Investment ideas for 2019

Despite the recent surge in general and biotech indices I still believe we are in the beginning of a significant correction after a 10-year bull market. If a major correction occurs in 2019, I intend to use it and increase exposure to small cap biotechs as I still believe in their long term value proposition.

With respect to stock picking, the thriving biotech IPO market created a dichotomy. On the one hand, investors have a lot to choose from as the IPO class of 2017-18 includes so many high quality biotech companies. On the other, valuations for many companies (especially the ones without clinical validation) appear to be overblown, driven by hype rather than data.

The most extreme example is Moderna (MRNA), which went public with a valuation of $7.5B without a single program that has a clear route to the market. Many other companies IPO’d with generous valuations (>$500M) without clinical data, sometimes without a drug in the clinic. These include Rubius (RUBY), Arvinas (ARVN), Editas (EDIT), CRISPR (CRSP), Intellia (NTLA), Jounce (JNCE), Denali (DNLI), Homology (FIXX), Wave (WVE) and Scholar Rock (SRRK).

Looking at recent IPO filings, not a lot has changed. Synthorx (THOR) whose lead IL-2 variant is not yet in the clinic, is worth $431M. The same goes for high profile imminent IPOs: Harpoon (Lead program in P1 with limited data and no efficacy signal to date), TCR2 (lead program about to enter P1) and Alector (2 programs in P1, no data in patients).

These high profile companies have excellent fundamentals and could eventually generate huge returns in the long run but given the industry’s high attrition rate in translating preclinical data to humans, I find their stocks outrageously expensive. I therefore prefer to wait for clinical data before buying any of these stocks even if it means a higher price because, judging by the history of our field, most of them will encounter setbacks and failures.

Another group of stocks on my watchlist are advanced stage companies with clinically validated assets and in some cases regulatory approvals that are traded at a reasonable EV. These include: Xenon (XENE), Insmed (INSM), Chiasma (CHMA), Stemline (STML) and Esperion (ESPR).

Regardless of market performance, 2019 will have a flood of clinical data. Here are some segments worth tracking.

ANTIBODY-DRUG CONJUGATES (ADCs)

ADCs were the big hope of the antibody industry 5-7 years ago but so far did not live up to expectations. Originally, ADCs were supposed to combine the best of both worlds: chemo-like efficacy with antibody-like safety. In reality, ADCs behaved less like antibodies and more like chemotherapy with the main hurdle being off-target toxicity which limited the dose patients can be given. There are obviously additional issues specific for each program but a narrow therapeutic window has been the primary hurdle with many ADC programs to date. There were cases in which ADCs demonstrated a favorable clinical profile (HER2, CD30) but these are the exceptions.

Despite the challenges, 2019 could be a turning point for ADCs thanks to new technologies and a couple of “old school” programs that were able to generate compelling data.

Immunomedics’ (IMMU) Trop2 program (sacituzumab govitecan) has already been submitted for approval in triple-negative breast cancer. This program is very interesting because it relies on an old, less potent chemotherapy agent (like 1st generation ADCs which failed) but somehow Immunomedics found the right recipe with this program. Of note, this ADC is given frequently (weekly) at high doses (10 mg/kg), a regimen which is not feasible with 2nd generation ADCs from Immunogen (IMGN) or Seattle Genetics (SGEN). Efficacy to date has been encouraging (32% response rate, 6.7 months duration of response) and may be sufficient for accelerated approval.

IMUCSeattle Genetics’ (SGEN) anti-Nectin4 program (enfortumab vedotin) is currently in a pivotal P2 for bladder cancer. This ADC utilizes the same payload the company used in Adcetris (MMAE) which so far hasn’t been very successful in solid tumors for the reasons outlined above. With enfortumab vedotin, Seattle Genetics and its partner Astellas may have found the right target and indication to produce good efficacy even at a low dose (1.25 mg/kg). This agent still has serious side effects including fatalities that may be treatment related. The ongoing P2 is a single arm study in PD1-resistant patients with results expected in Q1 2019

sgenWhile many biopharmas de-prioritized ADCs (including Astellas recently), there are still a lot of smaller companies working on novel ADC technologies.

Initially, companies focused on highly-potent payloads, which looked great in mice but backfired in humans due to increased toxicity (see SGN33A as a recent example). Today, companies are focused on improving the therapeutic window by minimizing exposure in normal tissues, which is perceived as the main barrier.

It remains to be seen whether these new technologies improve ADCs’ therapeutic window but there is reason to believe some features can be optimized to overcome general toxicity. Personally, I am optimistic about Zymeworks (ZYME) and its ADC platform, which appears to rationally and meticulously address the major technical issues with ADCs. The company’s lead ADC, ZW49, combines the company’s ADC technologies including a bispecific binding region (to enhance cell penetration) as well as an optimized conjugation method (to improve exposure in the blood  while minimizing exposure in non-target tissues). ZW49 is expected to start P1 imminently and should have P1 data towards YE2019.

CRISPR AND PROTAC

2019 should have the first ever clinical data for two potentially disruptive technologies: CRISPR (clustered regularly interspaced short palindromic repeats) and PROTAC (proteolysis targeting chimera).

Editas (EDIT) and CRISPR Therapeutics (CRSP) both have active clinical programs that are expected to generate data in 2019. Editas is evaluating EDIT-101 in LCA10, a rare genetic retinal disease which is not amenable to standard gene therapy with AAV due to the size of the mutated gene. CRISPR Therapeutics is developing CTX001, an ex vivo treatment for Beta Thalassemia and Sickle Cell Disease, putting it in direct competition with Bluebird Bio (BLUE).

