Are biotech valuations sustainable?

The biotech sector is currently in the most successful period in its history based on valuation metrics, amount of money raised and number of IPOs. The perception around the current situation ranges from very bearish (it’s a bubble) to very bullish (there’s enough innovation to fuel future growth).

Before providing my take (which is very subjective and is as good as anybody else’s for that matter), there are two things most investors agree on:

1 – The biopharma industry enjoyed a massive wave of innovation in the form of revolutionary drugs that truly make a difference for patients. These include PD-1 antibodies, curative HCV drugs and PCSK9 antibodies just to name a few. Fundamentally, our understanding around diseases and our abilities to modulate them has never been better, which should dramatically increase success rates in the long run.

2 – The biotech sector has had a huge run in the past ~3 years. Since the beginning of 2012, the primary biotech indices on NASDAQ and NYSE are up 250%-260%. This means that in 3.5 years, the biotech industry (which was already quite established at the time) saw its valuation more than triple.  Continue reading

Biotech portfolio update – 2013 summary and 2014 preview

Seattle Genetics (+65% in 2013)

In 2013, Seattle Genetics’ (SGEN) Adcetris reached market saturation in its approved labeling (relapsed/refractory HL), shifting market attention to label expansion. These include DLBCL, where Adcetris showed impressive efficacy in highly refractory patients (42% response rate, PFS of 5 months) and CTCL (73% response rate). Adcetris is in phase III for earlier stages of HL as well as CTCL, which are viewed as the next opportunity to grow sales. The company will outline its registration strategy for DLBCL in early 2014. Continue reading

Clovis Oncology – A buying opportunity following the EOS deal

Last week, Clovis Oncology (CLVS) announced the acquisition of EOS, a small Italian company with an oncology program in phase II. To me, this is the smartest deal in 2013 so far given the relatively low price ($200M) Clovis paid for a mid stage oncology asset with a strong clinical proof of concept and a clear differentiation from competition. Clovis has commercialization rights for US and Japan while Servier has EU+ROW according to a previous licensing agreement with EOS. Continue reading

Top picks for ASH 2013

The annual ASH (American society of hematology) meeting will take place next month in New Orleans. Based on the abstracts that were released 2 weeks ago, it seems that after 2 phenomenal years of introducing novel mechanisms, this year’s meeting is going to be more on the evolving landscape in each segment (Btk/PI3K inhibitors, antibody drug conjugates, myelofibrosis, CD38 antibodies, chimeric antigen receptors etc.).

Below are my top picks.   Continue reading

Drugs to watch at ASCO 2013

Below is a recap of interesting data expected to be presented at the Annual meeting of The American Society of Clinical Oncology (ASCO).  This year’s meeting will have a strong focus on immunotherapy (PD-1 antibodies in particular) as well as novel oral agents for hematology. Companies for which important data are expected are reviewed as well.

PD-1 takes center stage

PD-1 antibodies are by far the hottest and most active field in cancer drug development. Although technically, all data to date were from phase I studies, there is wall to wall consensus that inhibitors of the PD-1 pathway will become a cornerstone in several cancer types and a $5-$10B franchise.

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Incyte’s Jakafi is likely a $1B drug

Predicting future sales for a given drug is always challenging, let alone in a case like Incyte’s (INCY) Jakafi (Marketed in Europe under the name Jakavi by Novartis), which is the first drug in history to receive approval for myelofibrosis (MF). With no precedents to serve as a benchmark, it is still unclear how big Jakafi can be. However, based on Incyte’s recent 2013 guidance and remarks from the head of Novartis’ (NVS) oncology business unit, it has a high likelihood to reach $1B already in 2016.
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Drugs to watch at ASCO 2012

Below is a list of drugs and companies which will have meaningful data at this year’s annual meeting of American Society of Clinical Oncology (ASCO). As I will be attending this year’s conference, I will try to write updates on a regular basis. Feel free to send me questions or post them as comments to this post. Continue reading

Gilead’s Hematology Pipeline – Transformative and Under-appreciated

Gilead (GILD) is garnering a huge amount of attention from investors owing to the hepatitis C virus (HCV) pipeline it got from the Pharmasset acquisition. As the market is occupied with the company’s HCV programs, investors seem to ignore additional promising assets in Gilead’s pipeline. GS-1101, which started phase III in leukemia last week, is a good example. I have no intention to downplay Gilead’s HCV pipeline, however, the minimal attention given to GS-1101, one of the promising hematology agents in development, seems unjustified.

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