Winners of ESMO 2010


The ESMO meeting is the most important oncology conference in Europe. This year in particular, it included very interesting data that affected the sentiment towards many biotech companies. Here, I intend to focus on what I view as three clear winners from the conference: Seattle Genetics (SGEN), Arqule (ARQL) and Dendreon (DNDN).     

Seattle Genetics

Seattle Genetics is about to conclude the best year in its history, since it was incorporated 13 years ago.  The company’s lead agent, SGN-35 (aka Brentuximab Vedotin), generated astonishing results in two types of blood cancers earlier this year. Based on the results in Hodkin’s Lymphoma, SGN-35’s approval seems inevitable, even though results are not from large randomized studies. Unlike T-DM1’s case, Seattle Genetics negotiated a special protocol assessment (SPA) with the FDA, implying that the trial design and endpoints are acceptable by the FDA.

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Immunogen beyond the T-DM1 delay

The FDA’s decision to reject Roche’s filing for accelerated approval of T-DM1’s had quite an impact on Immunogen’s (IMGN) stock. There is no doubt that T-DM1 represents the company’s most valuable, even if it is in the form of a mid single digit royalty rate, due to its blockbuster potential and impressive clinical activity. This justifies to some extent last week’s market reaction, as the next potential approval for T-DM1 will is anticipated in mid 2012. Nevertheless, T-DM1 is facing multiple potential value creation events in the coming year, including an important data set for T-DM1 next month. In addition, the company is involved in 6 clinical stage programs (#7 is expected to enter the clinic this month), some of which are expected to generate data in the coming months. Although none of these programs are nearly as exciting as T-DM1, some of them could become more attractive with time.

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Pfizer’s failure provides clarity for Arqule

Yesterday Pfizer (PFE) announced that Sutent failed to prolong survival of lung cancer patients when given in combination with Tarceva. The drug led to an increase in progression free survival (PFS), which was the secondary endpoint of the study. The results are not published and there are several open questions such as the extent of PFS improvement, benefit across different subtypes and use of Sutent in patients from the placebo cohort after progressing on Tarceva. Nevertheless, chances to see Sutent+Tarceva  as a standard of care for 2nd/3rd  line NSCLC are slim.

Pfizer’s failure provided some clarity for Arqule (ARQL) and its partner Daiichi Sankyo, who plan to initiate a phase III study for ARQ-197 in combination with Tarceva. The indication Arqule is pursuing is very similar to that pursued by Pfizer, so had the Sutent trial been successful, it would have adversely affect ARQ-197’s prospects in general and potentially the required clinical route. Continue reading

The winner of ASCO 2010 – BMS

The hottest theme at this year’s 2010 ASCO (American Society of Clinical Oncology) annual meeting was without a doubt cancer immunotherapy, an old paradigm that deals with redirecting the patient’s immune system against tumors. After decades of failures, this concept is finally proving itself useful. There are basically two approaches:  1) cancer vaccines that aim at eliciting an immune response against specific targets on cancer cells and 2) immunomodulatory drugs that aim at stimulating the immune system in a more general manner (not target specific). The undisputed leader in cancer vaccines is Dendreon (DNDN), which currently has the only FDA approved cancer vaccine. Following ASCO, it looks like the leader in immunomodulation drugs is BMS (BMY).

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Incyte – Life After Debt (Part I)

Last week, Incyte (INCY) sold over $130M worth of stock and $400M worth of convertible debt in an effort to solve its balance sheet issues. Thanks to the stronger cash position, the company can finally be evaluated based on its promising pipeline rather than its capital structure. More importantly, it will be able to complete a series of business development deals and focus on becoming a commercial stage company.

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Biotech Portfolio Updates – Incyte


A drug with an almost certain approval and immediate sales potential of hundreds of millions of dollars is an asset very few biotech companies possess. In that sense, Incyte (INCY), which is developing a breakthrough drug for blood disorders, represents a unique opportunity in an industry plagued by risk and uncertainty. Incyte is also unique in its problematic capital structure, which makes an otherwise simple investment decision into a tricky one.

