Portfolio updates –ADC data readouts, AVROBIO, Chiasma

Crucial ADC readouts at WCLC 2019

The coming months will be very important for the ADC industry which has been struggling to bring forward effective treatments, especially for solid tumors. While there have been some positive news (mostly utilizing Seattle Genetics’ technology like the recent  update on GSK’s BCMA program in multiple myeloma), existing platforms are still limited by side effects. In order to address this need, the industry has to find new technologies that would minimize off -target toxicities.

To me, the most intriguing ADC platform today is that of Daiichi Sankyo, which has been quietly developing its next generation ADC platform at a time when most of its peers de-prioritized their ADC programs.

Daiichi’s bet started to pay off with DS-8201, now partnered with AstraZeneca (AZN), which demonstrated unprecedented efficacy in breast cancer. The company has 6 additional ADC programs, including two in clinical testing:  DS-1062 (anti-TROP2) and U3-1402 (anti-HER3). Both programs will report data at WCLC 2019 next month that, based on previous results, could demonstrate impressive efficacy.

The TROP2 program looks particularly promising based on preliminary findings presented at ASCO 2019. The study was able to reach high doses not typically achieved with ADCs (8 mg/kg) without severe toxicity issues (although side effects were clearly observed) and demonstrate very encouraging dose-dependent efficacy. If the trend continues and no safety show stoppers emerge, the 6-8 mg/kg cohorts may demonstrate a >50% response rate, which is unprecedented for an ADC in NSCLC. Response rate could actually be higher in TROP2 expressors as the trial did not include TROP2 expression as an entry criterion.


Data for DS-1062 and U3-1402 will be crucial for the entire ADC field as they could potentially validate Daiichi’s ADC platform and provide the first differentiated next-gen ADC platform in over a decade. Most importantly, they might mark the start of the next innovation cycle in the ADC space.

Positive results for DS-1062 will have a material impact on Immunomedics (IMMU), which has a TROP2 ADC. While Immunomedics’ lead indication is TNBC (triple negative breast cancer), their ADC could become irrelevant even before an expected approval next year as both ADCs use Topo-1 inhibitors as payloads. If DS-1062’s data are as good as expected, it will be very hard to justify Immunomedics’ valuation of ~$2.5B. Therefore, I would stay out of the stock going into WCLC 2019 given the asymmetric risk/reward profile.

AVROBIO – Back in the game

I was previously very skeptic about AVROBIO’s (AVRO) Fabry program (AVR-RD-01) given the decline in enzyme (AGA) levels and VCN seen 3-6 months post treatment. Based on the trajectory at the time I thought transduced cells will eventually vanish after ~2 years which could make AVR-RD-01 irrelevant.

I am now much more optimistic following  last month’s update that demonstrated stabilization of the slope of AGA levels and VCN in two patients 18 and 28 months post treatment, respectively (three additional patients did not have long enough follow up).

While more data are needed (# of patients and longer follow up) the new data suggests AVR-RD-01 may have a long lasting “tail” of enzyme activity. Enzyme levels generated by AVR-RD-01 appear clinically meaningful based on substrate reduction to levels below what had been achieved with ERT in these patients. Importantly, patient #1 is ERT free for 10 months with no significant changes in substrate levels, which unequivocally demonstrates the treatment’s activity with ERT’s “masking” effect.


Substrate levels are considered a good surrogate for long term tissue damage (mainly kidney and heart) but the clinical impact will have to be evaluated in the long run. A read-across from AVROBIO’s P2 in ERT-naïve patients further supports the notion that levels achieved in P1 will lead to clinical improvement.

The company presented biopsy data from an ERT-naive patient that had a dramatic reduction in substrate in the kidney, which is the approvable endpoint for Fabry. Enzyme levels in this patient were similar to long term expression levels seen in patients in P1. In theory, long term clinical outcomes should be better with AVR-RD-01 vs. ERT as the prior produces constant, stable enzyme levels vs. the typical peak/trough profile with ERT.

Things look much better for AVROBIO today but long term durability will remain an overhang for a long time as the company aspires to provide life-long treatments. Risk is still high but with the new data demonstrating stabilization or near-stabilization of enzyme levels in P1 coupled with kidney biopsy data in P2 and experience with other bone marrow transplant technologies, the company is attractive at the current valuation.

