Biotech portfolio updates – Exelixis, Spark, buying more gene therapy stocks

Exelixis – Decreasing exposure on valuation

Exelixis (EXEL) continues to look very strong after hitting a 15-year high on Friday, which is never a bad point in time to realize some gains. While I still view Cabometyx as the most effective agent ever approved in renal cancer (even better than Opdivo), a valuation of $5.1B seems to fully capture the current label.

Exelixis definitely has potential to grow with multiple data readouts for cabo (P3 in liver cancer, combination data with checkpoint inhibitors in GU cancers) and Roche-partnered Cotellic (expected to be in three pivotal trials next year) in 2017. On the regulatory front, the company plans to submit data from the CABOSUN study in 1st line RCC with the potential to get approval by late 2017, earlier than the expected Opdivo/Yervoy filing (assuming positive results).

The company also faces risks. To begin with, the commercial launch looks strong but still hard to predict market dynamics in 2017. Competition from PD1-based combination regimens may make 1st line more competitive, even if Cabometyx receives approval. Another risk lies in the fact that the PFS data from CABOSUN were made based on investigator assessments and therefore need to be confirmed by a blinded central reviewer, which may impact the data the FDA receives.

On a personal level, I cannot ignore my bad track record with other oncology launches (especially Genmab and Pharmacyclics) where I sold too early but the strongest argument for selling one of my two Exelixis position is its disproportional share (~30%) of the total portfolio.

Spark – ASH data set isn’t perfect but still impressive

Spark (ONCE) and its partner Pfizer (PFE) presented updated data for their hemophilia B program SPK-9001. Data continue to show durable, strong production of FIX and a sharp decrease in bleeding episodes but this time with some hiccups: Of the nine treated patients, two experienced an immune reaction against the viral vector (one case had already been reported by the company). Although the immune flares were successfully contained with steroids, one patient had a dramatic reduction of FIX levels from ~48% to 12%, which is considered the minimally required levels to achieve a significant clinical benefit. The other patient was treated with steroids more quickly and had a minor drop from 68% to 65%. Importantly, neither of the patients experienced any bleeding events.


The two cases understandably raise concerns but do not impact SPK-9001’s value proposition. Even if the patient who had a sharp decrease in FIX levels is considered a treatment failure (which isn’t the case because there is still clinically-relevant FIX production) a success rate of  89% (8 of 9 patients) is still remarkable. The biggest risk for SPK-9001 remains a life-threatening safety event (uncontrolled immune reaction or carcinogenicity) rather than an imperfect efficacy scorecard.

Alnylam (ALNY) presented data for fitusiran, a siRNA targeting antithrombin for Hemophilia A and B. The drug also led to a robust, dose dependent reduction in bleeding incidence. Of the ten patients who received a higher dose of fitusiran, seven were bleeding-free at the time of analysis.


Fitusiram has a very different clinical profile compared to gene therapies such as SPK-9001. It affects thrombin levels directly so it is effective in both hemophilia A and B which have to be addressed by two different gene therapies. It needs to be administered monthly versus a one-time administration with gene therapy, which is less convenient but also advantageous given the lack of long term safety information for gene therapies. Lastly, although siRNA drugs have a checkered history regarding immune reactions, fitusiran may present a different safety profile without the risk of anti-viral reactions or anti-FIX antibodies (inhibitors).

In summary, while gene therapy represents a more logical straightforward approach for a genetic disease like hemophilia, fitusiran may be able to garner a significant market share especially in younger patients or patients with high inhibitor levels.

Increasing exposure to gene therapy

As followers of this blog know, I am a big fan of gene therapy given its disruptive potential and recent technological advances. Acknowledging the high inherent risk in such a nascent field, I intend to increase my exposure to gene therapy by creating a basket of stocks in order to have a diversified exposure across technologies and indications.

After starting with the clinical leaders: Spark, Avexis (AVXS), Abeona (ABEO) and REGENXBIO (RGNX), it is time to move to the earlier-stage, less validated players. Of these, my favorites are Audentes (BOLD), Dimension Therapeutics (DMTX), and Adverum (ADVM). The market is understandably less excited about these names, evidenced by the relatively low valuations (compared to the $1.5B market caps for Spark and Avexis), but all three have strong platforms and are covering a broad array of indications. Importantly, all three have sufficient cash to generate at least preliminary clinical data.

Audentes is still a preclinical company but expects to have three programs in the clinic in the coming months. The company has a diversified and differentiated pipeline covering a rare muscle condition (X-Linked Myotubular Myopathy), an ultra-rare metabolic condition (Crigler-Najjar Type 1) and Pompe disease which is currently treated with enzyme-replacement therapies.


