Replies to post #213796 on Biotech Values

[biomaven0]

I really don't see how the existence of not of a secondary project should impact the decision about whether to play a binary Phase III or not. Both the up-move and the down-move will be smaller if some value is ascribed to the remaining pipeline - but you can adjust for that by increasing or decreasing your bet.

I didn't personally follow this drug, but on the surface it looked something on the order of a 50:50 shot given a decent inferiority margin. So I can certainly see how these name-brand investors had a position.

Peter

[DewDiligence]

Re: Buying in advance of phase-3

It was still a major P3 binary event and we all know what a crapshoot those can turn out to be more often than not... If I'm going to gamble on a P3 binary (and I rarely do that), there has to be at least one major clinical asset left in the pipeline to fall back on in a worst-case scenario.

My strategy vis-à-vis pre-phase-3 buying is simple: Bet on phase-3 being successful in cases where the drug’s MoA is well-understood and efficacy has effectively been established in phase-2, thus limiting the phase-3 risk to the surfacing of a latent safety problem.

Examples where I put this precept into practice include ENTA (in 2013) and RVNC (in 2016).

In the past few years, I have made more money from this investing theme than from any other. This particular market inefficiency has not yet been whittled away through exploitation, evidently.