Esperion – Seeing the glass half full

Esperion (ESPR) has been the target of a lot of criticism lately, demonstrated by the collapse from $115 to $24 in just 5 months. Investors became skeptical about Esperion’s ability to get FDA approval without cardiovascular outcomes data, which may push approval by 2-3 years and decrease probability of success. Even if the drug obtains FDA approval, many are worried about a narrow label that will limit initial commercial opportunity.

While some of the criticism may be justified, I feel the market is over-reacting since the shift in investor sentiment has nothing to do with ETC-1002’s clinical profile but instead reflects a more cautious outlook around regulatory route and market positioning. ETC-1002 remains a promising lipid-lowering drug as the only agent with a statin-like effect on LDL-C and hsCRP (two validated surrogates for clinical benefit) without causing statin-related muscle pain/weakness.

It seems to me that investors are ignoring the positive aspects while overblowing the risks. Below are the three primary concerns and why I think the market is seeing the glass half empty.

Restrictive label for PCSK9 antibodies

Praluent and Repatha were recently approved based on LDL reductions but with restrictive labels which were narrower than what the market had hoped for. They can be used only in “high risk” patients (with acute coronary syndromes, HeFH, a history of a heart attack or stroke etc.) whose LDL is not adequately controlled. Investors (rightfully) assume the FDA will use similarly restrictive language in ETC-1002’s label but this patient population still represents a multi-billion dollar opportunity (2-3 million patients in the US alone).  From a reimbursement perspective, these patients are considered the primary target population for new LDL agents anyway, and the label can be broadened with time based on positive outcomes data.

Need for CV outcomes data

In September, Esperion provided an update on its registration plans following receipt of written feedback from the FDA (End of phase 2 meeting). The update was not in line with what the company guided one month earlier and included cautionary language from the FDA regarding the need for cardiovascular outcomes data for approval, especially in statin intolerant patients.

Investors were particularly troubled by the following statement in the press release:

“FDA has encouraged the Company to initiate a cardiovascular outcomes trial promptly, which would be well underway at the time of the New Drug Application submission and review, since any concern regarding the benefit/risk assessment of ETC-1002 could necessitate a completed cardiovascular outcomes trial before approval.”

Although such a statement can be viewed as pure conservatism and a logic idea (in case the risk/benefit profile is not a clear cut) and does not mean outcomes data are required by definition, it was enough to cut the stock in half. In addition, there was a lot of anger towards the company because this was not mentioned in an update call they had one month earlier (solely based on the EoP2 meeting prior to receiving minutes).

FDA’s recommendation indicated the bar for LDL-lowering drugs is getting higher, however, it certainly does not rule out LDL as an approvable endpoint, especially in high-risk patients on statins that do not achieve their LDL target. Esperion plans to conduct a separate P3 trial in these patients and another trial in statin intolerant patients. A reasonable scenario would be approval based on LDL in the statin combination setting and approval based on outcomes data in statin intolerant patients.

Competition from CETP inhibitors

CETP inhibitors, which have been pursued for over a decade, were once the big hope of the cardiovascular field because they increase HDL (the “good” cholesterol) and decrease LDL. This class is viewed as ETC-1002’s primary competitor since CETP inhibitors are oral and some of them lead to more significant LDL reductions (40-50% vs. 25-30% with ETC-1002).

In September, Amgen acquired Dezima Pharma, for its P3-ready CETP program for $300M upfront and $1.25B in milestone payments. The fact Amgen, which markets a PCSK9 antibody (Repatha), decided to acquire a CETP company rather than Esperion was seen as a clear negative and exacerbated concerns around competition from CETP inhibitors. The relatively low price was also seen as a negative read-across to Esperion, which had a $1B valuation at the time.

One month later, Lilly (LLY) announced it decided to terminate its CETP program (evacetrapib) after a 12,000-patient trial failed to demonstrate clinical benefit. Evacetrapib joins CETP programs from Pfizer (PFE) and Roche that could not demonstrate benefit in CV outcomes trials. Merck is the only remaining company with a CETP program in P3, with an interim analysis and final data expected in Q4:15 and 2017, respectively.

Investors fear that Lilly’s failure could make the FDA less flexible with respect to approving drugs based on LDL reduction. I find this unlikely because CETP inhibitors were never viewed as “LDL drugs” so the LDL hypothesis is probably irrelevant for them. In fact, Lilly’s trial enrolled patients with relatively low LDL levels and the fact increasing HDL levels did not translate to clinical benefit in these patients indirectly supports the LDL hypothesis. In addition, the FDA just approved both Repatha and Praluent based on LDL reduction despite failures with older CETP inhibitors.

