Biotech catalysts for 2016

After last week’s pessimistic post, this week I am focusing on potential catalysts in 2016 that could improve sentiment towards biotech as a sector.

As if to remind us late stage trials don’t always fail, last week saw positive news from three different programs, all of which are antibodies in non-oncology indications. Regeneron (REGN) and its partner Sanofi (SNY) announced excellent data in atopic dermatitis, Alder (ALDR) reported positive results in a P2b in migraine and Pfizer (PFE) had positive P3 data for its PCSK9 program.

Below are four additional clinical data readouts that (if positive) may serve as important catalysts.

PCSK9 cardiovascular outcomes trials (CVOT)

Amgen (AMGN) and Regeneron will announce results from CVOT for their respective PCSK9 antibodies. So far, Repatha and Praluent have had weak launches as physicians are reluctant to put patients on injectable drugs without a proven long term benefit (reduction in CV events or death).

I think there is a high (~70%) probability of success for both programs based on dramatic reductions in LDL-C and preliminary pooled analysis from earlier studies.  Positive outcomes data may allow PCSK9 to dramatically improve market penetration in high risk patients who are not adequately controlled by statins with a potential label expansion to other patients with high cholesterol.

Positive outcomes data should be viewed as a positive breakthrough for The Medicines Company (MDCO) and Alnylam (ALNY) which are developing an siRNA targeting PCSK9 with a potentially less frequent treatment regimen.  Results will also be important for Esperion (ESPR) because they will further validate the LDL hypothesis. Compared to PCSK9 antibodies, Esperion’s bempedoic acid has a weaker effect on LDL but as an oral agent that does not cause muscle pain, it may become an important treatment line after statins.

Three high risk readouts – Aduro, Biogen and Lilly

Aduro (ADRO) will report P2b data for its off-the-shelf cancer vaccine in pancreatic cancer by mid-2016. Off- the-shelf cancer vaccines have a terrible track record with many attempts over decades and not a single success (Celldex (CLDX) is the most recent example). The only approved cancer vaccine (Provenge) is an autologous vaccine in which a patient’s cells are taken and modified before re-administration.

An earlier phase 2 trial generated a positive survival benefit of 2.2 months in the overall population and a subset analysis demonstrated a more pronounced survival benefit (5.1 months). The current P2b is designed to corroborate this finding with data expected in the May -June timeframe. Although I don’t think the trial will be successful, positive results will have widespread implications as they will validate the concept of cancer vaccines and set the stage for many other vaccines using Aduro’s platform.

In Q3 of 2016, Biogen (BIIB) will report data from a P2b data evaluating its anti-LINGO antibody in MS. Targeting LINGO represents a new approach in MS, as the drug is designed to induce re-myelination in contrast to available treatments that slow down disease progression by suppressing the immune system. Given the lack of clinical validation for the target and the approach, this program should also be regarded as a high risk bet. In addition, more studies will be required to understand whether anti-LINGO is truly disease modifying and how it fits in the crowded MS market.

Lilly (LLY) is expected to report topline results for its Alzheimer program solanezumab in December 2016 (data may be pushed to early 2017). Solanezumab is an antibody targeting amyloid-beta (Abeta), which like all other Abeta programs, failed to demonstrate clinical benefit in P3 trials. A subset analysis of the failed P3 studies generated a mild signal of activity in early stage patients which was enough to justify initiating another P3. Although market opportunity and unmet need are huge, likelihood of success is low in my opinion given past experience with other Abeta agents. Biogen recently started P3 with its Abeta antibody (adacanumab) in Alzheimer’s disease.

Gene therapy as a potential long term growth driver

So what could be the industry’s next growth engine? To support long term growth, the biotech sector has to expand to new treatment modalities and indications. This makes gene therapy an ideal growth engine given its broad applicability in diseases which are not well addressed with current therapeutic approaches (therapeutic proteins, small molecules, siRNA etc.).

After 20 years of setbacks, gene therapy had a comeback in 2013-2014 based on preliminary results from Bluebird Bio (BLUE), Spark (ONCE)and Avalanche (AAVL), among others. Since then excitement waned following a mixed performance: Sprak reported the first ever positive randomized P3 for its ophthalmic RPE-65 program while Avalanche’s gene therapy for wet- AMD had disappointing results. Bluebird’s Lentiglobin fell somewhere in between, generating a clear proof of concept but only in some patients.