PROTACs are a novel class of molecules that selectively degrade proteins by harnessing the body’s natural protein disposal system. This could enable targeting proteins deemed undruggable with conventional methods. In principle, the concept is similar to siRNA but with a small molecule, making it more feasible in tissues outside the liver. Arvinas (ARVN) is expected to start P1 for ARV-110 (targeting androgen receptor for prostate cancer) in Q1 2019 and could have initial results by year-end 2019.

While both approaches are not validated in humans, any clinical proof of concept with any of the programs above will be huge news, potentially opening a new era in medicine.

IMMUNO-ONCOLOGY

The year has been particularly tough for IO pure-plays who went from the industry’s darlings in 2015-2016 to the most beaten down group on the stock market. This is easily illustrated by pure play IO stocks like Jounce (JNCE), Surface (SURF), FivePrime (FPRX) and Corvus (CRVS), all of which are currently trading close to their cash levels. Arcus (RCUS) is an exception with an enterprise value of ~180M.

There will likely be a lot of PD1 combo data in 2019 but so far nothing looks promising. Nektar’s (NKTR) PEGylated IL2 will have readouts from multiple studies but data will be hard to interpret without a control arm.

At ASH 2018, CD3 engagers demonstrated good efficacy in liquid tumors. Three CD20-targeting programs from Roche (mosunetzumab and CD20-TCB) and Regeneron (REGN) demonstrating good efficacy (including durable CRs) in NHL. Side effect profile appears manageable but toxicity is still an issue. Importantly, all agents were given once every 2-3 weeks, in contrast to first generation CD3 engagers (BiTE) that are given via continuous infusion over months.

Mosunetuzumab

CD20 TCBAmgen presented preliminary results for its CD3xBCMA BiTE in multiple myeloma, demonstrating responses in 7/10 patients. While preliminary, this type of activity may make bispecific BCMA antibodies (especially constructs with half-life extensions) a real threat to BCMA CARs.AMG420GENE THERAPY

2018 was not an easy year for gene therapy, a sector for which I still have high hopes. With a few exceptions, news flow has been negative to neutral dominated by development setbacks and early uninterpretable data. Muscle diseases provided a preliminary silver lining while ophthalmic and liver targeted programs failed to impress.

Early positive readouts in muscle diseases

Audentes (BOLD) and Sarepta (SRPT) presented positive data in XLMTM and DMD, respectively. Audentes’ AT132 data continue to look promising with significant improvements in functional and respiratory endpoints that cannot be explained by spontaneous improvement. As patients are treated early in life and their muscle tissue grows significantly, duration remains a key concern (in two patients there were mild score reductions at the last time points but it’s too early to tell whether this is a real trend or not).  The company expects to present updated results in 2019 and intends to file for approval if results continue to look good.

BOLD- ASPIRO

Investors got excited with Sarepta’s DMD data which were limited (4 patients) but did show impressive micro-dystrophin expression and sharp reductions in CK (a marker for muscle damage). The effect was less dramatic on key functional scores but improvement was seen across the different endpoints, including NSAA, which will probably be the primary endpoint for the pivotal study. Still, these improvements are hard to interpret without a control arm as they can be unrelated to treatment. Similarly to the case in XLMTM, DMD patients are children so the question of dilution as patients grow and add muscle mass is a very pertinent one.

Solid Bio (SLDB) and Pfizer are also enrolling patients in their respective DMD programs, with initial data expected in 2019. Results will be inevitably compared to those of Sarepta but they will likely be hard to interpret via cross trial comparison.

DMD GTx - From Citi

Source : Citi, November 2018

Pompe disease is the next frontier in muscle diseases with multiple programs in development, including Spark’s (ONCE) SPK-3006 and Audentes’ AT982. Both programs are expected to enter the clinic in 2019 with Spark taking the lead following a recent setback with AT982, forcing Audents to explore a different vector.

Liver programs generated mixed data

For liver-targeting therapies, 2018 will go down as a disappointing year. While hemophilia B programs from Spark and UniQure (QURE) generated promising data, Spark’s Hem A program continued to face challenges, leaving Biomarin’s (BMRN) BMN270 in the lead.

So far, companies could not replicate the initial success with hemophilia in other liver diseases.

Ultragenyx’s (RARE) DTX301 for OTC demonstrated suboptimal efficacy with only two of six patients achieving a response (normalized ureagenesis at 24 weeks). There was no dose-response despite a 3-fold increase in the second cohort, which is concerning. In 2019, Ultragenyx will provide an update from the third cohort.

The company recently released preliminary results from a second liver-directed gene therapy for GSD1, reporting clinical improvements (time to hypoglycemia) in 2/3 patients in the first cohort. The trial will start enrolling the second cohort imminently with potential data later in 2019.

Audentes’ AT342 in Crigler-Najjar syndrome also encountered setbacks due to slow enrollment and a transient biomarker effect in the first patient. The study is evaluating a higher dose with data expected in 2019.

Retinal programs

The retinal gene therapy space started 2018 with high expectations following the approval of Spark’s Luxturna (Dec 2017), however, the year included mainly mixed or negative data readouts.

Nightstar (NITE) presented first data for its XLRP program which demonstrated some efficacy signals at the lower doses but adverse events at higher doses required intervention which made data hard to interpret.

AGTC’s (AGTC) XLRS program failed to demonstrate efficacy, leading Biogen to terminate its collaboration with the company. AGTC has three other programs in clinical development, data from which are expected during 2019. Expectations around the two Achromatopsia programs are low given setbacks observed to date. The XLRP program recently entered P1 and it will be interesting to see whether AGTC will also see the efficacy signals observed by Nighstar.