Lilly’s failure removed an important competitor and demonstrated for the third time that CETP inhibition has no clinical value. While this doesn’t guarantee Merck’s CETP inhibitor will fail, it certainly calls into question CETP inhibition as a therapeutic approach even with new agents that decrease LDL (Roche’s CETP inhibitor had no impact on LDL).

Still an attractive M&A target

Esperion has a market cap of $540M and ended Q2 with $314.3M in cash. Assuming a quarterly burn rate of $25M for the remainder of the year, the company will have an enterprise value of ~$280M by year end. Even after reducing likelihood of success and stretching timelines, this is very cheap for a first-in class P3-ready oral cardiovascular drug with a relatively high likelihood of success and $1-2B sales potential.

ETC-1002 has a unique clinical profile because like statins it is an oral drug that lowers LDL (25-30%) and hsCRP (~35%) by inhibiting the cholesterol biosynthesis pathway, but unlike statins it does not lead to muscle-related side effects (possibly because it is not activated in muscles). Having a similar profile to that of statins without their primary side effect makes ETC-1002 a relatively safe program regardless of the need of CV outcomes data. The true risk for ETC-1002 is long term safety, which must be extremely clean and is impossible to predict before conducting long term studies in thousands of patients.

Esperion will shortly have the only P3 oral drug in development for hypercholesterolemia and in contrast to other programs, ETC-1002 is the only agent in its class (ACL inhibitor). This scarcity value, coupled with a large body of evidence supporting the importance of LDL and hsCRP reductions in preventing CV events should make Esperion an attractive acquisition for companies with a CV franchise who could exploit the weakness in Esperion’s shares to replenish their CV pipelines with a late stage program. These include AstraZeneca (AZN), Gilead (GILD), Novartis (NVS) and Sanofi (SNY).

Dezima as a benchmark

Some view the Dezima transaction as a good benchmark for what a potential buyer will pay for Esperion as both drugs are P3-ready and target a similar indication. I think Dezima (even before Lilly’s failure) is several-fold riskier because: 1) HDL increase is not a validated endpoint 2) CETP inhibitors failed in the past 3)outcome studies are required for approval 4)two competing P3 programs were ongoing at the time of acquisition. Esperion’s ETC-1002 is a first-in class molecule with no direct competition and a “statin-like” efficacy profile (without muscle-related side effects) with a reasonable likelihood of gaining approval without outcomes data. Esperion has global rights to ETC-1002 while Dezima had global rights for its CETP inhibitor excluding Japan and other Asian markets.

With an upfront payment of $300M, $1.25B in milestone payments and a minor royalty stake the Dezima transaction can be conservatively valued at $450M.  Esperion should be worth at least 2-fold more than Dezima, bringing the acquisition price to ~$1.1B (including a $200M cash position), which represents a 100% premium over current stock price. This is still an extremely low price compared to industry benchmarks but the recent weakness in Esperion may enable  a smart acquirer to take advantage of the situation.

Portfolio updates  

We are adding a third position in Esperion, bringing the overall exposure to the stock to ~5% of the total portfolio.

Portfolio holdings – November 1, 2015

Biotech portfolio - 1-11-2015 - after changes

Biotech ETFs = 1-11-2015

65 thoughts on “Esperion – Seeing the glass half full

  1. Hey Ohad
    very nice and write-up. Thanks for this. I had added soem essperion when it tumbled to $18. Incredible rollercoaster though. Any hint of of something negative makes a bioteech stock tumble hard, in this market… EXAS, MRNS, are other examples. Though for small investors like us to keep the faith… so thanks for your work!

  2. Hi Ohad,

    Nice surprise for conatus with Acceptance of Late-Breaking Abstract for AASLD Annual Meeting for Portal Hypertension.
    despite much skepticism on social networks neophytes, I think that the opinions of experts in hepatology confirms the growing interest of emricasan for liver disease.
    What is your opinion ?
    Many thanks.

  3. Dan – Thanks. In small cap biotechs volatility comes with the territory…

    Tedy (CNAT) – imo, the portal hypertension data generated a signal but it is very preliminary and we should wait for the full presentation next week as the press release was not a home run. I agree emricasan represents a completely novel and potentially groundbreaking approach for many diseases wit tissue injury but the burden of proof is on CNAT.


