Assembling my biofolio...
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Re: IMGN valuation
Let's just go with your assumption of 4 years until approval of T-DM1 in a second-line setting. Again, it may be approved earlier in third-line as there are no approved treatments in that indication.
Second, let's assume peak annual sales of about $1 billion in second and third-line settings combined. Since Herceptin itself is well established in the medical community and not some unknown drug that will take time to establish itself, I think we can safely assume that T-DM1 will establish peak sales rather quickly.
Separately, I'm not concerned about the introduction of an FoB for Herceptin as early as 2013 as that would impact Herceptin itself more so than T-DM1. As T-DM1 is targeted intially towards those patients who are resistant to Herceptin by itself, it would make sense to me that an FoB for Herceptin would pose no threat in second and third line settings to T-DM1. Furthermore, in the first line setting that DNA is also now targeting for T-DM1, we should know well before 2013 how much more effective T-DM1 is in this setting than Herceptin itself. If proven to be much more efficacious than Herceptin itself in first line, T-DM1 should be able to effectively compete with any Herceptin FoB in first-line given an efficacy advantage.
So, let's assume combined second and third-line sales of about $1 billion a year starting 4 years from now with IMGN pocketing $50 million per year based on a 5% royalty. Then, add in first-line setting sales commencing in year 5. Let's assume peak combined sales for all settings of $2 billion. This would equate to roughly $100 million/year in royalties due to IMGN starting 5 years from now.
Based on those figures, what price per share would you assign today to IMGN shares strictly for T-DM1? What about 1 year?
Re: IMGN
PGS, please by all means continue to post your thoughts on IMGN. If you can dissuade me from an investment in IMGN or persuade me to sell current holdings by making me see a point I didn't before, then I'm all for that. I appreciate the posts by you, Dew, and others as you all offer many viewpoints I would not have thought of on my own. Although we may not all always agree, the more information the better as far as I'm concerned.
Now, with respect to IMGN, where do you get the 4 year approval timeframe from for T-DM1? It may be on the market much much sooner for 3rd line Her2 breast cancer as there are no approved therapies for this patient population. From IMGN's most recent 10-K: "Genentech reported that they plan to initiate a Phase II trial assessing T-DM1 as a third-line treatment for this cancer during the second half of 2008 and that if the results from this study are compelling, that they will discuss an earlier approval pathway with the [FDA]..."
I know this may not be the largest patient population but I'm just making the point it may be approved much sooner. The drug is about to enter Phase III for second-line treatment and will also be tested in first line in a Phase II. I would think approval in 3 years for second-line might be possible given that it's about to enter Phase III.
The other point is that we may have different definitions of "much higher" for the stock price. I'm talking along the lines of around a $15/share or so personal price target (about $650 million - $700 million market cap) if approved for third line. I don't think that's unreasonable given the ultimate royalties due IMGN for T-DM1 plus what this approval will do to add validity to the rest of the pipeline. That in itself is hard to quantify but to me seems inevitable if T-DM1 is approved. Notwithstanding, I am open to any specific share price projections you have arrived at using DCF.
Re: IMGN
"Why chase a company that is getting a very small amount of the sales? Why not buy DNA?"
Apples and oranges. IMGN would get a small amount of sales but it also has a tiny market cap compared to DNA (about $200 million vs. $88 billion).
The big picture point to me is that regardless of the fact that IMGN is only entitled to a small percentage of royalties on T-DM1 and regardless of whether that exact amount is 3%, 4%, 5%, or whatever, if T-DM1 makes it to market, I believe that will justify a much higher share price for IMGN IMHO. And I'm in the stock because I believe the drug will make it to market given what we know so far with its efficacy.
Looks like we lost 2 RMFs
Who are the leading contenders for replacement?
Re: ACHN
Dew, I gotta ask, what's keeping you out of ACHN at this valuation ($20 million market cap & negative enterprise value)? Are you waiting to see Phase I or Phase II results for the HCV compounds? They are admittedly early stage but the market is essentially assigning no value to them. I'll change my tune if GILD were to walk away at some point from the partnership, but as things currently stand today, I like the risk/reward here.
Re: ACHN
Do you have any thoughts on ACHN's claims that ACH-1095, the NS4A antagonist, is 14 to 21 times more potent than Telaprevir and Boceprevir? See http://www.achillion.com/main.aspx?pn=Ns4aProgram&fl=l
Being far behind both compounds, ACH-1095 needs to be able to differentiate itself from the competition. I know these are just pre-clinical findings but I think this is still very encouraging.
Also, ACH-1095 targets NS4A, an entirely different target from the protease inhibitors, which further allows it to differentiate itself. And based on your HCV: Most Likely to Succeed list, it appears this may be one of the only compounds targeting NS4A. I see an NS4B inhibitor and NS5A inhibitors but do not see any other NS4A inhibitors like ACH-1095. If you have comments on the differences/advantages/disadvantages between NS4A, NS4B, and NS5A as targets for HCV, I'd love to hear.
