Biotech Values

[DewDiligence]

Re: Premise for buying RVNC /ENTA 2013 parallel

I'm looking at RNVC. Are you…specifying that the higher price before 10/29/15 was a fair price in your view?

Not necessarily; buying RVNC before the release of phase-2 data from the BELMONT study on 10/29/15 would’ve been quite risky. The stock would’ve been clobbered if RT002 had under-performed the Botox arm in the BELMONT study, and it might have taken a hit even if RT002 had merely matched the Botox arm.

Rather, my point in #msg-119776867 is that the BELMONT data (although not quite as impressive in duration of effect as RVNC claims) has very substantially de-risked the RT002 program by establishing efficacy in a cosmetic indication that’s at least as good as Botox’s efficacy and probably a little better on duration. Eventual regulatory approval and commercial success of RT002—at least in cosmetic indications—is now likely, IMO, unless an unusual safety problem crops up in the phase-3 trials.

The premise for RVNC at the current valuation is similar to the premise for buying ENTA in 2013 (at a share price in the teens) based on ABBV/ENTA’s phase-2 data in HCV (#msg-89490439). ENTA was unduly cheap then because many investors didn’t understand that antiviral drugs almost never fail in phase-3 due to inadequate efficacy (#msg-89746606). The same argument can be made for botulinum-toxin products in cosmetic indications.