  4. Ohad, as always great breakdown and analysis – much appreciated!
    Have you heard of or any thoughts on Organovo (ONVO) trying to generate and print human tissue technology for biotech/drug research etc?

  5. EXEL Do you see any reason why Roche has not announced the OS advantage upto now or in EADO 2015 ? Is there a timing issue regarding when they got the data and the conference schedule, a secrecy rule regarding FDA submitted data, or is there another meeting where you think they might present it, or do you think they might be hiding something ?

  6. curiousgeorge (EXEL) – Roche will probably submit the OS update to an upcoming medical meeting. Don’t think there are other issues in play here.


  7. STML

    Ohad, do you think the ASH Conference will have an serious impact on the stock movement (positive or negative)? market cap of Stemline ($163m) is still quite cheap compared to OMED ($640m).

  8. Hello Ohad, can I ask you what’s your take on $FMI recent results and general longer term development? They continue to significantly underperform on clinical side – just a little over 8000 tests in Q3. (Q2 8800 tests). Do you still remain bullish on long-term prospects? Thanks as always for your insights.

  9. n0cturne (STML) – They might present early results from the potentially pivotal P2 in BPDCN, which I expect to be positive. Not the comparison to OMED is relevant as the two companies differ in therapeutic approach (immunocytokine vs. naked antibodies), pathways (CD123 vs. Notch/Wnt pathway) and indications (myeloid cancers vs. solid tumors).

    Milos (FMI) – Their execution is very disappointing, obviously something needs to change in their marketing approach. The only near term hope is full acquisition by Roche.


  10. Hi Ohad,
    What is your feeling after CNAT last update phase-2b plans for Emricasan?
    thank you

  11. Has the FDA ever rejected a drug the Europe approved ? CHMP already has a positive opinion on Cobimetinib, i don’t see a scenario of the FDA not approving Cobimetinib when the European agencies have given it a positive opinion. They are both looking at the same data set.

  12. Ohad

    with your expectations for a positive P2 readout at ASH for BPDCN and STML trading near a 1 year low would that be a position you would look to average down at these depressed levels?

  13. $EXEL Roche Pharma Day, OS Benefit of Cotellic to be presented Society of Melanoma Research, and also they are using Cotellic with PDL1 and Zelboraf for Melanoma expanding the potential. It is in Phase 3 for TNBC. Do you know when they might announce the Phase 1 data for KRAS for Cotellic ? Any suggestions on using the Pharma Day slides from Roche to figure out potential market opportunities or companies with good potential to invest in.

  14. Hi Ohad,

    MRNS – very poor execution for financing, Brought the pps up to $20 to do direct selling into the market at $17, but it did not work. Not enough fund to do PPD.
    I guess MRNS had no choice other than to pursue SRSE. It keeps falling further away from SAGE in terms of valuation. I averaged down today. I’d like to hear your opinion. TIA


  15. Igonber (CNAT) – Honestly I am ascribe more value to their portal hypertension results next week than to their regulatory plans, which make sense to me but it’s more important to have a clear efficacy signal.

    .curiousgeorge (EXEL) – I can’t think of an example but I am sure there are examples for drugs approved by EMA and rejected by FDA. I agree with your assessment, cobi is an approvable drug in melanoma, the more interesting aspect is competition with NVS’ combo (Tafilnar+Mekinist) and other indications (especially KRAS+ NSCLC).

    dave (STML) – Their abstract suggests a clear efficacy signal (with safety issues that may be overcome wit the right clinical monitoring and management) but it is hard to understand what the response rate is and follow up is limited. Not sure I want to average down as this is still a high risk program and competition from other CD123-targeting programs (MGNX, CARs) may emerge next year.

    curiousgeorge (EXEL) – Thanks, Roche is clearly thinking trying to expand cobi’s (Cotellic) label although less aggressively compared to other MEK programs. I think the TNBC trial is P2, not P3). Indications pursued with cobi are clearly significant and represent a multi billion potential but I wouldn’t model anything beyond BRAF+ melanoma before seeing clinical data.

    Gene (MRNS) – I also averaged down yesterday although I share your frustration. The market’s lack of interest even after the IV launch given the valuation gap with SAGE is hard for me to understand. Clearly a red flag but I still think the drugs are should have a similar profile.