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Top picks for ASCO 2009 (Part I)

The ASCO annual meeting, one of the most important events in the pharmaceutical industry will take place in Orlando next weekend. With over 4,000 abstracts to be presented this year, separating the wheat from the chaff is difficult, but below is an incomplete list of intriguing trials that deserve investors’ attention.

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Rigel And Seattle Genetics -The Delicate Art of Expectation Management

 In the previous article, I discussed the pharmaceutical industry’s race after approved drugs and late stage agents with proof of concept in humans. I mentioned Rigel’s (RIGL) lead drug, R788, as a likely target for collaboration due to its impressive activity, the huge addressable market and the fact it is an oral drug. For the past year, Rigel’s management has been consistently and rigorously claiming it will have a partnership in place during the first quarter of 2009. Although the company has had more than one opportunity to change this forecast, it stuck by its original statement. For example, when new safety data got published last year and worried investors sent the stock down 50% in two trading sessions, many believed that the imminent deal was not going to materialize. To their surprise, Rigel reassured investors the time frame for a partnership remains intact, explaining that none of the recently published data was actually new to potential partners. Then, Rigel appeared in countless investor conferences, the last of which was only last month, promising investors a licensing deal is forthcoming. 

Last week, the company announced it no longer expects to have a deal by the end of March. Instead, it intends to wait until it has results from two ongoing trials, due this summer. Deciding to wait until more data is available makes a lot of sense, providing the data is good. Typically, the further a drug gets in clinical development, the higher its value in the eyes of potential partners. The problem is not the decision itself, but its timing, as this kind of decision could have been made long ago. So what led Rigel’s management to suddenly change its mind after a year of expectations build up?

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Biotech Portfolio Updates – Rigel Is Still On Track, Pfizer May Have Found Its Next Blockbuster


In the pharmaceutical industry, 2008 will probably be marked by the big pharmas’ insatiable appetite for new drugs. Threatened by fierce generic competition, the pharmaceutical giants were not only eager to pay generous acquisition premiums for marketed products, but were also willing to pay a lot of money for investigational drugs with an early proof of concept in the clinic. Two recent examples for this trend are Arqule (ARQL) and Exelixis (EXEL), which recently signed two lucrative deals with Daiichi-Sankyo and Bristol-Myers Squibb (BMY), respectively.


Assuming this trend continues in 2009, it is crucial to identify small and medium companies with candidates whose activity has already been proven in clinical trials. One of the most interesting companies that fall into this category is Rigel Pharmaceutical (RIGL). The company is currently developing a validated drug with blockbuster potential, and is expected to announce a major collaboration deal during the first quarter.

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Rigel Pharmaceuticals– Crisis or Opportunity?



The past two weeks were anything but easy for Rigel’s (RIGL) shareholders, who saw their shares crash more than 50%. Rigel started 2008 on the right foot after a 200% jump in a single day last December, following impressive data for the company’s flagship product, R788, in Rheumatoid arthritis (RA) patients. Less than one year after, Rigel has given back all its gains, following the disclosure of additional data from the same trial. 


R788 was perceived as such a promising drug because it represented a highly anticipated paradigm shift in the treatment of RA: An oral drug that may be as effective as the current standard of care biologic agents. RA is a severe auto-immune disease, where the patient’s immune system attacks the body’s tissues, leading to a gradual destruction of the joints, which results in severe pains and disabilities. The rate of disease progression varies from patient to patient, but in the vast majority of cases, the disease is incurable, progressing over the patient’s lifetime. Therefore, despite the relatively low incidence of the disease, it has a high prevalence, affecting 1.3 million patients in the United States alone. Since there is no cure for the disease, patients must be treated indefinitely in order to delay disease progression and reduce its debilitating symptoms. This makes RA one of the most lucrative indications in the pharmaceutical industry, estimated at more than $10 billion annually.

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