Biotech Values

[willyw]

I have held my ENTA position for over a year. I recently reduced it for a few reasons.

Linhdtu, I greatly appreciated your approach to why you reduced your stake. As you know I am more of a novice to investing, but I have read, felt and seen similar expressions of value, but I've not seen it expressed so clearly, or in a formula. I felt it more on an intuitive level, just like something "seemed" to be.

My decision to reduce was made on almost the opposite end of the spectrum, I guess something one might call sentiment.

I've been in HCV forums for over a decade. I have contributed but now mostly observe.
In one case there was a genotype 1b who had decided to start on viekira pak, posted a thread and got responses. As is often the case people chime in with incorrect information. I set about to correct that misinformation.

I responded that no, it wasn't true that the OP would need ribavirin, but that they would treat for 12 weeks, but have a 99-100% chance of a cure, that in 12 weeks of each TX, the Abbvie treatment would have the superior cure rate for 1b's.
The board then tried to convince the OP that they should ask for Harvoni but for 8 weeks; it would be cheaper and better.

I responded that the only data on 8 weeks was from the Lonestar study, that 95% was the very best that was documented, and that since Harvoni was more effective on g-1a's that they were looking at a SVR rate far inferior to doing the Abbvie treatment; possibly 7-10% less by treating w/ Harvoni for 8 weeks versus 12 weeks with the Abbvie program. (The actual groups in 8 weeks of Harvoni are very light and so it is actually difficult to assert w/ total confidence, but some g-1b's came in about 87% SVR)

Here is what I deduced; the facts didn't matter; the perception that Harvoni was better, even in cases where it was clearly, indisputably inferior, carried the day.

Further, several people who had a heavier presence on the board green lighted the idea for Harvoni. When I asked what the cure rate for G-1b's on 8 weeks of Harvoni was..... not one person could reply; no one knew, nor did they care. They just "knew" Harvoni was best, would provide the cure; yadda yadda yadda.

Guess what? The OP, that had done their research and decided on Abbvie, ended up being swayed to switch to Harvoni.
It is only one story, but it may encapsulate what could happen in the marketplace and market share.

The crowning glory to the story was that when the patient told the doctor that they wanted Harvoni, the doctor replied; that's OK, if it doesn't work, we will then try Viekira. (To date, the Abbvie program is not approved for DAA failures) Insert shaking head emoticon. : (

Here's my point. They say the market can remain irrational longer than you can stay solvent. There is a point at which science and logic ends, and marketing and sentiment begins. For me it was a kind of "ah hah" moment. Like watching the first McDonalds open in Moscow, I rather felt the war was over.

What Abbvie is going to have to do is to change MY perception as well now. They are going to have to provide some numbers that convince me that they can win the hearts and minds of doctors and patients. My little story is perhaps emblematic that they have some work to do.

All sorts of things play into investors decisions. I just thought that this was a far different rationale to what moved my needle than yours, and yet that we both pulled the trigger in roughly the same time frame. Thanks for your thoughts. I think they are more useable for other stock decisions than my seat of the pants, and very gut feeling driven decision.

~W