  16. Hi Ohad,

    GNCA took a tumble with disappointing P2 pneumococcal results. But it owns HSV2 market ($1B US oppty – no credible vaccine competition), has an early-stage pipe of T cell vaccines, and has demonstrated the revenue potential of its ATLAS antigen discovery platform in two immuno-oncology collaborations. Would love to hear your thoughts on its prospects. Also AUPH – how much could upcoming biomarker data move the stock?

    Thanks as always for the spot-on analysis


  17. Hi Ohad,

    Any thoughts about the updated IMGN853 results?

    There is an additional CR this time, and it looks like the percentage of responders is consistent with the prior results:

    The duration of response is much more promising from the high FR-alpha group but somewhat disappointing from the medium and low groups. I’m not sure if it would meet a median 6 months DOR threshold if you include the low and medium patients. Perhaps a more aggressive schedule is needed for those patients.

  18. Mike Goodman-

    GNCA – I really like the new neo-antigen initiative as (like everybody else) I am very excited about this field but it is hard to assign a lot of value given early stage of development.
    AUPH – Don’t have high expectations from the AURION trial because it is going to be a small data set (10 pts) on the background of standard of care therapy so it will be challenging to interpret.

    Christian (IMGN) – I am excited about the subset analysis they presented, response rate was overwhelming and the rationale is clearly there (like HER2). We still need to see if this stratification holds up prospectively in future patients (I expected them to have more patients). Durability looks good, not stellar but still clinically meaningful for this patient population. Hopefully, real world duration of response will be higher as 2 patients dropped off despite achieving PRs.

    Still didn’t have a chance to see the AKBA data.

    Wildbiftek (IMGN) – Overall I think the update was positive because they may have a patient population which is smaller but response rate is highly impressive, higher than most other biomarker-based oncology drugs. As I wrote to Christian, I would like to see this response rate corroborated prospectively in additional FR-high patients.
    Going forward, it seems that IMGN853 is relevant only to FR-high ovarian cancer (at least as monotherapy). I Don’t think they can intensify the schedule for the other patients.


  19. Ohad

    The Financial Times reported that Amgen is seeking a 10 billion deal.Can you share which companies they may look to pursue.

  20. Astellas wants to buy $OCAT for $8.50 per share, a 90% premium to Monday’s close. Total deal cost $379M.

    We will see how it ends. Congrats Ohad for picking this one.

  21. @ Dave
    I would think that CLVS would be a candidate for AMGN based on their interest for a 10 Billion dollar target and late-stage pipeline candidates. Not sure about the total value of CLVS, but they definitely have great product candidates in oncology. Any thoughts about this potential Ohad?

  22. dave (AMGN) – Can’t think of a lot of $10B possibilities (ALNY, ICPT, ISIS, MDVN are possible names). They can also go after BLUE or one of the CAR companies which have a lower market cap. CLVS makes sense as well, they can probably get it for 5-6B.

    curiousgeorge (EXEL) – Hard to tell but I think there are other companies with more synergies with EXEL’s products.

    n0cturne (OCAT) – Thanks. I didn’t see that coming at all, was sure other companies in my portfolio would be taken out before them.

    Adam (CLVS) – Agree that if someone is looking for late stage oncology assets CLVS is the right company to acquire. Not sure if AMGN are interested in expanding their oncology pipeline or branching out to other fields. We’ll see…


  23. As for OCAT nice to see the interest, but as a long time follower, is $8.50 enough? It is nice to be in the money, but there is a lot of potential with the technology.

    Do you have an opinion on Astellas? Considering the market potential they may be able to work into a billion dollar market for the $379M.



  24. hi Ohad

    LOXO now valued 450 mio USD. they had some positive update on their PI on the TRK-patients.

    u think it is expensive now? thinking about realizing profits here….


  25. $EXEL What is your take on Exelixis conference call ? Do u think Roche is delaying data release from Phase 1 with Cotellic in KRAS. What do you think of their JV (2015/2016) ? Do u think there will be price appreciation after the JV announcement left on the table ?

  26. Any interest in AAVL now that their trading below cash? They still have a pipeline beyond AVA 101

  27. Ohad

    has your opinion changed regarding ARRY.After the CEO stated on their nov 4th CC that he expected topline data from the NEMO trial before the end of 2015,it was brought to my attention that the trial completion date was updated to May 2016.I was under the impression the COLUMBUS trial completion date was 1st half of 2016.Am I confusing the 2 trials.