REGENXBIO (RGNX) reported an update from its AMD program, which is intended to replace chronic administration of anti-VEGF drugs. Although the company reported a dose-dependent expression of the protein in the eye, clinical outcomes were not as unequivocal with 3/6 patients requiring anti-VEGF rescue treatments.

MeiraGTx (MGNX) continued to enroll patients in three retinal programs (RPE65, Achromatopsia, XLRP), with data expected in 2019.

CNS

Investors should expect a lot of readouts for CNS gene therapy programs in 2019. Similar to the case in ophthalmic programs, the field has one major success story (Avexis) that spurred a lot of activity but so far no home run data have been reported. Companies are focusing on rare genetic diseases such as MPS and Batten (CLN) with a strong preference for AAV9 given its ability to penetrate the brain and efficiently transduce neurons.

Abeona (ABEO) is one of the leaders with 2 programs in the clinic (MPSIII A and B, respectively), with two additional programs (CLN1, CLN3) expected to start P1 by mid-2019. In 2018, the company reported encouraging biomarker and imaging data for its MPS programs but so far could not demonstrate unequivocal neurocognitive effects. With no new data since May 2018, 2019 is going to be an important year for both programs. The MPSIIIA program will focus on younger patients hoping to see neurocognitive stabilization or improvement in 6-8 patients, which may be sufficient for approval.

Amicus (FOLD) recently became a dominant CNS GTx player via the acquisition of Celenex in September 2018. The company now has two clinical stage programs for Batten disease (CLN6 and CLN3) and multiple preclinical programs (CLN8, Niemann-Pick C). In its R&D day, Amicus presented encouraging anecdotal results for the first two patients, indicating disease stabilization.

FOLD

REGENXBIO (RGNX) expects to have three CNS programs in the clinic by YE2019. RGX111 (MPSI) and RGX121 (MPSII) are actively recruiting patients with preliminary data expected in 2019. A third program for CLN2 is expected to enter the clinic in 2019.

Beyond rare diseases, there are multiple gene therapies for Parkinson’s disease, most of which are designed to increase dopamine levels in the brain and do not address the underlying cause of the disease. Voyager (VYGR), Axovant (AXON) and MeiraGTx (MGTX) have programs in the clinic.

Ex vivo gene therapy

In 2018 three ex-vivo gene therapy companies got listed. Rocket (RCKT), AVROBIO (AVRO) and Orchard Therapeutics (ORTX) joined Bluebird Bio (BLUE), which is still the leader in the space. The companies are using lentiviruses to transduce blood cell progenitors outside the body (ex vivo).

Bluebird, which became more of a CAR story following promising BCMA data in multiple myeloma, continued to advance LentiGlobin for Beta thalassemia and Sickle cell disease (SCD). Recent data at ASH demonstrated good efficacy with an optimized manufacturing process in SCD but a case of MDS in one patient raised concerns among investors despite the fact that the cancer cells did not contain LentiGlobin’s transgene. The company guides for a potential approval of LentiGlobin in 2019 in Beta thalassemia, initially in Europe.

Rocket presented data in Fanconi anemia which demonstrated some signs of efficacy but totality of clinical data were inconclusive. The company expects to start dosing patients with an optimized process in 2019. The company expects to advance three additional programs to the clinic, including one in vivo AAV-based program for Danon disease.

AVROBIO started 2018 with promising data for its Fabry program but a recent update was disappointing due to lack of persistence (see my take here). In 2019, the company will provide updated results in Fabry, including data from an improved manufacturing process that could improve persistence and expects to start P1 for two additional programs (Gaucher and cystinosis).

Orchard has already an EU approved product for ADA-SCID (a rare immunodeficiency syndrome), originally developed at GSK. The company has four other clinical stage programs including two immunodeficiency programs, one rare metabolic program and a program in Beta Thalassemia.

siRNA

Another important 2018 landmark was the first approval for a siRNA drug, Alnylam’s (ALNY) Onpattro for TTR amyloidosis. The road was admittedly longer and more expensive than originally anticipated (17 years from the first paper to describe siRNA in human cells, 16 years from the establishment of Alnylam and 14 years from its IPO), but at the end of the day it should be viewed as a major success story with a validated class that should generate a steady flow of new drugs going forward. The next step for the field would be validation of siRNA drugs using  GalNAc delivery which carries a major overhang following revusiran’s P3 termination due to mortality imbalance.

At a market cap of $9B Alnylam is not a steal yet I would feel much comfortable owning it today vs. owning Moderna at $5.6B. mRNA drugs have an explosive potential and do not directly compete with siRNA drugs but if history is of any indication, mRNA could be years from realizing its potential. Alnylam has everything Moderna lacks: Clinical validation across multiple agents, genes and indications (so far limited to liver diseases); a clear translational route from in vitro through animals to humans and market assumptions that stand up to scrutiny.

Portfolio updates

I am selling Endocyte (ECYT) and Sunesis (SNSS), adding another position in Stemline (STML) and starting a new position in Chiasma (CHMA).

Portfolio holdings – Jan 13, 2019

Biotech portfolio - Jan 13, 2019

BIOTECH ETFS - 13-1-2019

94 thoughts on “Investment ideas for 2019

  1. Hi ohad , Thank you for this excellent summary. Very interesting stuff and thoughts as always. Can you explain your investment case in CHMA ? And do you think STML has a reasonable Chance of being acquired in near Future? Thank you and have a nice WE.

