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. Continue reading

Biotech portfolio updates – Endocyte and AVROBIO

Endocyte – Surprise acquisition driven by scarcity value

Last week’s acquisition of Endocyte (ECYT) by Novartis (NVS) came as a surprise as Lu-PSMA-617 just started P3 and results are not expected until 2020. This is Novartis’ second radiopharmaceutical acquisition within a year, following the AAA acquisition, making Novartis the undisputed leader in targeted radiotherapy.

The decision to buy Endocyte was likely driven by the commercial performance of Lutahtera (originally developed by AAA), which generated Q3 sales of $56M compared to $24M in Q2. This trajectory in the first year of launch (approved January 2018) proves that radiopharmaceuticals can become meaningful products despite the logistic hurdles. Continue reading