  28. Hello Ohad. i am also interested in your opinion on dave question (ARRY) and roland question (AAVL). I would like also to get your opinion on yesterday´s release advancement in ALNY-MDCO cholesterol lowering drug, in therms on how would this affect to ESPR stock.
    Thank you.
    Alnylam Pharmaceuticals and development partner The Medicines Company announce positive results from their ongoing Phase 1 clinical trial evaluating ALN-PCSsc for the potential treatment of high cholesterol. The data were presented at the American Heart Association Scientific Sessions in Orlando, FL.
    As previously reported, subcutaneous administration of ALN-PCSsc reduced LDL-C (bad cholesterol) up to 83% (average maximum: 59 – 69%). New data showed the effects were highly durable and could support a twice/year dosing regimen, significantly longer than Amgen’s (AMGN +0.6%) Repatha (evolocumab), dosed every two weeks or once/month, and Sanofi (SNY +0.3%)/Regeneron’s (REGN +1%) Praluent (alirocumab), dosed every two weeks.Specifically, the maximum PCSK9 knockdown was 89% (average 80.3 – 84.3%) and the maximum LDL-C reduction was up to 78% (average 54.3 – 64.3%) after a single injection of ALN-PCSsc. At day 180, LDL-C reduction was as high as 53% (average 47%) in the 300 mg cohort. No clinically significant drug-related adverse events were seen.

  29. $EXEL What do u think of Roche’s project Cobi market share, seems like they are intentionally underestimating it to me. Can Cobi be used with competitor’s drug as the MEK inhibitor. It is priced lower and buying Cobi plus the competitor Zelboraf will be lower in total price. What do u think of the pricing of Cobi versus Zelboraf ? Was it fair given Zelboraf was declining in market share without Cobi ?

  30. In a supplemental filing with SEC form 424B5 regarding the offering at $6
    MRNS will fight SAGE upstream to SRSE in ‘established status epilepticus’ – this means in the ER, before the patients
    even go to the ICU. I think that’s a really smart move and gives them competitive advantage while avoiding potential
    IP conflicts. It sucks for SAGE because it could limit their market size substantially if patients get treated earlier
    Development should be quick: “Phase 1 early 2016, Phase 2/3 clinical trial in ESE patients later in 2016”

    SAGE price has been declining lately. I have positions in both but should I buy
    more MRNS? Thanks for your opinion, Ohad.

  31. Interesting finding on MRNS. Will need to look at it closely. In ER, they first will be treated with benzos, then antiepileptic. Are they suggesting trying MRNS drug before general anesthesia. If not, by then they will be in ICU anyways. SRSE is terrible, I just hope one of these drugs gets approved to help these people.

  32. This explains why MRNS is not pursuing PPD with the oral formulation. They want
    to spend the limited resource they have on the IV formulation for ESE.

  33. Ohad

    how does the approval of AZN lung 3 months earlier than expected affect CLVS.Seems like the data was comparable.Does that approval make the CLVS
    approval more likely.

  34. $EXEL Cometriq revenue from MTC seems to remain steady, do u think they have reached a plateu on MTC revenue and can they use NPU’s for RCC to generate more revenue while they wait for approval. Cobi OS is not estimateable so it must be high ?

  35. Sorry for the delay in responding, just got back from vacation.

    Peter (OCAT) – I think it’s safe to say Astellas took advantage of the negative sentiment around OCAT and frankly the very high risk their lead program represents. Agree this could become a transformative deal for Astellas but only 3-4 years down the road.

    Christian (LOXO) – Great company, great data, great compounds (from ARRY…), I still think curent valuation is too high, especially now that good news are baked in.

    curiousgeorge (EXEL) – Still didn’t listen to their CC, will try to update tomorrow.

    roland (AAVL) – Yes there is still value in the early stage pipeline but most of it already belongs to ALNY REGN. I was never a big fan of their color blindness initiative (even as a person “suffering” from this condition.

    dave (ARRY) – From what I know Nemo top line readout (PFS) is still expected this year. Perhaps they define completion as having a final OS analysis.BRAF+ melanoma is next (1H16).

    lgonber (ALNY) – Re AAVL and ARRY see my comments above. I plan to add more ARRY if Nemo readout is negative as I am optimistic about MEK as a target and also about their pipeline optionality.
    Re ALN-PCSsc – Their data is provocative and could be a Repatha/Praluent killer (although more patients and follow up are needed). ESPR is also threatened but to a lesser extent in my opinion because ETC-1002 (co-formulated with Zetia or a statin) should have some market share in cases where dramatic LDL-C reductions are not required (plus ETC-1002 has a CRP effect which PCSK9 agents don’t).