AVR-RD-01  is competing with AAV-based treatments for Fabry from  Amicus (FOLD), Abeona (ABEO) and Freeline. These treatments from are more straightforward to administer as a “drug in a vial” but their distribution profile and durability are still unclear.

Chiasma – Positive P3 but market unimpressed

Chiasma (CHMA) reported positive P3 data for its oral octreotide program, Mycapssa, in acromegaly. Despite the clear efficacy across every endpoint, the stock price is now lower than the price prior to the announcement.

Overall, results look very good to me with a clear superiority over placebo, which they demonstrate for the first time (previous P3 was a single arm study). The study, which involved switching stabilized patients from an injectable to Mycapssa, clearly demonstrated that in a significant portion of patients the disease can be controlled with Mycapssa: 58% of patients in the Mycapssa maintained an IGF-1 response (≤ 1.0 x ULN) vs. 19% in the placebo arm.

The drug’s eventual market penetration is a matter of debate but given the pain and inconvenience associated with injectables, Mycapssa should be able to capture a significant market share.  It is easy to understand why patients and physicians will prefer to start with oral and only if patients are not controlled, switch or add an injectable drug. Initial uptake is hard to predict but the eventual conversion to an oral alternative is highly likely.

Looking at rescue treatment and drop off rates during the study provides more color Mycapssa’s use in real life. 25% of patients in the active arm received rescue treatments vs. 68% in the control arm. Importantly 90% of patients who completed 36 weeks on Mycapssa opted to stay on the drug as part of an open label extension study.

The lackluster stock reaction can be attributed to future competition from Crinetics (CRNX), which has an oral agent (CRN00808) with encouraging P1 data including good PD modulation. As a highly selective and potent small molecule dosed once daily, CRN00808 represents a major threat to Chiasma but it is still in P2 and has no data in patients. One important advantage Chiasma has is the fact it utilizes a known and approved product with years of clinical experience. As a novel small molecule, Crinetics faces off target risks that will have to be assessed in long term studies.

In summary, Chiasma is now a de-risked story with a decent chance of capturing 25-50% of the acromegaly market. The indication represents a ~$900M  global opportunity so even a 20% chunk that translates to $180M in annual sales makes Chiasma a good risk/reward bet with a market cap of $216M.

Portfolio updates

I am starting a new position in AVROBIO based on the recent update in Fabry. I am also adding follow-on positions in Madrigal (MDGL) and Viking Therapeutics (VKTX), and selling Nightstar (NITE) following the Biogen (BIIB) acquisition.

Portfolio holdings – Aug 25, 2019

Biotech portfoio - 25-8-2019 - after changesBiotech ETFs - 25-8-2019

51 thoughts on “Portfolio updates –ADC data readouts, AVROBIO, Chiasma

  1. Ohad…Speaking of antibody drug conjugates…what are your thoughts on MRSN or STRO programs/molecules?

  2. ONCE – the merger with Roche postponed to Sept. 3
    the stock now is ~ 100$
    what do you think on adding ONCE and gaining an easy 10%?

  3. Robert goulet (MRSN/STRO) –

    MRSN – So far their technology has solved hte main problem of therapeutic window. Just like previous technologies, they can’t dose escalate easily and efficacy isn’t stellar.
    STRO – Their pipeline is too early, I am interested in their FRa program but need to wait for clinical data. They should have updated results at ASH for the CD74 program.

    Alex –
    MDGL/VKTX – I view both as long term de-risked holdings and potential M&A candidates at these valuations.
    AGTC , prefer to wait for more data.
    NERV – Prefer to wait for P3 readout this year, high risk event.

    Alex (ONCE) – I also think the deal with go through eventually but don’t know how to factor in risk/reward.


  4. immu-132, the trop-2 adc had similar response rates at this stage for their development. Their dose is 10 mg/kg and they are much ahead in development with their BLA to be resubmitted early 4th qtr.

  5. Ohad,

    thanks for your write-up, always interesting.

    Regarding ADCs, do you think ZYME’s ADC-Tech from their Kairos takeover has good chances of success? They started with licensing their tech (one small deal so far, and it sounded as they are expecting additional deals).
    I am very much looking forward to ZW49 first data later this year… Do you think it can compete with DS-8201..?