Acknowledging gene therapy’s checkered history, I believe the field is ready for primetime for the following reasons:

Technology – Technologies are mature enough with specialized vectors and delivery technologies that have generated clinical proof of concept across a myriad of indications  (Hematology, ophthalmology, CNS and metabolic disorders)

Pharmaceutical standards – Historically, most gene therapy programs were initiated by research centers. Today, more and more programs are being run by companies according to industry standards and are developed as a pharmaceutical product. This not only removes a lot of regulatory risk but also improves translatability from preliminary clinical anecdotes to late stage clinical trials.

Funding – For the first time, gene therapy programs have sufficient financial backing to reach the market. Between the gene therapy-dedicated companies and their partners, the budget available for gene therapy programs is probably several billions of dollars.

Gene therapy catalysts in 2016

While it is hard to see a single binary event in 2016 for gene therapy, the next 2-3 years will have readouts from dozens of programs across a wide spectrum of indications. (This doesn’t include CARs and TCRs, which are also a form of gene therapy but are regarded as an independent group):

Bluebird Bio remains the most prominent gene therapy company with a focus on hematology. Following a traumatic ASH last year, the company decided to provide another update for its beta-thalassemia and sickle cell disease trials only towards the end of 2016. Based on results to date and plans shared by the company, I am cautiously optimistic about the company’s chances of improving clinical activity.

After announcing positive P3 results for its lead program SPK‐RPE65 in RPE65-related blindness, Spark will file for approval and report initial data for a second ophthalmic program (SPK‐CHM for choroideremia) in the second half of 2016.

AGTC (AGTC) will report initial data for two other rare genetic ophthalmic indications (X-Linked Retinoschisis and Achromatopsia CNGB3) in 2016.

UniQure (QURE) – After presenting preliminary positive data in hemophilia B and Sanfilippo B (a rare neurological disease), UniQure is expected to update on both programs in 2016.

Voyager (VYGR), which focuses on CNS indications, expects to have clinical data for its Parkinson’s program in 2H:16. The program already generated  early signs of clinical efficacy in patients.

Dimension Therapeutics (DMTX), which has a liver targeting vector will have hemophilia B data in 2H:16.

AveXis (AVXS), which completed its IPO earlier this year, will have an update for AVXS-101 in SMA Type 1. The company reported preliminary encouraging results from a phase I study.

REGENXBIO (RGNX) is the most diversified gene therapy company thanks to its licensing agreements with multiple gene therapy companies ( Voyager, Dimension, Baxter and Lysogene). The company expects to advance two programs for HoFH and MPS1 to clinical trials in 2016.

Portfolio holdings – April 3, 2016

Biotech portfolio - Apr 3, 2016biotech etfs - Apr 3, 2016

177 thoughts on “Biotech catalysts for 2016

  1. EXEL will most likely be bought out. Currently 228m shares outstanding, 250m is we take the unvested shares; $287 debt converted at $5.31/share will add an additional 54m shares /dilution: totaling 302m shares outstanding. Assuming first line RCC is in play, $1b peak sales 4-5x multiple we are looking at 4-5b valuation at $16-20/share. Good luck!


  2. Alex: doubt tivozanib will be a real player. From SA:
    “…the FDA rejected its New Drug Application (NDA) for kidney cancer due to inconsistent study results.
    The company is undeterred though. It sought FDA guidance about a new 314-subject Phase 3 trial assessing tivozanib as third-line treatment in advanced RCC. The regulator responded that the data “may support” the indication. As always, it will be review issue”


  3. ARRY
    Thanks for the reply Ohad. Would like to know your opinion on the data for ecorafenib + cetuximab in BRAF CRC. The overall survival data looks very good with an n=100 compared to historical data, and ARRY has decided to do a 600 patient phase 3. Do you have an estimate of what it would cost given their partner is paying 40% of it?


  4. Ohad
    thanks for the DNAI response.
    You were concerned of the BCL2 inhibitors efficacy.
    ASCO data for Venetoclax after KI discontinuation for BCL2 target was ORR 76% and CR 7%.
    Does it increase your confidence in the DNAI data for the BCL2 target?
    DNAI drug is a DNA interference drug and probably should have better safety and tolerability profile compared to small molecule BCL2 inhibitors.
    At any rate, Merrill Lynch expects DNAI to be one of the ASCO winners. Let see on June 6.


  5. HI Ohad
    you wrote
    “I do expect pricing challenges (eg NICE’s decision regarding Opdivo in lung cancer) to persist during 2016, which should put pressure on the sector but could be good news for Smid caps.”
    how it could be good for Smid’s ?