  2. Carlos – Thanks. CHMA should report P3 data this year and I think they have a reasonable chance of meeting 1ry endpoint based on their previous P3 (which didn’t have a control arm).
    STML – There is still uncertainty around # of eligible patients so I think a potential acquirer would want to see 2-3 Qs post launch.

    Alex (CHMA) – Good catch, it’s a glitch on Yahoo Finance I couldn’t solve, in any case I factored that in by reducing the amount I earned on paper in the cash position.

    Ohad

  3. i must have missed it when you removed BLUE bluebird
    from your portfolio. what could have been the reason?

    thanks again

  4. CHMA look a compelling story but it will be a change to buy shares. The volume on Fri was 2.1k shares!?! If a couple of us decided to buy on Monday, the stock would easily double.
    Thanks for the excellent bio-market overview. A lot of names to add to the “watch” list.

  5. Ohad,

    Lots of stock plunged due to market correction. What do you think on UMRX? thinking create a list with great potential and reasonable price.

  6. “Richard Baker (ADVM) – Their cash position is a big advantage but recent setbacks took away most of the upside potential imo. Not optimistic about their AMD program. ”

    Ohad, why are not optimistic about the AMD program? What’s left, if not the AMD program? Will the stock remain in your model portfolio?

  7. RM (BLUE) – I don’t recall adding it. I’ve always followed it closely but don’t think I ever owned it (unless I am missing something…). I don’t have anything against owning it, waiting for a better entry point.

    teddy (ARCT) – Don’t know them well, need to take a closer look.

    andre (CHMA) – Yes, thin trading.

    Kenny (UMRX) – Definitely a name to follow as they offer a different angle to CAR but differentiating it clinically is going to be a challenge unless they pick new targets or show activity in solid tumors.

    Richard Baker (ADVM) – Hope I am wrong but I think it will be very challenging to get significant protein expression with intravitreal administration. Still thinking about whether to keep the stock or not. It’s a long shot but but EV is very low.

    Richard Baker (CRNX) – Agree, definitely worth tracking, no data in patients yet but PD markers in healthy volunteers were positive. The fact they have an oral small molecule with good selectivity is an advantage but on the other hand it’s hard to predict long term safety with a novel small molecule, CHMA uses a validated somatostatin analog so challenge is absorption and local concentrations in the gut.

    Bobjam (PRQR) – Don’t have a strong opinion on them. Signal is clearly there but recent safety issues are disconcerting.

    Ohad

  8. Thanks for the quick response.
    I made a lot of money on EZCH.
    Have substantial private placement stock on ASSOCS.
    A little CGEN and watching it.
    All Israeli companies.
    Too bad you can’t comment on them.
    😉

  9. 6.6 million stemline offering…about 25% dillution and shares now trading around $8.70. wondering why the offering is now when shares are near 52 week lows. Not sure if this is buying opportunity or one should just be cautious and take a wait and see approach?

  10. Hi Ohad,
    Unfortunate timing on the STML add… hopefully their PO pricing will be the baseline and with good results we will see it 2x to 3x over the next couple of years. What is the general investor expectation on ROI for Public Offerings? 2x to 3x in 2 to 3 years? Just wondering – with VKTX and XENE pricing being $18.50 and $14.50 respy and their current share prices at $8 and $7 why are PO investors not lapping them up?

  11. CHMA – Started to dig a bit on CHMA. My big question is on the prior P3 data that resulted in the CRL on their drug in 2015. It looks like for the initial P3 trial that 89% of patients were responding to the injectable somatostatin analogs at baseline. At the end of the P3 trial, 62% of patients achieved disease control with the CHMA oral pill. So, does this possibly suggest that the CHMA oral pill is not as efficacious as the injectable analogs or am I misreading the data? I realize the P3 that reads out 3Q is versus placebo so perhaps not as important for that binary event but perhaps more important for the next P3 trial that reads out in 2020 that is head-to-head with the injectable analogs.

    I do get that even if efficacy is less for the pill versus the injectables there are still the other advantages of having a pill. But, may be important to consider versus CRNX down the line. I listened to the CRNX JPM presentation and it wasn’t clear to me that they expect their drug’s efficacy to be any better than the current injectables. I guess CRNX trades at such a vast premium to CHMA because their drug is a novel drug they designed themself versus CHMA drug being a reformulation of the existing injectables.

  12. Alex (CHMA) – Q3/19 from what I understand o

    Sam (STML) – Obviously not idea timing but they need the money for the launch. They probably waited for approval, expecting a positive impact on share price but I understand their decision.

    Les – There are no rules, hard to say…

    mcbio316 (CHMA/CRNX) – Agree with your assessment, even if CHMA’s SSA is not as efficacious as injectables in some patients, I think many will prefer it as a 1st line option and use the injectables in Tx failures. I am not against CRNX, it’s a matter of risk/reward profile and time to data that sways to go with CHMA for now.

    Ohad

  13. CHMA/CRNX – Thanks for the comments. One other point on CRNX that gets to your point on unknowns on safety: at JPM they implied that their 2nd drug being developed specifically for NET is a bit better than the lead for acromegaly (both are oral sst2 agonists) because it is more potent and they also alluded to potential safety concerns for the lead drug that the 2nd drug doesn’t have. They didn’t specify what these safety questions were but noted that the P1 for the lead drug was clean and appeared to address their concerns but presumably points to potential concerns for longer-term, later stage trials for the drug.

