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.
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?
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.
In a time when so many biotech companies do not know how they will survive the nuclear winter of 2009, two companies we hold in the biotech portfolio, stand out in the crowd. Immunogen (IMGN) and Exelixis (EXEL) are poised for an exciting year, with plenty of events in the coming twelve months. The two companies have a lot in common: Both are developing innovative drugs for cancer that rely on remarkable basic science, both can generate an unlimited number of novel agents, that in turn can be licensed to large partners, and perhaps more importantly these days, both can remain independent of the capital markets for at least two years. Above all, the two companies exemplify how good products and good technologies can still generate tremendous value for investors, even during these economic turbulent times.
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