  6. TRVN

    Hi Ohad,

    any near-term catalyst for TRVN in sight? Results from TRV130 will be published in the first quarter of 2017. Where do you see the stock price in Dec2016/Jan2017?

    Best Regards, n0cturne


  7. curiousgeorge (EXEL) – Thanks, very interesting especially that now Cotellic is gaining importance as a PD-L1 “potentiator” . Hard to assess the outcome of this move.

    Alex (EXEL/AVEO) – I don’t think tivo is a major threat given the recent CABOSUN data. AVEO are going after Nexavar as a control arm (again), which is considred inferior to Sutent.

    Anthony (ARRY) – I think the doublet and triplet data are good although comparing OS to historical data is very unreliable. In addition, it is unclear whether adding alpelisib is worth the toxicity and financial cost. A 600 patient trial should probably cost $30-40M.

    andre (DNAI) – I am not worried about BCL2 as a target, it is the competition with venetoclax I am worried about.

    Alex – In this type of environment te only way to grow is introducing new differentiated drugs and for this large biopharma will have to acquire small companies.

    n0cturne (TRVN) – Cannot think of dramatic catalysts this year. P3 results for oliceridine are expected in 1H:17.



  8. Ohad Thanks for the reply. The triplet will be binimetinib/encorafenib/cetuximab for the phase 3 not alpelisib . Phase 2 trials of dabrafenib trametinib and cetuximab in BRAF CRC shows better response rate than just dabrafenib+ cetuximab. Maybe because of the competition, ARRY wants to make sure they have a triplet group as well.


  9. Also do you see a chance that Merck or BMY will collaborate with ARRY and use binimetinib with their PD-1 inhibitors to compete with Roche and Astrazenaca? I am not sure if BMY or Merk has an in house MEK.


  10. Yes a dropoff, but 30% above $400 million is still significant. Exel actually got decent terms to offload development costs. These deals usually require royalties to offload the development costs. Exel certainly got an unfair deal on drug pricing though.

    Under the terms of the Agreement, Exelixis is entitled to an initial equal share of U.S. profits and losses for cobimetinib, which will decrease as sales increase, and will share equally in the U.S. marketing and commercialization costs. The profit share has multiple tiers: Exelixis is entitled to 50% of profits from the first $200 million of U.S. actual sales, decreasing to 30% of profits from U.S. actual sales in excess of $400 million. Exelixis is entitled to low double-digit royalties on ex-U.S. net sales. In November 2013, Exelixis exercised an option that will permit it to provide up to 25% of the total sales force for cobimetinib in the United States, if the compound is commercialized, consistent with the Agreement’s terms.


  11. EXEL phase III with roche in CRC. EXEL also challenging Roche on cobi agreement. I thought Roche might buy them as the combo could be huge in the future in many indications. But the time to do it was before the ipsen deal.


  12. Anthony (ARRY) – Thanks for the clarification, makes sense. Regarding MRK/BMY using bini , it makes a lot of sense as I am not aware of them having active MEK programs. They can also choose NVS’ Mekinist.

    Chris (EXEL) – Agree.

    jh (EXEL) – I also assume it’s too late for an acquisition after the Ipsen deal. Cotellic will have to become increasingly important for Roche to bid for EXEL.

    Christian (MOR) – I don’t find those data sets exciting.



  13. Ohad: EXEL- what if Ipsen is the ultimate acquirer? The deal as you said was “very rich”! $855m for 2L RCC; with 1L in play it is more than plausible that they would be interested? Their CEO has deep connections, raising money wouldn’t be an issue, especially is the acquistion is based on initial cash and subsequent payments based on sales and trial milestones (eg $2.5-3b upfront with $1-2b in future milestone payments). Thoughts?


  14. $EXEL The way i see it is that Exelixis waiting to see the Combination results and the Cotellic results before engaging in the next set of steps, and will file for sNDA for 1st line RCC. I think based on the twitter feeds of Sumantha Pal and Apolo there seems to be a general enthusiasm about the differentiating factor Cabo brings to the combination story because it makes the disease receptors more open to detection by the immunotherapy drugs. I might be far fetched here but i think the combination might CURE RCC. If that happens the price of Exelixis can go astronomically high. This is my far fetched guess. So Exelixis therefore i think is setting themselves up for a buyout. The price might be above $100 if all the stars line up. You should listen to the Roche presentation and the ASCO presentation of Exelixis, and you can read between the lines. I heard the word CURE.