    Then another one, Belbuca (buccal film – oral formulation of buprenorphine) from BDSI – long-acting opioid schedule III substance – has a really nice growth trajectory, see below. Most opiods are schedule II. They have done a good job of getting coverage during the last few years.

    Q1 2018 to Q2 2019 TRx:
    27k -> 35k -> 44k -> 56k -> 65k -> 80k

    For this year they are guiding now 90 – 93 mio. USD net turnover for Belbuca (plus Symproic which they now distribute in the USD which gives a total guidance of 101 – 105 mio USD). Long-term they are now guiding 425 – 500 mio. USD annual peak sales for Belbuca and Symproic.

    They are valued at about 380 mio. USD. Sounds relatively cheap?

  6. Ohad
    Nice blog!
    Especially you added to stocks I like:)

    Is there any catalysis for MDGL & VKTX this year? It looks there will be some readouts next year. What is the reason to add now, not wait, let’s say until December?

    No position in IMMU yet, on my watch list though, but curious why positive readout with the same target TROP2 should be negative? They both validates each other, as in NASH, no?.
    You do not declare VKTX ‘irrelevant’ bc it will be 2 years behind MDGL. Not picking on you, just trying to learn.

  7. hi again Ohad,

    one more regarding CHMA

    If their TPE tech is good/valid, didn’t they conclude any license deals for their tech (maybe they have but I am not aware of it).

    Also I am wondering a little why they don’t have any advanced plans for Mycapssa in other indications. IP protection for this drug isn’t that long if I remember correctly.

    thanks as always for your insights!

  8. Alex, re ONCE
    I also think deal goes through (caveat emptor, worthless opinion, just an uninformed hunch) but doubt by Sept 3. You probably know this but for others Sep 3 is just the expiry date of the current tender offer, which they have already pushed back several times while waiting for FTC (and UK’s CMA?) to OK the deal. As far as I’m aware there is no new news on that front other than Roche saying recently words to the effect of apologies for delay but that they still expect deal to go through by end of year and are fully committed to it. If anyone knows anything else love to hear it.

  9. provocateur (IMMU) – I don’t think IMMU-132 demonstrated a >50% response rate at any stage but first let’s see if actual data for DS-1062 are that strong. Yes, they are ahead in development for TNBC but given the similar MOA, DS-1062 could eventually displace it.

    Christian (ZYME) – Yes, I am still optimistic about their ADC platform, preclinical package looks very good but we’ll have to wait for P1 data.

    Sorry, don’t know BDSI…

    andre –

    MDGL/VKTX – No major catalysts this year I am aware of but their valuations are attractive at these levels imo and programs are de-risked at least to some degree.

    IMMU – The main difference is that I assume (needs to be proven eventually) DS-1062 will be much more effective than ‘132. I cannot say that about either MGL-3196 or VK2809 at this stage.

    Christian (CHMA) – That’s a good question, I am not aware of any other programs or partnerships. I presume it’s a consequence of business decisions and probably technical challenges in finding an appropriate cargo and indications where the technology can reliably work.

    Alain (STML) – Overall launch is going very well but market opportunity is limited.


  10. I noticed the following patent application for CHMA:
    United States Patent Application 20190240284
    August 8, 2019


    Methods are disclosed of treating or preventing hypotension (e.g., neurogenic orthostatic hypotension or postprandial hypotension) or portal hypertension (e.g., bleeding esophageal varices associated with portal hypertension) or ascites (e.g., ascites associated with liver cirrhosis), by oral administration to affected subjects of compositions comprising a therapeutically effective amount of terlipressin or a pharmaceutically acceptable salt thereof.
    Chiasma, Inc. Waltham

    TERLIPRESSIN is a peptide hormone effective in the pituitary gland, Maybethe next peptide that should be made available orally.
    Terlipressin is an analogue of vasopressin used as a vasoactive drug in the management of low blood pressure. It has been found to be effective when norepinephrine does not help. Its currently not available in the US.

  11. Ohad , thanks for all you do. Do you happen to have an opinion on CCXI which has upcoming phase 3 data in Anca vasculitis 4th Q . A modest mkt cap of $396m a little over half of it in cash.

  12. Hello Ohad!
    Nice to read the update!
    Saw some skepticism about mdgl and the design of the Ph3 as they will be testing two doses- it seems in case the preferred dose generates a safety signal. Any concerns with their trial design and the rationale for also using a lower dose than the go ahead dose?

