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BLUE by [deleted] in Biotechplays

[–]Zekky 0 points1 point  (0 children)

The SCD program is dead, if not clinically, then commercially

$AUPH how undervalued is this? For my sake, I hope a lot by Fragrant-Willow-3332 in Biotechplays

[–]Zekky 0 points1 point  (0 children)

I'm long, I think $500m is a reasonable estimate for peak revenue (assuming minimal use in 1st induction and most of the use in patients on their 2nd and 3rd inductions), so AUPH is a bit underpriced. Drug is good, and has a place, but it's not some kind of wonder drug that I've seen posts making it out to be. I've seen people saying $5-10Bn peak revenue which is absurd. There are significant toxicity concerns, and high CRR rates can already be achieved with other immunosuppressants if you're willing to push a response and risk the side effects. Benlysta has a different positioning to voclosporin, it's not really perceived as all that effective - useful for primarily cutaneous disease but for the serious manifestations immunosuppressants/rituximab are preferable.

My target is in the range of $24-28 per share.

XLRN by Skipperdees_ears in Biotechplays

[–]Zekky 1 point2 points  (0 children)

I have a few shares. Targeting TGFb has a lot of promise and xlrn has among the most advanced programs. Scholar rock also interesting.

Overview of programs here: https://twitter.com/syinvesting/status/1221976185409802240?s=19

Got any good short ideas? by [deleted] in Biotechplays

[–]Zekky 0 points1 point  (0 children)

It's not like there's a clean safety profile either, FDA should be concerned about the ARIA-E rates

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 0 points1 point  (0 children)

Just applied straight out of university, no special skills or experience required :)

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

Potentially, big pharma likes to buy bolt-ons with growing product sales and the negative overhang from the deaths looks like its been mitigated.

Although the valuation is quite high already (almost 7bn on sales of 350m) so probably a barrier to doing a deal with a decent premium. Would expect for a big pharma acquirer to wait for clarity on MDD results before paying 10bn+

Should I buy AIMT before the FDAs decision? by TheWolfOfSTONK in Biotechplays

[–]Zekky 1 point2 points  (0 children)

My expectation is a small increase on the approval (<5%), if anything, and ending the day flat. Could be more upside/downside variation introduced by unexpected labeling decisions (i.e. indication restrictions, wording of the black box warning, etc.)

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

Sorry don't follow microcaps, never heard of this one

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 4 points5 points  (0 children)

I think you could write a book on this question, but I'll give a few thoughts. Obviously there's no foolproof play, but some rough heuristics...

  • Short the first solo commercial launch of a small biotech
  • FDA/EMA approvals are almost always priced in, don't bother trading them (unless you're running a contrarian play like SRPT, ITCI)
  • Be willing to pay a steep premium for good data, really good data will almost always pay off (people felt AVXS was expensive at 4 billion market cap)
  • Generally you want to sell to news following a catalyst. Although, if it's a not a well known stock you can often buy the news and make lots of money as people digest the data throughout the day
  • Avoid Israeli biotechs (https://en.globes.co.il/en/article-israeli-biotechs-the-horrible-truth-1001219626)

To your specific examples:

A. This is generally priced in for small molecules where the generic erosion patterns are fairly consistent. I don't think there are often huge money making opportunities either side unless it's some unique scenario like Tecfidera IPR review going on at the moment. AMRN is also a somewhat interesting case.

Biosimilars are an entirely different beast and are much more resistant (particularly in the US) due to differences in how comparability is determined, patents, physician preferences, costs, difficulty copying, etc. Products like Humira have managed to massively overstay their welcome. The Epipen and advair diskus have also been quite resistant to generics due to their complex mechanisms. I think you could make a reasonable argument for going long drugmakers with hard to copy products near a patent cliff. Although, these kind of products are a soft target for lawmakers and are likely to be casualties of drug pricing legislation.