  15. $EXEL At 100 it is a 22 billion dollar company, i know u will not agree to this valuation but it can happen if the combination results are blockbuster. Cotellic is already a block buster and the reason why Exelixis is seeking arbritration is that Roche wants to hide the value of Exelixis, they probably low balled Exelixis in a buyout offer so Exelixis did the right thing going for Ipsen.


  16. Hi Ohad,

    I was wondering if you plan on doing an update article on EXEL to address all the new developments (cabo RCC bone mets pfs/os, cotellic potential in CRC)



  17. Hi Ohad,

    Immunogen posted their ASCO poster of the IMGN853 data of 40 patients with EOC and 6 with a variety of other cancers:

    Click to access ASCO2016MIRVPH1AB5567.pdf

    I believe that the this poster data corresponds to the data they presented in May from the total sample confirmed ORR they report of 26%; presumably the responses on the waterfall with an asterisk progressed prior to being confirmed judging from the relatively modest median PFS figures.

    There were 22 high, 13 medium, and 8 low expressors for whom they had post-baseline measurements and plotted on their waterfall. Of confirmed responses stratified by folate expression:

    high: 6 / 22 (1 unmarked bar which I don’t count)
    medium: 4 / 13
    low: 2 /8

    Interestingly for the 4 CRs both confirmed with 1 unconfirmed:

    high: 2 (1 unconfirmed),
    medium: 1
    low: 1 (!)

    So even a low responder had a rather profound reduction in tumor size. This seems to somewhat weaken the initial thesis that higher folate receptor expression corresponds to better responses but the signal still seems to be there.

    The pre-treatment breakdown seems like an important one. By the poster 23 (50%) had 1-3 prior therapies and 23 had 4 or more. For just this stratification into more lightly pre-treated (1-3) vs more heavily pretreated (4+), confirmed ORR was

    1 to 3: 39% (9)
    4+: 13% (3)

    the latter implied from the total confirmed of 12 out of 46. This seems like a fairly important criteria, but whatever control arm they choose will likely also benefit from this as well.

    The spider plots looked promising, almost a little like an IO agent. (Perhaps an immune response is triggered?) Many didn’t paths didn’t have very long follow ups, but the ones added since 2015 look decidedly worse as they said on the conference.
    (compare the spider plots with the new paths added here to the original paths from

    There’s a bit more obfuscation since last year, but this still looks like a promising agent. Any thoughts about the poster, the responses, and the AEs?


  18. Ohad re Morphosys (part 2):
    Please take a look at the Morphosys investor presentation at ASCO.

    My highlights re MOR208:
    Time to response and DoR
    * Median DoR in DLBCL was 20 months
    * Median DoR was not reached in iNHL patients, with 72% of responders without disease progression at 16 months and 6 responses ongoing

    And even MOR202 now shows comparable efficiacy to daratumumab in monotherapy and in combination with iMIDs with two potential advantages:
    * far lower infusion reactions compared to daratumumab -> infusion time of 1h could be reached instead of 3-6h with daratumumab
    * there is a strong rationale that the DoR could be longer than with daratumumab because of preservation of NK Cells and because the antibody doesn’t deplete the target CD38 as biopsys showed (in contrast to daratumumab)

    So i think it’s worth for you to take a second look.


    Click to access 160606_mor_asco_investor_reception_0.pdf



  19. Steve (EXEL) – My guess is that potential acquirers (let alone Ipsen who already has a stake) would want to see at least 2-3 quarters of sales before acting.

    curiousgeorge (EXEL) – Combination with PD-1 in RCC as well as other indications could be an important value driver, no doubt. If MEK inhibitors are indeed PD-1 potentiators then their value will increase dramatically but the jury is still out.

    Christian/Jack (ARRY) – NEMO data are obviously disappointing. Let’s hope KRAS+ NSCLC data will look better later in the year.

    Justin (EXEL) – See my recent post about ASCO.

    Wildbiftek (IMGN) – mirv is definitely active but the lack of correlation with FRa expression is disconcerting.

    Ville (MOR) – Thanks for providing this information. Yes, that’s good durability but response rate is still rather low in DLBCL. Re: MOR202, data set was limited and hard to interpret without a control arm

    Kenny (NERV) – Sorry don’t know them well.


  20. I believe what you posted made a bunch of sense. However, what
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