? In the phase 2 it missed statistical significance (p = 0.057)

    overall, I guess you assume that safety is the big plus for ganaloxone (efficacy does not seem superior to other approved agents).


  54. Ohad

    May want to check out mstx

    Has a pipeline and a p3 for sickle cell enrollibg quickly ….79mill market cap….very low!

    If I am not mistaken Bakers are in

  55. Hi Ohad,

    Do you think Evotec is attractive at these levels? just signed a strategic collaboration with Sanofi. Seems market cap is not too high.

    Thanks as always

  56. Hi Ohad, what’s ur opinion -if u follow- about STEM? Price is tempting and data of two trials will be released in mid-2015. Seems to be a good opportunity.

  57. Christian (AERI) – I am not aware of a red eyes issue. Agree about ITEK as a potential hedge but they are a couple of years behind AERI.

    Thanks, Lisa , Allen and Manny. Glad I could help.

    Christian (MRNS) – Given the small size of the study, I believe there is a reasonable likelihood of meeting the 1ry endpoint in P3, which is powered to demonstrate that. Agree that the effect size is not dramatically better than other drugs but ganaxolone could work for patients who fail earlier treatment lines + safety profile looks compelling. I also have high hopes for additional indications and the IV formulation for more severe indications (like SRSE).

    Robert (MSTX) – Thanks, will take a look.

    Chris/Manny – Sorry, don’t know these companies well enough to have an opinion.


  58. Ohad, Thanks for sharing your thoughts. Giving the recent news on ESPR – do you still think ESPR has a decent M/A chance? ESPR claim that 2 to 7 million adults in the U.S., ceased therapy because of muscle pain or weakness and can be considered statin intolerant. You factored 0.5 million adults – so it is very conservative numbers


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