Replies to post #109920 on Biotech Values

[DewDiligence]

Thanks, Tinker. I would submit that the VRTX and EXEL situations are quite different insofar as it’s considerably easier to tell if an antiviral drug is going to be a success than it is to tell if a cancer drug is going to be a success.

For antivirals such as Telaprevir, the MoA is much better understood than any cancer pathway I’m aware of, and efficacy can often be established as early as phase-1b/2a. After that, if there are no unexpected safety problems, you’re basically home free from a regulatory standpoint. Moreover, for Telaprevir, it has been clear for several years that the commercial opportunity is huge and the competition is either late or inferior.

With EXEL’s XL184, none of the above calculations is anywhere near as simple as the corresponding calculations for Telaprevir, IMO.

[jq1234]

Not on Provenge again.

I have been a strong supporter of Provenge. However, I also firmly believed FDA shouldn't approve Provenge back in 2007. It's very simple, FDA should NEVER approve a drug that failed predefined primary endpoint. Having worked in pharma/biotech for a long time, I can tell you if FDA opens this flood gate, every drug that failed primary endpoint can find post hoc analysis that it met other endpoint or met primary endpoint for a subset patients. The reason is very simple, every drug in phase III works for some patients. You approve a drug when it works for enough patients to meet primary endpoint, or you know for sure how to identify for whom the drug works if it doesn't work for enough patients.

Many criticism on Provenge is unfair, but at the same time, many supporters of Provenge went over board when they consider any criticism of Provenge is a "crime".

Point being, I think you really have to be in earlier rather than later with a drug like this as the Street will start to project the share price to maturity if the drug really starts to look like a winner, and it will start to do so very quicly. After that all the returns, except for trading on steep troughs may be gone.

I'd agree on this. My investment philosphy in biotech is to find undervalued early, out when it becomes fair valued or overvalued. In EXEL when BMY bailed, out after RDT result out. EXEL is fair valued at this point. I'd decide if I want to get in again before ASCO GU when more data come out. For development stage biotech, it's never straightline up. You'll get opportunity to get in. Patience, don't buy when everyone buys, buy when tons of unwarranted skepticism abound.

[mcbio]

Point being, I think you really have to be in earlier rather than later with a drug like this as the Street will start to project the share price to maturity if the drug really starts to look like a winner, and it will start to do so very quicly. After that all the returns, except for trading on steep troughs may be gone.

However, it is usually worthwhile to wait until you know the drug really works, and you know the drug works well. The problem in this case, once the durability evidence comes out the shares are likely to spike before one could start buying. VRTX gave a great opportunity to start buying very cheapl ased upon the fact that telaprevir worked very well, and you knew it. I don't know if EXEL will give us that chance to buy cheaply if you wait until durability data is makde known - which does create some issues if you want to minimize your risk factor. But who knows how it will come out in the end in regard to share price behavior.

I totally agree with waiting until you have some sign a drug works but not waiting until the full sign is there because at that point it may be too late. You always have to take into account the market cap, the evidence of activity, and the potential opportunity and weigh things of course. With EXEL, the question is whether or not the bone scans are sufficient evidence that the drug works. Or is it at least enough of a signal to enable EXEL to land a really lucrative partnership for XL184 again, which could boost the shares? Although I don't think we can answer the former with any certainty despite the encouraging signs, I think the latter is entirely possible and that's why I think I like EXEL's risk-reward at the present level.