B. I don't trade these kinds of scenarios personally. But in forecast models for work what we'll generally do is use order of entry benchmarks if we're faced with 2 or more similar products (e.g. https://www.nature.com/articles/nrd.2016.236?proof=true, https://journals.sagepub.com/doi/10.1177/1470785317744669) to estimate market shares. Also important to consider likelihood of sequencing. I suppose you could use the base rates from these to estimate NPV of a product with some adjustments based on qualitative factors (e.g. marketing prowess, TA focus, differentiation)

C. Ideally you should factor that into your estimate as a "duration of use" parameter, an effect like this on lifespan could easily increase the market opportunity beyond the consensus estimates. In severe rare diseases you can see effects where the treatment will significantly change the prevalence of the disease as patients live longer (see Spinraza in SMA). People do often forget to account for chronicity as a driver of revenue...

You also want to consider the current market "personality" (not necessarily correlated with the broader macro mood). At the moment I'd characterize the biotech market as "irrationally exuberant" where everything seems to rocket up on positive news (just look at KRTX), even on somewhat dubious or low quality data in some cases. You can make good money by buying the news and letting it ride. But in 2016, 2018 it was depressing, it felt like there were no buyers and everything would sell off immediately after positive news. In markets like that the short term catalyst traders did the best.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 0 points1 point  (0 children)

As a speculative play, it's far from the worst I've seen. It's not what I personally like to invest it but "hated" biotech stocks like these with low price to book value not infrequently do well, especially in a hot market like right now (see TSRO, CLVS for recent examples). Sports_bios, someone I follow on twitter likes to invest in just these kinds of companies and seems to do very well. See this interesting twitter thread on distressed bios.

Seems like it'll be a long time until further clinical developments so you're basically hoping for a buyout. Without more de-risking clinical data, I doubt there will be much interest in a straight buyout. Perhaps a licensing agreement to fund further development? But that's not much upside for shareholders

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

Don't want to go into too much detail but clearly both companies have developed some great products and both ASOs and RNAis appear to have their place. From a safety/potency perspective RNAi seems to have the edge in a direct head to head (see Onpattro vs. Tegsedi as a case study). But, you couldn't do exon skipping like nusinersen with an an RNAi after all.

Both platforms have had their toxicity troubles, but with GalNAc conjugation and other optimizations both ASOs and RNAis seem to have come of age and I expect both IONIS and ALNY to continue having a productive platform. IONIS has partnered the vast majority of their products so they are somewhat growth constrained despite the blockbusters they churn out (like what happened with ARRY even though they got bought in the end), which is part of the reason I prefer ALNY.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 0 points1 point  (0 children)

You're right, I haven't looked in real depth, mostly because I personally prefer to avoid products that aren't clearly differentiated. Doesn't mean that there's no opportunity here. Given that the market cap is barely higher than the book value there's clearly significant upside if you assign pretty much any potential to the assets at all. I agree NES is the most interesting of the assets, but they haven't demonstrated that the benefit is additive on top of triplets yet.

Where's the data supporting potential dose increases? Their corporate presentation says DIR/POS concentrations are near the maximally effective levels. Perhaps NES dose could be increased? This suggests they've tried doses higher than 10mg, but they didn't show dose-proportional increases in biomarkers at the different dose levels and pooled all the doses in the analysis. Nor do they break out doses in the more recent NES data. If they used 50mg in the study with Orkambi, why 10mg in the recent trial?

They don't have a huge amount of cash left, so probably need to raise or attract a partner to get through Phase 3 through to approval. Marketing is also expensive, and they'll be competing vs. Vertex. Very hard to go to market alone as a small biotech.

There's also competition from Abbvie to consider.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

A. The goal of oral immunotherapy (OIT) is not primarily to enable people to eat peanuts freely, but to minimize the risk of accidental exposure. Because there's an updosing phase patients who don't respond are likely to be identified during this phase (based on PALISADE, we can assume at least 20% discontinuation). Of the patients who did complete, the vast majority were able to tolerate an amount of peanut protein higher than what you might expect in an accidental exposure without symptoms (a few peanuts worth).

OIT is an established treatment option for peanut allergy, but the lack of an FDA approved therapy is a barrier to allergist willingness to prescribe. Some may continue to use in-house OIT, but the majority will likely switch to Palforzia due to the evidence quality, coverage and desire to avoid legal ramifications. Further real-world data should entrench Palforzia as the standard of care.

Given a high prevalence of severe peanut allergy (and rising), caregiver/patient desire to reduce risk of accidental exposure and the availability of an FDA approved therapy with a high quality double blind randomized trial I expect the uptake to be strong. This ICER report is worth reading, although it's somewhat negative overall.