  14. Ohad

    You mentioned INSM as a low EV company with derisked assets. Market cap has doubled in less than a month. Is this too much too fast or is the stock compelling to you at these levels? Also, Arikayce, their approved therapy for the treatment of MAC(lung disease) appears to have gotten off to a decent ramp. Is it this asset or their pipeline that most interests you?

  15. Ohad
    Do you follow ALNA?
    It looks they at the same stage as CHMA – Ph3 top line data In H2. Potentially filling for BLA thereafter (6mo follow up of 400pt.).

  16. What is your view on the IMMU CRL? Cited CMC issues. It doesn’t seem to be related to clinical data and no other study is required. You liked the data so could this be the right time to step in once we have further guidance from management?

  17. Hello Ohad,

    isn’t TBIO very undervalued when you compare to MRNA? They have a Phase II product!

    Thanks
    Toby

  18. Hammer time…I was looking at $MGTA and really fascinated by what they are doing…through my research I came across $STRO Sutro Biopharma…any thoughts on them? Thanx sir

  19. I see it is debated about Nordic Nanovector, and they may have great news to report in 2019.

    25. okt. 2018. Nordic Nanovector’s Betalutin receives promising innovative medicine (PIM) Designation in the UK for the treatment of Follicular Lymphoma

    Nordic Nanovector’s Chief Operating Officer, said 02 january 2019.
    As we advance with Betalutin® through the pivotal PARADIGME study we are putting in place key elements for its commercialisation pending approval.

    nordicnanovector.com

  20. EDIT/CRSP/NTLA – Ohad, with news of EDIT CEO stepping down, that leaves 3 high-level EDIT execs that left within the span of a year (CFO and CMO left earlier). Have to wonder if this is an overall bearish sign for CRISPR or just specific to EDIT and thus a bullish sign for CRSP and possibly NTLA. Or it could all just be noise though I find 3 high-level exec departures unlikely to just be random noise.

  21. Ohad
    Any opinion about BHVN?
    NDA in ALS. 3 platforms, 3 drugs by 2021.
    Looks low risk – all programs clinically validated. Not sure about valuation – 1.6B.

  22. Ohad, what changed your mind about ADVM’s wet AMD drug? The primate data looked awfully strong.

  23. mcbio316 (CHMA/CRNX) – Yes, with small molecules long term safety is always a wild card, especially in non-oncology indications.

    Les (LPCN) – Impossible to interpret this small non-controlled study imo…

    Dave (INSM) – I am mostly interested in Arikayce, good pricing and a strong launch. Waiting foe a better entry point.

    andre (ALNA) – Yes, vert interesting approach that makes a lot of sense, I just find their clinical validation too soft to support P3. Market cap is low for a P3 company ,though.

    Kenny (NTGN) – I am still on the sidelines as I don’t believe in cancer vaccines approach even with NeoAgs. I like their T cell expansion program but it isn’t in the clinic (expect to start P1 this year).

    Nick (IMMU) – In principle yes, but I would wait for more clarity from management because timelines are still opaque, especially in light of the shut down.

    Toby (TBIO) – Everything is undervalued when compared to MRNA….
    Don’t know the mRNA field well to form a concrete opinion on TBIO, approach is def interesting.

    Robert goulet (STRO) – Their pipeline is too early IMO, they should have a lot ADC technologies but couldn’t find a lot of info on the CD74 and FRa programs. The animation in their IR section is addictive, though…

    mcbio316 (EDIT/CRSP/NTLA ) – Don’t know what to think, it doesn’t look coincidental but EDIT conveyed that everything is on track development-wise.

    andre (BHVN) – Sorry, don’t know them well.

    Richard Baker (ADVM) – I am just cautious after failures with other programs in AMD or with intravitreal administration.

    Stevengatxje (CHMA) – Hard to say, depending on the data but if it’sa home run upside is very significant.

    Ohad

  24. Ohad
    SEEL just started trading.
    They have 2 drugs in PTSD/MDD and Parkinson. They expect to start 2 pivotal Ph3 trials in 2019 in US and EU.
    Due to the reverse merger the valuation is extremely low – 26M with 18M cash.
    What do you think about their programs.
    VKTX started in the same way with licences from LGND and now is 560M company. Actually the CEO of VKTX is in the BOD of SEEL.

  25. Ohad, do you have an opinion on VRCA? Looks like great Phase III results in an underserved market.

  26. Thanks for your comments on IMMU. Looks like it rebounded from when I posted already.

    I wanted to get your thoughts on KPTI. I know you and I have discussed before, but it seems really attractive at these levels with a market cap of 546MM. We have a few near term catalysts as well, including the ODAC (ad comm) in late Feb and eventual PDUFA on April 6. Additionally we will be seeing early safety data from the other two compounds, eltanexor, and KPT9274. Any PD signals could provide further upside. I’m curious to hear what you think. Thanks as always.

  27. Ohad,

    you will hold through the P3 results of NERV, correct?

    How risky do you see their P3 in general?

    thanks!
    Christian

  28. hi Ohad,
    OVID down enough for a buy or not so interesting anymore for you?
    thanks and have a great time
    Paul

  29. Ohad
    Do you like the VYGR deal?
    It might bring back confidence in their Parkinson’s program.
    They will have 350M cash and 50% reduced expences in both programs PD and FA.