The one major concern I have regarding the compound is that ACHN's prior NS4A antagonist, ACH-806, showed clear efficacy in humans but had to be discontinued due to unacceptable levels of serum creatinine. So, the question is whether this side effect might be attributable to all NS4A antagonists or if it was just specific to ACH-806. We shall see.
Separately, ACHN believes that ACH-1625, its own unpartnered HCV protease inhibitor, may offer once-daily dosing. See http://www.achillion.com/main.aspx?pn=1625&fl=l
Do any of the other protease inhibitors under development allow for once-daily dosing? ACHN doesn't appear to note any potency advantages on its Web site for ACH-1625 so perhaps they may be trying to stress a pharmacokinetic advantage of the drug.
Re: Indevus/Endo Merger
I had Indevus on my watch list and was thinking of adding it at some point later this year if I were in a position to sell any current holdings. I thought it looked good with a possible Nebido approval later in 2009.
Re: GILD conf.calls/ACHN
That is a good question and I have to admit that I have not listened to any recent GILD conference calls. I will do that though.
2009 Survey
Dew, any more thoughts on the 2009 survey? If we're going for largest percentage gainers in 2009, I'm going to be a homer and nominate the favorites of my current holdings: MNTA, IMGN, RIGL, ACHN, and ARRY.
I'll also boldly go out on a limb with a specific prediction that GILD will acquire ACHN (its partner for an early stage HCV compound) at some point during 2009 for at least $80 million and possibly $100 million (about 4-5 times ACHN's current market cap of about $20 million). I predict this due to: (1) the current partnership between the two companies; (2) the fact that ACHN has another HCV compound separate from the existing agreement with GILD that is about to enter Phase I trials along with a few other drugs in the pipeline; (3) a similar acquisition by GSK of its partner GNLB in 2008 for about $60 million for access to its early-stage HCV compounds (http://biz.yahoo.com/ap/081029/apfn_glaxosmithkline_genelabs.html?.v=2); and (4) the simple fact that I just believe that at a $20 million market cap and negative enterprise value the stock is just too cheap and GILD will see that at some point and make a move.
Re: MNTA article
I read it and it's a good article. It nicely summarizes the bull case for MNTA, which I happen to agree with. Of course, Dew has summarized essentially all those points and more in the ReadMeFirst.
Seeking Alpha is one source I happen to like for biotech info. They're not always right on their calls, but then who is? They at least give you a nice summary for the bull or bear case for a given stock, which is a good starting point before you do your own further due diligence.
Re: ARIA
It's tempting I'll admit. The problem is that the Phase III results are a crapshoot given that there was no control arm in Phase II. If negative, the share price will probably be cut in half even from current levels, if not more. There is a lot of upside though if the results are positive.
Large Pre-Open Volume in HGSI
2,660,000 shares have already traded this morning in HGSI pre-open on no news. I presume this is last minute tax-loss selling?
Re: Quizzes
Dew, I have no idea of the correct answer for the bond fund but would highly encourage you to offer your personal shares of MNTA as an inducement for future participation in your quizzes. You could offer one share for easy quizzes and expand the offering for more challenging ones. Thoughts? ; )
Re: NFLD
http://biz.yahoo.com/bw/081230/20081230005049.html?.v=1
Not Dew, but I was a bit suprised to see that the filing was accepted and indeed is getting a priority review. However, I wonder if this is just a case of where the FDA doesn't need much time to review the application because of its strong stance against the trial results (safety and efficacy issues) and will reject PolyHeme anyway. Although if that were the case, I would think the filing wouldn't have been accepted in the first place.
I haven't kept up with PolyHeme too much of late and I see that NFLD is trying to get PolyHeme approved for instances where "blood transfusion is indicated but red blood cells may not be available, appropriate, or acceptable." PolyHeme clearly has issues compared to conventional hemoglobin but perhaps when that is not an option, the FDA will allow for approval of PolyHeme. I would still wonder how big the market would be though. Notwithstanding, I wouldn't want to bet on the drug or NFLD given the negative trial results and the fact that PolyHeme is NFLD's only drug under development.
Feurstein of TheStreet.com has wrote several interesting negative articles over the years questioning PolyHeme.
See: http://www.thestreet.com/story/10409818/2/feuersteins-biotech-stock-mailbag.html
There are links in that article to prior stories and they make for a good read.
Dew Re: Sepsis drugs
Thanks for the info Dew. It appears that Artisan has received approval in Japan for its drug, although I didn't dig into the efficacy numbers for their drug. Artisan appears to be private.