    Regarding CHMA – will they remain independent or do you expect a large rare diseases company to acquire them? And what would be valuation? 5x top annual revenues? So between $1 and $1.5B – or is this at the moment a mirage?

    What do you need to see from APTO MYC program to become a believer?

    Finally what are the implications for ESPR of the MDCO RNAI ldl lowering drug results?



  13. Hi Ohad,

    Thanks for your thorough analysis as always.
    This might be a naive question, but is it normal for companies like VKTX and MGDL and the likes to be run by less than 20 people? I know that they are outsourcing most of the clinical trial works, but with a portfolio of a few molecules 14 or 17 people seem far too few to support them. Is this the norm in the industry?

  14. Ruedi Schmid (CHMA) – Thanks, inteersting to see they are still issuing patents. I haven’t heard anything from the company about additional programs.

    Paul (CCXI) – I don’t have a strong opinion there, indication and biology are complex so high technical risk imo.

    Dan (MDGL) – I think it’s perfectly normal to think about safety in this setting of chronic small molecule treatments for non-life threatening diseases, don’t see anything wrong with it. Safety is a major risk here, no doubt as the bar is set very high…

    CHMA – I don’t expect anybody to buy them before approval (given previous attempts), probably potential acquirers would want to wait to see market uptake of several Qs. I plan to add next year if price stays at this level. I think a 5x multiple is reasonable.

    APTO – I would like to see safety and efficacy data that demonstrate clinical activity (not just biomarkers)

    ESPR – I don’t think these drugs compete in the same market, different pt subsets imo.

    Erin (VKTX/MDGL) – Agree, it does sound quite low. Not sure if this figure is up to date.


  15. AUPH – Phase 3 results for voclosporin nearing, what do you think are their chances?

  16. Good, excellent results for ESPR today- clean and effective drug – the combo almost as effective as PCSK9 drugs with the addies benefit is also lowers inflammation by 25%. Maybe time to add to the position?

  17. Hi Ohad thanks a lot for the very nice note as always. Great readings!
    Daiichi TROP2 ADC programs will have oral presentation or posters at WCLC 2019?
    Any link?
    Thanks Bruno

  18. Hi Ohad,

    As a follow up to your comment regarding company size, I think the figures are current. If you look at the most recent VKTX form 10-Q (http://ir.vikingtherapeutics.com/sec-filings) , under the stated risks it is shown that they only have 14 full time employees. Given that they have 5 candidates in the pipeline, I have a hard time understanding how the trials are thoroughly managed. Might be typical for small biotechs, but I personally was shocked at the small scale.

  19. Hi Ohad,

    As a follow up to the company size comment, the figures for VKTX are current. In their recently released form 10-Q they stated having only 14 employees as a risk. Not sure if this is the industry standard, but managing 5 drug candidates with 14 people seems rather interesting… Do you think this can be a significant factor impacting the success of VKTX candidates?

  20. Alex (AUPH) – I am not optimistic given the mixed p2b results but hope I am wrong…

    Dan (ESPR) – Agree, data look great and the combo should be an attractive option for statin failures. I don’t think this can compete with PCSK9i but these are two distinct patient populations.

    Bruno – Thanks. Both will be oral presentations, see link:


    Erin (VKTX) – It is quite low but looks like they are handling things fine to date.


  21. Hi Ohad,
    Any reason why you’re waiting to increase CHMA position, as you mention that you’re planning to do it if price remains around these levels? I mean, is there a compelling event you’re waiting for before increasing?
    Are you planning to close ABEO position or do you see it as attractive at this level? Market cap is <$80M
    Thanks for all the great analyses and info!

  22. Hey Ohad
    Thanks for the replies!
    Any opinions on TGTX CD20 drug for MS? Roche’s drug has had a great launch and it seems that ph2 results for TGTX are on par with that drug but with shorter infusion times- could be large market opportunity given projections for Roche’s drug are $7B in top annual sales

  23. Alex (ABEO) – Not aware of anything fundamental, probably weakness related to financial position.

    Aviv (CHMA) – The way I see it the company can only have bad news in the next several months (like regulatory or CMC issues) so I prefer to wait and see they have a PDUFA date. A takeout is always an option but a low likelihood one IMO.
    ABEO- Plan to hold my position and wait for the next funding round.

    Dan (TGTX) – I was never a big fan of their approach to target established markets with products that are clearly active but not well differentiated.