  36. curiousgeorge (EXEL) – A moest market share is reasonable given the fact Tafilnar+Mekinist are on the market since last year. Roche/EXEL will need to show a differentiated clinical profile (for example, better tolerability or superior survival benefit) to regain market leadership originally seen with Zelboraf. More attractive pricing sounds like the right thing to do (if there is no differentiation, more data on that next week). Cobi cannot be used with other BRAF inhibitors because there is no data package or label for such a regimen.

    Minh (MRNS/SAGE) – I prefer not to give direct and personal advice. Personally, I feel comfortable holding both stocks. SAGE is also addressing earlier stages of SE so it remains to be seen if one drug is better than the other.

    jh (MRNS) – Not an expert but from what I understand the answer is yes. They plan to use the drug before putting patients in medically induced coma.

    PaulB (TRVN) – Fentanyl was discussed at their R&D webcast. I don’t think it will be a serious competitor due to its clinical profile that precludes long term administration.

    Minh (MRNS) – IMO it’s a mistake. They already have an oral drug ready for testing…

    dave (CLVS) – Both drugs were seen as highly likely approvals. CLVS should get its FDA approval this year.

    curiousgeorge (EXEL) – In the US it looks like sales reached a plateau but there is still an opportunity ex-US with a more established partner than SOBI. Updated OS results will be presented next week at the Society for Melanoma Research Congress. Don’t think you can conclude anything based on the fact OS benefit is not “estimateable ”


  37. sorry, don´t understand your reply to roland about AAVL: “Yes there is still value in the early stage pipeline but most of it already belongs to ALNY.” no connection between AAVL + ALNY that I can find on the respective company websides

  38. $EXEL Cobi has a better safety profile than Tafilnar plus Mekinist. Cobi does not cause renal failure and is better in terms of cardiovascular profile. Tafilnar plus Mekinist causes cardiovascular problems. Given a lower price, better safety profile, and most likely a higher or competitive OS number Cobi will gain market share over Tafilnar plus Mekinist. I think Roche is intentionally underplaying Cobi perhaps they want to gain something from Exelixis and don’t want to reveal the full potential of Cobi quickly.

  39. hi Ohad,

    what do you think of ARRY deal?

    upfront seems low… on the other hand cost split 60:40 seems positive. and ARRY retains key markets.

  40. Very surprised for CLVS’s feedback from FDA. For non-randomized trial, the tumor response PR/CR needs to be confirmed per RECIST criteria. This is a very standard requirement in clinical trials and CLVS even didn’t mention this at all. I guess they already knew if they present confirmed data the results would look inferior to AZ. This is a big mistake if they thought there is a chance FDA wouldn’t notice this. Given the buyout is much less likely now, what do you think of the value left here? It’s time for sell or average down?

  41. Some of the analysts declare Rocilitenib worthless. Price target is slashed to $25-$35. Is the current valuation of 1B too high assuming only Rucaparib may be approved in a distant future (if at all)?
    The reputation of the management is seriously damaged. Adam Feuerstein is all over them comparing CLVS to ImClone.

  42. curiousgeorge (EXEL) – The most important data point will be the survival benefit which will be reported this week. Not sure how significant the difference in safety profiles are. Don’t know about a hidden agenda that was behind the pricing decision.

    Adam/Christian (ARRY) – Overall I view the deal is disappointing as the economics are modest and it may also mean that other companies were not that interested in the drugs.

    CLVS – I am utterly shocked by CLVS, this is probably the most surprising twist I have ever seen . It is hard for me to believe this issue of of response confirmation emerged only last month (they are recruiting patient for more than 2 years…). Coupled with recent departure of CFO and CMO, this smells really bad…
    Still haven’t decided what to do but it’s hard to invest in people who are not trustworthy…


  43. Hi Ohad,

    Thanks for your responses.

    As for EXEL, do you see that there is downside risk for them this week if the survival benefit is below expectation?

    Ethics aside, I don’t understand the doomsday scenario for CLVS. They should still have a legitimate approval able drug and two other high potential molecules. The market likely will punish them for the questionable information transfer; Analysts definitely seemed very displeased on the conference call yesterday. Seems like they might be more willing to be bought and their valuation is much more modest now.