Re: Xoma
Thanks for the info PL1. I do follow Xoma a little bit but have never owned it. I remember all the hype surrounding rBPI/Neuprex. It's interesting that the Prohost Comments speculate that rBPI could return to the clinic targeting sepsis if XMP.629 is effective.
It looks like Xoma is really focused on Xoma-052, which targets IL-1, to treat diabetes and other indications. Although they're not the first company to target IL-1, they appear to be one of the first to target type II diabetes and the drug may be able to be dosed just once a month. I'm going to keep an eye on this one. Do you still own Xoma for the potential of 052?
Sepsis drugs in development?
Are any biotechs working on potential sepsis drugs or is this an area no longer being actively targeted given the high-profile failures from Centocor, Xoma, and Synergen, among others?
I know Eli Lilly's Xigris is on the market but it has had limited success, which I assume is because the drug only offers limited benefit.
Re: Ten Worst Financial Newsletters of 2008
Ah, BI Research. That's the newsletter I have to thank (or curse) for getting me originally interested in biotech stocks way back in the early 90s. The newsletter was big at the time on Lidak Pharmaceuticals (now Avanir). I became convinced of the story and had all of my money in that one stock. At its peak, I could have sold my holdings for a triple but held on for the Phase III results for Lidakol (now Abreva) as I was certain they would be positive.
After disappointing Phase III results, I was back to where I started, but at least learned an important lesson about how unpredictable biotech investing can be and about how it pays to diversify and take your profits when you can.
Thankfully, I didn't also invest with margin in the stock. I actually considered that at one point.
Re: NWBO
And that press release is to report results for two patients. I've never seen that kind of release before. lol I'd go so far to say I pretty much don't trust any company that trades on the Bulletin Board.
MNTA & Sandoz Terminate M249 Program
http://biz.yahoo.com/e/081223/mnta8-k.html
Thoughts Dew? Obviously there are more important short-term drivers for MNTA, namely M-Enoxaparin.
Re: Zacks
"LOL—the Zack’s reports on biotech companies are brain dead, IMO. Even the ones where they like the companies I like :- )"
I've noticed this as well and rarely even bother reading them anymore.
Re: AMAG
"discovery labs recieved this respones, how many years ago, and are still waiting for approval.
I thought about the Discovery fiasco myself and it looks like the stock is down about 15% at this point in pre-market trading.
Re: Feuerstein and AMAG
>>Ask Feuerstein—isn’t it one of his picks? :- )<<
It is indeed. One of his top picks I believe as well.
AMAG receives Complete Response Letter for Ferumoxytol
http://biz.yahoo.com/bw/081222/20081222005948.html?.v=1
The drug doesn't get approved but it doesn't appear any more trials will be necessary. So, does the stock soar or plunge at open tomorrow?
Dew/ghmm Re: R7128 (kidney tox in monkeys)
I see that R7128 has apparently shown kidney tox in monkeys. That has to be a bit of a concern for this drug to say the least, isn't it? I would imagine the FDA would require a lot of safety data to prove this doesn't occur in humans. Is it known yet if this just occurs at a much greater dose than what is being utilized in human trials?
Re: Pats
.33333333
I'm a Dolphins fan so I'm hoping the correct answer is closer to 0.
Thomas RE: ARRY
Nice work on the RMF for ARRY. I took a small position in this one today after selling a few losers that no longer meet my investment criteria. I decided to make a change going forward in my investment criteria and that's to only invest in small-cap biotechs that have at least shown success (i.e. attained statistical significance) in a randomized, placebo-controlled Phase II with one of their primary drugs. My prior screens of having a diverse pipeline and at least one strong partnership remain as well.
ARRY satisfies all of that criteria for me.
ARRY royalties on ITMN-191
Does anyone know what royalty rate ARRY would be due on potential sales of ITMN-191 or at least whether or not that will be a single or double-digit royalty? I couldn't find that in the ReadMeFirst for ARRY. Dew, I see you have 191 as #2 on your list of HCV compounds most likely to succeed so this could become a key valuation driver for ARRY down the road.
"IMGN deals are small royalties and the ceo's rep isn't great. SGEN gets a good chunk of the economics on sgn-40 and the program is seen as promising."
I don't know as much about the CEO's rep but that's a fair point on the smaller royalties. I would counter though that TDM-1 (IMGN's lead drug, which combines its ADC with Herceptin) has a lot of promise itself, even if IMGN is only getting a single-digit royalty as I believe to be the case.
Re: SGEN vs IMGN & enterprise value
"Also, SGEN does have other pipeline products, whereas IMGN is really ADC or nothing."
This is a valid point. Even though you may look at IMGN and see a very deep and impressive pipeline, it is all based on their ADC platform. So, until they get at least 1 drug to market, there will persist that general concern about the entire pipeline and approach. I can't argue with that and that is a clear risk with IMGN, although I feel pretty good about the risk/reward at current levels.