  30. Ohad/Nick

    I invested in KPTI when they dropped a few days ago, as I am optimistic about their upcoming FDA meeting. Would love to get Ohad’s thoughts. Some of the issues that convinced me:

    —There are very few drugs in oncology that have a 26% ORR in patients who have failed 5 different drugs.
    —8% grade III nausea is a concern (especially in an oral drug taken every day), but is probably surmountable with better prophylaxis. On the other hand, no neuropathy which is usually treatment-limiting in extensively treated patients. Also, in combination studies, less neuropathy is seen.
    —Not randomized, but the fact that nonresponders have an OS of 1.7 months versus 15 months for >=MR suggests that there are no other good alternatives for this group of pts and the improvement in responders is meaningful.
    —since accelerated approval depends on lack of other options and serious unmet need hopefully will get marketed in 2019 while awaiting phase III combination data

    Thanks as always to Ohad and other blog members. I really find the dialogue invaluable.

  31. Do you have an opinion on LPTX? Seems to have a lot going on for a $34 million company. But really short on cash.

  32. ESPR

    Ohad,
    how do you see the europe deal? is there still a reasonable chance for a buyout after this “deal terms”? where do you see the stock price after potential approval next year?

    Thank you.

  33. RGNX

    ohad, do you still like the stock and keep on adding at these levels? how much of the valuation is covered by royalties/milestones from NVS / BOLD? EV seems quite low with about 470m in cash at the end of 2018. Maybe you could give a short update about the stock. Thanks :-)

  34. Ohad,
    Thank you for the very informative update. I really enjoy reading your posts.
    Any opinion on Y-mAbs Therapeutics? They are currently conducting two pivotal phase II studies in different neuroblastomas.

    Thanks.

  35. Why no mention of NASH stocks in your post? One of the current hottest areas with lots of momentum too…

  36. TRVN doubled last week .62 to 1.40 and then dipped back to 1.0 on a private offering on Thur/Fri. Now back up to 1.32 over Mon/Tue. Anyone holding TRVN have comments?

    Hi Ohad – will appreciate your comments on TRVN recent updates- I know you got it out of your portfolio mid last year after the lack of positive results but will really appreciate your thoughts.

  37. Declan (CAPR) – Didn’t delve deep but at first glance didn’t find it compelling.

    andre (SEEL) – Wasn’t aware of them, will take a look.

    . on January 26, 2019 at 9:59 am said: Edit
    Ohad
    SEEL just started trading.
    They have 2 drugs in PTSD/MDD and Parkinson. They expect to start 2 pivotal Ph3 trials in 2019 in US and EU.

    Andrew c (LPTX) – Sorry, haven’t been following this program.

    Richard Baker (VRCA) – Sorry, dermatology is out of my scope.

    Declan (AUPH) – Hard to say… 1ry endpoint eventually wasn’t met so I would take everything with a grain of salt.

    Nick (KPTI) – I am still struggling with this one… the myeloma data in penta-refractory patients are positive but market is very competitive, they have some other efficacy signals but no home run data set yet plus safety is still an overhang. Anxious to see data with their next gen compounds to see if decreasing brain penetrability resolves some of the tox. Bottom line, still on the sidelines.

    Christian (NERV) – Correct. I think risk/reward is ok, especially for a CNS program.

    Larry Holt – It’s always hard to predict how broad the effect will be. I personally don’t think there is so much rising on CRISPR today as the exposure in the biotech field is still limited (similar to siRNA 7 years ago).

    Les (TRVN) – Sorry, not following them anymore.

    paul (OVID) – I decided to wait as clinical data in Angelman were disappointing. CH24H program is interesting but still early.

    andre (VYGR) – In the short run the deal reduces cash burn and provides non-dilutive funding but I view it as a sign of weakness and long term economics aren’t that compelling IMO. Same for the MGTX deal, they are giving a lot of upside for a limited upfront payment.

    Josef (VYGR) – Agree about EV. Upside potential is more limited now but the risk of dilution is significantly reduced. I still like their early stage programs.

    Carola (MGTX) – Still prefer to wait for data, especially now that the RPGR program is partnered.

    Gary (KPTI) – It’s one of those cases where a drug has a decent likelihood of approval but I am not sure about initial market performance in a crowded market like myeloma with all the BCMA programs.

    druz –
    FTSV – I don’t like risk/reward given all the issues with other CD47 programs, they may have a differentiated product but still efficacy isn’t stellar so far imo.

    MNOV – Sorry, don’t know them well.

    Richard Baker (LPTX) – Sorry, not following them.

    James (MGTX) – Yes, but economics are somewhat underwhelming and upside potential is capped significantly now. Still like the xerostomia program.

    karlos (ESPR) – Hate to sound negative on all the deals today but I also found this one disappointing, near term it removes a lot of financial concerns, don’t think anybody will buy them before they get approval.

    svenja (RGNX) – Yes I still like it given the vast exposure to many AAV 8/9 programs. I am still a little concerned about te lack of a clear wholly owned value driver but this may change with their MPS programs.

    Lasse (YMAB) – Don’t know them well. GD2 has been a round for years so not sure how different their naked mAb is, the radioconjugate is a high risk program because it is an IgG.

    Kay Lee – You’re right, other than MDGL and VKTX I am not very familiar with the field. Not very optimistic on ICPT’s readout this year, though…

    Les (TRVN) – Sorry don’t have a strong opinion here….

    Richard Baker (APTX) – Not sure, NMDA modulators (positive or negative) are very interesting with so much potential but very hard for me to evaluate them.

    Ohad

  38. Ohad
    ABEO has 300M market cap and >100M cash.
    It looks the market does not believe in their programs.
    Do you agree with the market?

  39. Ohad, always nice to see you continue to be objective, even if negative.

    Where do you stand with XENE and CHMA. Are those still good risk-reward buys?