  44. hey Ohad
    same reaction as you on CLVS. Very disappointed. The funny thing is that the poster present at ESMO (Link provided above by Martin) clearly shows that ORR was much lower than what reported before…. ESMO poster was end of September…. Yes, management mislead investors, but I wonder why nobody put 2 and 2 together… were there no investors at ESMO?
    Re ARRY, the marked did not like the deal, or is it that everybody is nervous about NEMO? what are the chances of that trial failing?

  45. Dan, that ORR is for T790M negative based on my understanding. Confirmed response is course 101, so it’s hard for me to believe their innocent. Agree with Ohad, personally I wouldn’t invest a penny for these liars.

  46. $EXEL Clovis had paired up with Roche to combine the lung cancer drug with azeto. Cabozantinib works well with Tarceva, and might work well with azeto. Exelixis is now more valuable to Roche than before given it’s market potential for lung cancer, and RCC and the fact that Cabo Phase 1 b trials are expanding in RCC and bladder cancer for the combo of Opdivo and Cabo as revealed in the call today.
    I think Roche is intentionally underplaying Cobimetinib as they are probably interested in buying Exelixis and want it at a lower price. Waiting for a good deal won’t hurt as Exelixis has de-risked drugs compared to unpredictable Clovis, and they know Cobimetinib is effective so they will wait to see it’s full potential. Exelixis will probably be bought by a big Pharma. Do you think that Exelixis is now more attractive to Roche for a buyout ?

  47. Adam

    EXEL – I don’t think there is a lot of risk as we know the trial met the OS endpoint and expectations are already low.
    CLVS – There is always a chance that future updates for both roci and AZD9291 will indicate the prior has some commercial potential but so far roci looks inferior. Rucaparib in ovarian cancer is the only think left and it does have the potential to become a 300-500M drug with a differentiated label. Not sure if this can offset the tarnished reputation.

    Dan –
    CLVS – The poster from ESMO was in T790M- patients. I tried to look for any indication in Clovis’ presentations of distinguishing confirmed and unconfirmed responses and couldn’t find anything. Agree this is a question that should have been asked but I personally trusted the team that if they present a response rate in such a consistent manner after a long follow up then most responses are confirmed.

    ARRY – I also didn’t like the deal, was expecting something more lucrative. I think the trial has a 50% likelihood of success but MEK inhibitors still have potential in other indications.

    Christian (ARRY) – Yes, amazing. While ARRY focused on flianesib which had mediocre activity the smart people at LOXO understood the concept of targeting clear drivers of cancer.

    N0cturne (ARRY) – Yes I plan to hold them going into NEMO data but thinking about adding more if the trial fails and the stock gets hit.

    curiousgeorge (EXEL) – Don’t know about any hidden agendas but I still think EXEL is a good fit to a company with an oncology franchise.


  48. Hi Ohad,

    Thanks for your insights.
    Do you think ATYR pharma (LIFE) is attractive at these levels?

  49. CNAT

    extremely under pressure. Very disappointing. Do you know any reason for that?


  50. Hi Ohad,

    Do you follow Depomed? (DEPO) any thoughts about recent developments?
    Do you plan keeping AUPH in your portfolio?

    Thanks as always,

  51. Hello Ohad,
    I have been following this blog for only a few months and thanks to you- already own a number of the companies mentioned.
    Do you have any thoughts on either RLYP (Relypsa) or CARA ? I traded TRVN for CARA.
    Your comments are much appreciated. Thank you.

  52. Chris (LIFE) – I really like their platform and the possibility of having a new class of therapeutic proteins is exciting. Although EV is relatively low (~70M), I am still waiting for a better entry point given the early stage.

    n0cturne (CNAT) – The data they presented were consistent with previous top line results but there are still open questions like the lack of correlation with cCK18 and the puzling increase in HVPG for less non-severe patients.

    Chris – Sorry don’t know DEPO well. Re AUPH, yes I plan to keep it as I think there is a reasonable likelihood of success in the P2b given experience with other calcineurin inhibitors.

    Lawrence (RLYP/CARA) – I don’t have a strong opinion on either of them. I admit RLYP looks attractive on paper solely based on ZSPH’s acquisition but I haven’t delved into the details.


Leave a Reply

Your email address will not be published. Required fields are marked *