As far as enterprise value goes, SGEN does have a nice balance sheet but even in backing out the net assets you still get an enterprise value over $500 million. IMGN's enterprise value is about $140 million so there's still quite a discrepancy.
Re: SGEN valuation
I don't think I'm ignoring it. I recognize it has value but I'm just curious if a market cap of $700 million is indicative of the value. Look at IMGN, by contrast (which I do own), which also has a conjugate technology and is also in partnership with DNA (and even further along in its trials than SGEN), but which trades at just north of a market cap of $200 million.
Re: HQH
Hey PGS, I did have a look at HQH before and it looks interesting. It's a quick and easy way to diversify into healthcare and biotech. However, as with most funds, there's a lot of holdings that I wouldn't want to own.
I do generally follow a large number of biotech stocks and you'll see some random comments from me on various ones. It's more just because I enjoy following the industry and events within it and discussing the prospects and valuation of various companies. As far as actual holdings, I only hold 10 biotech stocks right now. I generally like to keep my holdings between 8-12 as for me that's enough to diversify the risk but then still be able to focus enough attention on my favorites. I pay attention to my holdings very closely, much more than all the other companies I follow generally. I just want to have other names in mind in case I decide to sell one of my current holdings (for better or for worse).
What gives with SGEN (Seattle Genetics)?
This seems to be a promising company with a nice pipeline of monoclonal antibodies targeting cancer and autoimmune disorders and the company has a solid partnership with Genentech. But, the stock sports almost a $700 million market cap with no drugs on the market and none even in Phase III trials. I don't get this one.
Re: CLDX (formerly AVAN) data
"In one trial, presented at a meeting of oncologists in June, 23 patients who got the vaccine along with the established drug Temodar lived 33 months, compared with the 15-month median life span that would have been expected. . . .
Neither trial had a control group, making it impossible to tell whether the good survival numbers are due to the vaccine or to some subtle characteristic of their illnesses."
The old "historical controls" rears its ugly head again. I was reading about CLDX and the data to date. Although the technology and drug sound promising and the company appears to have a lot of upside, the fact that there have not been any controlled trial results so far would imply to me that this is not much more than a crapshoot as to whether the drug truly works.
Linking Issues
I've noticed since I signed up for a free trial that any links I post do not work if there are any words in the address that spellcheck thinks may be mispelled. How do I get around this?
E.g.:
http://www.merkfund.com/?src=aw&grp=hard_currency&crt=1&_kk=merk%20hard%20currency%20fund&_kt=9b1d437c-1f40-4821-acf2-8aa6d46431e5
http://quote.yahoo.com
Thanks.
Re: Euro
Do you follow the Merk funds (www.merkfund.com) at all? There are two funds, one focused on Asian currencies and the other on the Euro and miscellaneous currencies. They look like an interesting way to hedge or speculate against a decline in the dollar.
Personalized Medicine - Who benefits most?
Which companies stand to benefit the most from the shift to personalized medicine? ILMN? MYGN? AFFX? Someone else?
I haven't tracked this area too much to this point so I'm only vaguely familiar of the names and not the underlying differences. I see AFFX has cratered over the past year. Aren't they still positioned to benefit from personalized medicine?
Re: MisFOLDed Proteins/Chaperons
Thanks for the info. I'm going to put FOLD on my watchlist as it seems interesting and the company does have plenty of cash to weather the storm.
Biogen has made several investments in Amorfix and has the right to license its technology and therapies for use in ALS. Amorfix will receive an upfront payment and potential milestone payments in excess of $25 million if Biogen does enter into a license and will also receive royalties on any sales.
It looks like PTC is private so my research will end here on that one. ; )
Interesting ARIA read RE ethics/AGTI merger
http://seekingalpha.com/article/110728-why-ariad-pharmaceuticals-needs-an-sec-investigation?source=yahoo
"ARIAD, in an unusual transaction, issued options to buy AGTI shares to several members of ARIAD management, including Harvey Berger, Jay LaMarche, John Illiucci and David Berstein.
...In the SEC Form 8K filed on September 23, 2008, it appears that the independent directors acting at the advice of their valuation consultant Oppenheimer & Co. offered to buy the AGTI shares and pay one share of ARIAD stock for each share of AGTI owned. Berger and LaMarche suggested AGTI minority stockholders receive 10 shares of ARIAD for each share of AGTI. Eventually the price was settled at two shares of ARIAD for each AGTI.
Berger and LaMarche properly recused themselves from the final ARIAD vote in an effort to not influence the final outcome, but the critical question remains. Did Berger and LaMarche attempt to interfere with negotiations in an attempt to influence the price to be paid to them?"
Re: Amorfix and misfolded proteins
I now realize that Amicus (FOLD) is involved in this area, although their research is also very early.