  40. Gene therapy

    Are you still positive on Gene therapy in General After the recent set backs? Of do you think about eliminating some stocks from your Portfolio? There was a huge sell off for rgnx Abeo nite advm agtc etc…

  41. Ohad
    do you follow CNST?
    Two Ph 2 updates this year. Indicated that they will start in 2019 talks for pivotal trail(s) with FDA after the data !?!
    240M cap with 120M cash. Cash until Q2 2020.

  42. Ohad – Kodiak Sciences (KOD) is developing a long lasting 12-20 wk duration anti-VEGF (KSI-301) for wet AMD + DME and RVO. They will enroll a 400 pts in a phase 2B pivotal study in 2Q 2019, with interim and primary readouts in 2020 and 2021. Have you looked at them?

  43. Hey Ohad,

    Any opinions on GILD NASH failure and any implication for MDGL VKTX- maybe a catalysts for shares to start climbing up.

    Thanks,

    Dan

  44. Synthorx (THOR) non-alpha IL-2 looks interesting as well. Pre-clinical data looks intriguing. All comers solid tumors P1/2 IND filing in 2Q and poc data 4Q 2019.

  45. Hey Ohad,
    Any opinions on the esketamine SAC? And how the vote may affect approval chances of other drugs for MDD – VTGN RLMD AXSM SAGE
    Thanks!
    Dan

  46. Hey Ohad,

    What are the implications of the esketamine SAC vote for other stings for MDD, if any? AXSM VTGN SAGE RLMD.
    Thanks!
    Dan

  47. Ohad
    Good new for JnJ for their exketamine spray.-14:2 panel vote.
    SEEL has pivotal trail ready drug – racemic ketamine nasal spray for similar indications – suicidality, PTSD and MDD.
    JnJ panel vote looks to validate the SEEL drug.
    The second program is partial dopamine agonist for Parkinson’s Disease with positive ph 2, but shelfed by LGND after an acquisition of a company.
    I would appreciate if if you look into this company. Unique case – 25M cap is very low, considering the both programs are sort of validated.

  48. Hey Andre,
    Re SEEL: is the market cap $25 million? Strangely I have seen different valuations on my brokerage. Not sure why.
    Dan

  49. Hi Ohad,

    Thanks much for your valuable comments.Appreciate them a lot.

    Any comments on FCSC? Big jump today after the Feb11-12 CEO webcast indicating positive progress and possible Ph2 readout very soon. Stock jumped 10% today and likely big jump coming soon. Patient population seems very small though for their drug – 2500 in US. Does the value lie in their approach and potential use in other applications?

    Also BIS seems to have taken a beating – dropping from 26 to 17. seems to be value in it only if you take profits like any other stock – not hold for the long term like a biotech.

  50. ABEO

    Can you Write a few words about the actual Development at Abeona and the reason why the Stock is hated by the market these days. Also has KRYS a higher chance of success with their program? I See you Go with Both stocks. Thanks!

  51. Hi Dan
    My understanding from the merger agreement is that the outstanding shares are 6.22M. APRI got 15% or ~1M shares.At $4 it makes $4M for APRI stockholders, which was the EV of the company before the merger. Just based on the APRI deal I think $25M is correct
    There are some similarities between SEEL and VKTX – drugs from LGND with validates MOA. Let’s see if SEEL can do the VKTX trick. Starting one of the pivotal trails could be the trigger.
    I got 2k shares starter position. Waiting for Ohad opinion and for the inenevitabl secondary before buying more shares, if at all.

  52. Andre, Dan, SEEL has dipped more than 10% since your first post. You folks have taken a ‘Ohad like’ position already 😊. Seems you have a high degree of confidence based on LGND pedigree (although LGND itself has taken a beating). Data so far looks that good?

  53. ALSO – do you have any comments on TRVN and FCSC?

    Keeping fingers crossed on ICPT. Things don’t look so good. Recent piece on SeekingAlpha seems to think GILD will acquire GALT or MDGL on failure of their NASH drug. VKTX being couple of years behind. Any ideas on that front?

  54. Hi Les
    Sometimes reverse mergers offer nice opportunity.
    Check Ohad blog from Sep 2017. I asked about ITEK / RCKT reverse merger. I took a starter a bit too early, got some beating of ~ -15% when the stock dropped below 4.
    Ohad was positive about the technology, so I doubled down.
    Exactly one year later RCKT was trading at $25. Sold my initial 2K shares, still holding the rest and still like the company.
    The history may not repeat with SEEL, but the current cap of 23M is compalling, so I decided to gamble a bit until the secondary.
    At that point I will see what to do – sell, buy or nothing

  55. Thanks Andre. Bought some too. For all the NASH watchers – I was apprehensive about ICPT but it turned out well. Glad I held some shares through the results. Unfortunately VKTX got hit short term by the news.

  56. HI Ohad,

    Based on the low valuation, I too would love if you looked into SEEL. Any thoughts about the Parkinsons data from NTEC this morning? Thanks so much, appreciate all your feedback!

  57. Andre & SEEL followers,
    SEEL dropped some more… not sure why but may be this – Just saw a news release that ORPN (Pontifax) sold its Trehalose assets to SEEL for development. ORPN is up big but SEEL dropped. Maybe secondary offer as you said may be needed for the development. Why would SEEL acquire this if they just had a merger?

    Ohad – would really appreciate your opinion on SEEL.