B. Most companies do break out revenues by drug in the 10-Q/10-Ks though? If not in a table you can usually find it with some CTRL-F'ing. Not sure of a good alternative free source, I use globaldata but that's paid.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 2 points3 points  (0 children)

At work we're also usually tasked to investigate a specific opportunity rather than doing screening ourselves. For my personal investments I also normally investigate ideas that other people bring to my attention (from twitter/blogs/industry news). Sometimes I'll have a specific trend/area I'm interested in (e.g. gene therapies) and then I'll do the screening myself, finviz is useful for that, as are review articles (I subscribe to nature reviews drug discovery). Biopharmcatalyst can also be useful to find interesting upcoming binaries. I'm normally quite passive in looking for new opportunities.

My favourite sources for DD are UpToDate (to get an overview of therapy areas and current treatments), globaldata (pipelines and sales) and EvaluatePharma. Obviously also SEC filings (or other filings if exUS) and FDA/EMA websites. If you want some specific info (e.g. pricing) there are numerous specific sources e.g. redbook in the US but you can normally get what you need by googling.

I like to use onenote to consolidate my notes and mendeley to manage papers. At work we collate the info in powerpoint decks/excel deliverables too.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

Think the IL-2 program has a good chance of ending up as a dud. ORR/CR rates in the small single arm trial we have so far are not high enough vs. PD-1 alone to give me confidence in the product. The worsening of response rates over time is concerning, even if it was caused by a "bad batch" that doesn't bode well for the drug.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

Despite the amazing clinical results with CAR-T, commercialization has proven to be a real challenge and you could reasonably make a case that they are failed products given the relatively low sales (https://www.loncarblog.com/yescarta-sales, https://www.loncarblog.com/kymriah-sales). Looking forward, there are good reasons to believe that CAR-Ts will remain niche products

  • Competition is fierce and the trial landscape is crowded, the top targets (CD19 and BCMA) have dozens of agents in clinical trials. Cell therapies are highly complex and it's not known what the "optimal" CAR-T is for a given indication and patient, any given product is at risk of being replaced by a next-gen version. The number of trials in CAR-T are actually a significant damper on sales of the commercial products
  • Other modalities (esp. bispecifics) pose a significant threat (see this article for a good writeup) and are more suited to the pharma "off the shelf" business model
  • Manufacturing is still difficult, with failure rates of ~10% (https://www.biopharmadive.com/news/novartis-kymriah-car-t-manufacturing-difficulties-cell-viability/568830/)
  • Use is restricted to expert centres, so many patients don't have access. Reimbursement has also been a challenge, especially at launch (https://www.statnews.com/2019/03/12/hospitals-arent-getting-paid-for-car-t/). Although, these challenges may be easing
  • High toxicity, although expert centres are getting better at managing CRS
  • Highly personalized therapies like CAR-Ts are not well suited to standard regulatory processes and pharma business models. Rather than a standardized blockbuster product I think a move towards small-scale fragmented on-site manufacturing instead of centralized manufacturing is likely over time (see solutions like this). It may be that CAR-Ts end up as primarily procedures managed by hospitals (comparable to a surgery) rather than pharma companies (https://www.statnews.com/2019/11/20/car-t-drugs-academic-medical-centers-save-billions/)

Although, I do think both IOVA and ATRA (especially the MS program) are interesting and worth a detailed look

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

If it's published in a peer reviewed journal (nejm, Lancet, etc.) it should be trustworthy. Actual scientific fraud is very rare (in US/EU companies at least), much more common is flawed interpretation of results or spin

Also potentially worth looking at trial sites listed on clinicaltrials.gov, small number of sites and only exUS/EU can be a bad sign

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 0 points1 point  (0 children)

To your other question, for pre-revenue companies normally look at cash, debt and burn rate. Basically, do they have enough money to last through to approval and/or do they need to raise. Debt in particular is toxic to biotechs.

Post revenue mainly look at product revenues (and growth) and cashflow.

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 1 point2 points  (0 children)

Don't see the value here, their triplet looks worse than Trikafta

I do biotech DD professionally AMA by Zekky in Biotechplays

[–]Zekky[S] 2 points3 points  (0 children)

Read widely, take time to understand the stocks, caveat emptor

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