Replies to post #176972 on Biotech Values

[mcbio]

TKMR

You are right it is 5% for the two ALNY drugs.

Are you sure 5% is correct? I thought it was even lower, like 2 or 3%.

5% of 2 Billion is still good money -- 100 million.

But how realistic is that $2 billion estimate? In my experience, billion-dollar drug projections, let alone $2B, often fall well short. Long way to go to get to $2B in sales for ALNY drugs.

PS: I know you sold out of ECYT a while ago as you didn't want to hold during the binary event. Now that it got a positive CHMP opinion and the stock has dropped from 33 to 18 are you looking to get back in.

Yes, ECYT was an example of where my fear of holding through key binary events cost me. I won't change my approach though as, more often than not, it tends to serve me well. I have no intention of getting back into ECYT at this valuation. I have read plenty of skepticism on sales potential of lead drug with lack of OS benefit. That skepticism seems reasonable to me. My only angle to play ECYT was if EU opinion had been negative and stock plunged. Absent that, and otherwise absent a sharp decline in share price, I am not interested personally.

PPS: What other biotechs are you looking at now after the recent bloodbath. CRIS, ARQL, DVAX, EXEL interest you at these levels?

I still hold core positions in both CRIS and ARQL and I am certainly not selling at these levels. ARQL in particular well below $2 really puzzles me but I will just continue to hold. They have plenty of cash to weather this storm. If I had funds to add, I would certainly add to both positions but I am fully invested right now.

Any of the newer IPOs? AMBI, ESPR, STML etc.

I find AMBI potentially interesting at this valuation and it is well on my watch list to consider a position should funds become available.

How about ALNY, VRTX, GILD at these levels?

Those are all way too big for me. I like much smaller market caps. I will add that I recently took a nice position in MGNX and it is now one of my largest holdings. I had long been interested in MGNX given breadth of novel pipeline, legit big name partners, and fact that they are intent on keeping core U.S. rights to their drugs. The plunge from $30 level to $20 on no apparent change in fundamentals made it a no-brainer for me. I rarely venture above the $500M market cap range for an investment but happy to make an exception for MGNX here.