  24. My coder is trying to convince me to move to .net from PHP.

    I have always disliked the idea because of the expenses.
    But he’s tryiong none the less. I’ve been using Movable-type on various websites for about a year and am anxious
    about switching to another platform. I have heard fantastic things
    about blogengine.net. Is there a way I can transfer all my wordpress content into it?
    Any help would be greatly appreciated!

  25. Ohad,

    ABEO provided some strategic view this morning but no timeline or funding raise were determined. The uptick volume is huge. Do you think it’s good time to average down or still waiting for the funding raise or partnership announcement? Thanks!

  26. AGLE

    great data, ultra orphan and clear path to approval/high commercial value . EV is 120m. How do you see it?


    Also derisked Stock Trading very low. Any opinion?


  27. Ohad, any opinion on AFMD?

    I agree with previous poster who requested that you put purchase price for your stocks in the table.

  28. Richard, I think it is very easy (using excel) to get the purchase price on the table. I think Ohad is using generic finance portfolio and they have limited capabilities. Using excel just subtract the “Total Chg” from the “Market Value” and divide that with the number of stocks held and you will get the purchase price. Then just copy the equation for the entire table.

  29. Hi Ohad,

    Any thoughts on Kura’s MLL and ERK inhibitor programs? Looks like the market is only valuing Tipifarnib. I believe the ERK class has disappointed in the past, do you think Kura’s intravenous dosing and increased receptor occupancy time could lead to success?

    Thank you

  30. Ohad
    Are you still following IMGN?
    On ESMO Sep 27 – data for Mirvetuximab+CARBOPLATIN+ BEVACIZUMAB.
    On ASH Dec 7 – data for IMGN632 in AML and BPDCN
    Any upside from these data?
    Is it now the right time to jump in or IMGN is lost cause 4ever :(

  31. Hi Ohad
    Do you have any opinion on Zealand Pharma (ZEAL)? Just recently announced that Boehringer Ingelheim will proceed with their GLP-1/glucagon dual agonist into phase II. Also, announced a private placement today, the large shareholder in the company Van Herk Investments B.V invest >80 mio $. Phase III readout for potential best-in-class GLP-2 agonist for short bowel syndrome and another peptide, Dasiglucagon, close to NDA for severe hypoglycemia and in development for several other indications. Do you see some potential here?


  32. CHMA 09/06/19 S-3 Simplified registration form
    What do you think about the potential capital increase?

  33. IMMU-132 side effect profile clearly better than the Ds-1062a. Recommended dose in Trop2ADC (8 mg/kg) saw major occurence of ILD toxicity in NSCLC

  34. Ohad

    Daiichi reported some safety issues in their news release today. Is there a crossover to ZYME which is also selling off.

  35. Hello Ohad,
    Have you read the Reuter brief news on AVEO vs Sorafenib? It says HR of 0.99 with 20 patients progression free vs 2 for Sorafenib in rénal cell carcinoma…looks good to me what do you think taking into account how well tolerated Tivo is!

  36. Ohad
    Any comments on the ADVM data?
    The market reaction is negative. But not all look bad – they had substantial reduction in retina thickness -52 from 370 baseline. Does it mean that it might actually work and longer follow up is needed for vision improvement

  37. Hello Ohad,
    I know you like companies with an “unique selling point”. Can you take a look at Valneva SE? They have the only Lyme vaccine in clinical development.

  38. What is your take on PBYI? The annual sales of Neratinib is expected to 220-240M in 2019 while the market cap is only 450M (2x sales). Plus, what is the chance of approval for Neratinib in the 3rd line Her2+ breast cancer based on the recent Phase III data? How does Neratinib compare to the new ADCs in the field?


  39. Hi Ohad,

    ADVM dropped big-time and is still dropping. Had sold a large part of my holdings (unfortunately not at the $16 peak) but still holding and bought a few more (too early). Will appreciate your comments on the trial results, potential for further data to show better efficacy and valuation. Are you planning to hold / add?Thanks as always for your insight.

    Nice little gain for FCSC bag-holders (like me) who averaged down when it dropped. Any sense in holding on until the deal is closed?

  40. Any opinion on EIGR? They have four BTDs for 4 different regimens. The valuation is very very low <300 M. How do their HDV programs compare others?

Leave a Reply

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