  58. Hello Ohad,
    I too was piqued with the SEEL commentary- until now, when I came across the “Citron Publishes the Smoking Gun on Ligand Pharmaceuticals” article, where they published pictures of the purported SEEL offices in NYC. I would suggest that anyone interested… google that and decide what to make of SEEL.
    I also was aware that Viking VKTX took a hit a few weeks back when this article first surfaced, also because of their formative ties to Ligand. Unfortunate because VKTX is an important position for me.
    I would much appreciate it if you could comment on the Citron publication. Is VKTX still a worthy investment? Thanks,
    Lawrence

  59. Any SMID cap companies come to mind that you think has the potential to the next Celgene, Gilead, etc (large caps)? BLUE, AGIO, BPMC, SAGE come to mind based on the potential of those initial platforms. Maybe RGNX, ONCE, BOLD if current generation gene therapies take off.

  60. Hi Ohad,

    Appreciate the great blogging! Ive been looking into the epidermolysis bullosa drug developers. Do you have any preference between ABEO, KRYS, and, FCSC? I took a small position in KRYS, if they can continue to show positive data with a topical allogeneic gene therapy, I think it has very interesting upside.

  61. Do you think autologous CAR-Ts will ever have a successful commercial product? How do you see BLUE’s bb2121 doing commercially vs other BCMA approaches (BITEs, bispecifics, allogenic)? In the allogenic space do you have any opinion on ATRA? thx

  62. Hi Les and other
    Sorry if I misled you with the SEEL story
    The deal today does not make sense, so it’s a red flag.
    Reading some financial disclosure docs I realized that behind the 18M financing there are a lot of warants, another red flag.
    I did a sloppy DD here.

  63. andre (ABEO) – I thought recent updates from MPS were disappointing as the clinical signal wasn’t as strong as biomarker data, could be related to age and stage of disease but still. I plan on holding them as valuation isn’t high and they have multiple shots on goal.

    Bio Executive (XENE/CHMA) – I like both as cheap , high probability of success stories (with all the obvious caveats…). Plan on holding both.

    Sereb (Gene therapy) – Yes I am still positive but have to admit the degree of failures and setbacks surprised me. This is beyond normal attrition but I hope that at least some of the names you mentioned will have good data this year.

    andre (CNST) – Haven’t looked at them for a while but overall no very optimistic about EZH2 as a target.

    biocqr (KOD) – I think it’s a high risk program and validation in the clinic is limited, NVS new VEGF product will raise the bar even higher. Don’t see a reason to own it now.

    Dan (GILD) – Don’t think it has any implications besides removal of potential competition. Ask1 inhibitors have never demonstrated a robust clinical signal in contrast to Thrb agonists from MDGL and VKTX.

    biocqr (THOR) – personally I don’t share the excitement around IL2 variants, so far monotherapy data was disappointing and NKTR’s single arm data are iffy. Reminds me of the IDO craze 2 years ago. I don’t think risk/reward is favorable with the current valuation.

    Dan (esketamine ) – I think people are going to use it but there is a lot of room for new agents with improved (safety, oral) clinical profile.

    Toby (GRTS) – I think the right way to pursue neoAgs is via cell therapies, not cancer vaccines, so I prefer to wait until such programs from GRTS and NTGN mature.

    andre (SEEL) – Sorry, not familiar with the story here.

    Les (FCSC) – I prefer other approaches from ABEO and KRYS. Don’t think market size is the problem as pricing will be probably high.

    BIS – As an ultra short ETF, there is obviously a lot of volatility but I plan on keeping my position as a hedge.

    Carlos (ABEO) – Ithink the primary reason for weakness is disappointing MPS results, so far the strong biomarker reduction even in the CSF did not translate to an unequivocal clinical benefit. Yes, for DEB I prefer to go with both names, both programs are high risk IMO but rationale is strong.

    Lawrence (MEIP) – Not following them closely but not excited with HDAC inhibtors, similarly to other epigenetic drugs that appear to broad.

    Les (TRVN/FCSC) – Not following them closely.
    ICPT – I was positively surprised by the data but profile is still unfavorable IMO. Good for next gen FXR agonists which are hopefully safer and more potent.

    Kenny (EOLS) – Sorry, don’t know the field well.

    Chad (SEEL/NTEC) – Sorry, still didn’t have a chance to take a closer look, too much work…

    David – That’s a tough question… It also makes you wonder about teh importance of a productive platform vs. one big success story that can be leveraged to expand the pipeline. Both GILD and CELG belong to the latter type imo.

    David (ABEO/KRYS/FCSC) – Thanks. I decided to go with ABEO and KRYS. Agree that the profile offered by KRYS is an ideal one that does not involve cumbersome production.

    William – I sure hope they will. I like BLUE’s bb2121, there is so much going on around the target so hard to predict…

    Ohad

  64. Any comments on Guardant Health (GH) that claims to use big data, machine learning and genomic sequencing to diagnose cancer through blood testing rather than tumor biopsies?

  65. Andre, backed out halfway out of SEEL and switched to GALT and VSTM. Hope to make up losses there. CBAY is also moving up. NASH is getting really crowded.

  66. Negative news for KPTI, FDA on KPTI “limited efficacy and significant toxicity demonstrated in trial population, it is unclear whether treatment with Selinexor-dexamethasone provides a clinically meaningful benefit that outweighs the risk of treatment”

  67. I thought the data looked better than the FDA interpretation, but they are considering all infectious deaths on study due to drug regardless of time off therapy. Given the patient population and their general medical condition, that is unlikely, but I see their point in a non-randomized setting. It does look like they will require the phase III BOSTON study with top-line results in Q4 19 for approval…..

Leave a Reply

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