Replies to post #105203 on Biotech Values

[jq1234]

David,

It's impossible to compare solid tumor ORR with liquid tumor ORR. I don't think that is valid comparison.

However, I do agree with your technology assessment of IMGN and SGEN in general. Based on the evidence, I have come to conclude SGEN's ADC seems to have wider applicability than IMGN's TAP.

[mcbio]

Re: IMGN/DNA linker tech

I said the technology hasn't been validated "but" (except) for DM-1. All other attempts at using TAP have failed, some miserably. Whether that is learning cruve due to being first or something wrong with TAP is a valuation question. We cover them, and think they are suitable for investment capital over the long term. I think use of TAP with previously validated MAbs will likely be successful, though I think it will take more fiddling with TAP to get it right than I do with SGEN's ADC technology.

I wasn't asked about SGEN's valuation, though you assume I think it's immediately going higher. I think it can go higher, but that will wait until we know pricing and indication for SGN-35. I think their relative valuation gains (from a post ALCL-baseline) are likely to be the same until we know pricing on SGN-35 and 2nd line results on T-DM1.

When comparing technology, let's look at the prime examples:

SGN-30 was a a single-digit response rate MAb. The same MAb empowered by SGEN's ADC technology has a 75% ORR with durability likely approaching a year in the same population.

Herceptin in third line has varying repsonse rates depending on the protocol, but I think we can agree it is also single-digit response rates. T-DM1 has a 32.7% response rate.

Like any indirect data set comparisons, this only goes so far -- particularly since they are completely separate diseases and one can argue T-DM1 was used in a more heavily pre-treated population that essentially excluded any MAb-specific baseline response.

This is what potential partners and potential acquirers are looking at, however, which partically explains the price differential between the two companies. The other explanation is the TAP technology has failed more often than it has succeeded (again, not necessarily the technology's fault). The remainder (majority) of the price differential is IMGN gets ~5% of T-DM1 sales and SGEN gets 100% in NA and double-digits ex-NA.

Thanks for the detailed response. Is the improved linker technology apparently developed in collaboration with DNA that is the basis for T-DM1 also being utilized by IMGN for the drugs in the rest of its pipeline? If so, that gives me added confidence in the rest of IMGN's pipeline and gives me more hope that IMGN may be more than a one-trick pony. That would also make me believe that perhaps the valuation difference between SGEN and IMGN shouldn't be so great.

Also, in comparing the difference in royalty rates of 100% for SGEN vs. ~5% for IMGN, I believe we're also talking about a much larger market for T-DM1 compared to SGN-35's initial market. What the ultimate net profit is to each company is of course open to debate, but I would imagine the much larger market opportunity for T-DM1, notwithstanding the lower royalty due IMGN, should to some degree lessen the valuation difference between IMGN and SGEN.