Biotech Values

[tinkershaw]

<<<From an investment standpoint, this update seems to be essentially neutral. Comments?>>>

Actually, this time, I think positive.

It is clear that the misdiagnosed patient was treated in the worse possible manner. You could not have created a textbook case of worse handling of such a patient. They thought it was a stroke, followed by more tysabri, steroids, and only much later, oh yes, could be PML. By then it was too late.

The other patient, conversely, was treated in the exact manner that textbooks would probably describe. The result very positive.

It is also likely that the first patient should never have been placed on tysabri to begin with except out of desperation treatment.

In any event, I think neurologists, and patients, are going to focus more on the second patient, and now consider that any tysabri induced PML is not necessarily a death sentence but treatable with due diligence. Whether this turns out to be true or not, who knows, but it does give confident neurologists the power to say PML may not be as dangerous as we thought (relatively speaking), and knowledgeable patients the power to say, it is still a risk, but the risk is now somewhat less as I've seen this PML side effect, as rare as it has been, can be treated.

A positive.

But what is more positive is this news on fingolimod. I don't see another MS drug anywhere near to market (talking next 5 years in that context) with anywhere near the efficacy that is less dangerous than tysabri. And in fact, any drug with similar efficacy appears to actually be more dangerous than tysabri. And by the time they get to market, say 3 years from now, I would lay the odds are decently good, that neurologists will be much more comfortable and have much more knowledge as to how to address the PML issue. Meaning, I believe that tysabri will be more in the line of other drugs that have been associated with PML, but you hear almost nothing about by the time these competitive drugs get on the market.

In the meantime, every year there will be a certain percentage of patients who fail CRABS and have the choice, even if scared (whether rationally or not rationally), to choose between tysabri or no treatment at all. Most of these patients will choose tysabri, and by attrition alone on CRABS tysabri use will grow.

All in all good news. Biogen can also sell the latest clinical reports that tysabri had no effect on changing the level of the JC virus in the measured spots in the body. Critics of course will cite that this is not a spinal tap, but I don't see any reason why the virus would only accumulate in the spinal tap measure without also accumulating through the rest of the body. It seems a good proxy, and indication as to why PML has been less frequent then feared. And this study, by the way had 2500 patients, all going over 2 years of treatment, no PML. One would expected 2.5 cases on average. And in every study, or statistical analysis one can do, the incidence of PML has been much less than feared. This study gives us a direct insight as to why that may be.

Whether or not the market sees it this way only time will tell, but that is how it looks to me.

Presently, backing out the EDT business, tysabri is valued at ~$3.5 billion, and the alzheimer program, which is extensive, with many mid to late stage programs that are industry leading, is given what looks like $0 value, perhaps negative value.

Assuming this is the market value for tysabri (otherwise tysabri is being valued even less if Bap and others are given value) that is remarkably little for a drug like tysabri, looking at the competitive environment, that may be the premier MS drug in terms of efficacy and safety for at least a decade, and who knows what it may do in additional indications over this period of time.

Perhaps it is just the residue fear that there are hordes of PML cases waiting to explode. As of now, however, none of the suspected but unconfirmed cases that were discussed by some analysts have been confirmed, and will not be confirmed. Any future PML plague will need to come from future identified patients, and not these patients suspected as of August.

Tinker