Dimension has a platform of liver-targeted gene therapies (licensed from REGENXBIO) with a Hemophilia B program in P1 and a preclinical Hemophilia A program partnered with Bayer. The company expects to report initial results IN Hemophilia B next month and to advance another program (Ornithine transcarbamylase deficiency) to the clinic imminently. The company has a $105M market cap which is almost entirely covered in cash (~93.8M as of last quarter).


Adverum was created after Avalanche merged with Annapurna Therapeutics. The combined company kept Avalanche’s ophthalmic pipeline (including a partnership with Regeneron) and added Annapurna’s pipeline which includes programs for the lung disease Alpha1-antitrypsin (A1AT) deficiency and hereditary angioedema. Although the company does not expect to have anything in the clinic until Q4:17, it has a significant $231M cash position, almost double its $119M valuation.


Portfolio updates

As discussed above, I am selling one of my Exelixis positions and initiating positions in Audentes, Dimension and Adverum. Gene therapy companies now comprise ~15% of the portfolio, and I expect their weight to increase to ~20% in 2017.

Portfolio holdings – Dec 4th, 2016


137 thoughts on “Biotech portfolio updates – Exelixis, Spark, buying more gene therapy stocks

  1. Happy new year Ohad,

    SGEN – It looks like the issue w/ SGEN’s CD33 ADC is liver toxicity, and this is similar to what we saw with Gemtuzumab Ozogamicin (Myologarg) which also had a DNA crosslinking payload.

    We’ll see if this is an issue w/ IMGN779 which targets CD33 with a DGN payload; it seems they took pains to address the issue of liver toxicity here and the result they achieved is paradoxical given that cleavable linkers are less tolerable in conjugation with maytansinoids:

    “. Treatment with the imine-sulfonated form of
    ADC 3b, with a noncleavable linker, at a dose of 10 mg/kg caused
    a considerable spike in liver enzymes [17- and 35-fold increase in
    aspartate aminotransferase (AST) and alanine aminotransferase
    (ALT), respectively] and an 8-fold decrease in platelet count. In
    contrast, treatment with the ADC 5b with the cleavable linker at a
    4-fold higher dose (40 mg/kg) caused only mild hematologic
    toxicity with a small decrease (2- to 4-fold) in platelets, neutrophils,
    and lymphocytes, and no effects on liver enzyme levels.
    Animals were observed for 90 days and the body weights of mice
    treated with 18 and 40 mg/kg doses both tracked with control
    animals (Fig. 5D).”

    ” Notably, the ADC with the
    disulfide linker tested here was also better tolerated, with a 3.5-
    fold greater MTD in mice than that with the ADC with a noncleavable
    linker. These results indicate that, in the ADCs described
    here, the bystander killing feature provides increased antitumor
    activity but not increased systemic toxicity. Interestingly, this
    finding is counterintuitive, since ADCs of tubulin-interacting
    agents, maytansinoids or auristatins, with cleavable linkers
    (disulfide or peptidase-labile) are reported to be less tolerable
    in mice, compared with those prepared with noncleavable linkers
    (34, 35). Further studies on the in vivo catabolism and distribution
    of these ADCs are ongoing and may provide some insight into the
    cause of the improved tolerability of the ADC with the cleavable

    Click to access 1535-7163.MCT-16-0184.full.pdf

    The 779 trial isn’t expected to readout for a while, but these details are an interesting wrinkle.


  2. Wildbiftek (SGEN/IMGN) – Thanks!
    I personally don’t feel I have the full picture as far as SGN33A’s safety profile based on the press release. Remember that as monotherapy and in combination with HMAs, toxicity was milder so still hard to say what the ADC’s contribution was given that veno-occlusive disease is a known complication of stem cell transplant.
    Tox findings with IMGN779 are indeed very intriguing, the cleaveable linker seems to play a role (payload is also differentiated) but we also know that so far ADCs with cleavable linkers haven’t delivered great clinical data so far. Reminds me of the EGFR ADC devoid of skin tox in preclinical that had to be terminated eventually…

    Mike – Thanks, unfortunately I don’t know this program well.

    Biosepp (CTMX) – I agree it’s a nice technology with disruptive potential (can deal with a lot of safety hurdles seen with ADCs and IO agents. I still think valuation is too high without any clinical validation.

    Kevin (VYGR) – I am still on the sidelines because they have to inject directly to the brain, PD may have other alternatives and the treatment does not address the underlying driver of the disease like in other gene Tx settings (re-introduction of a dysfunctional gene).

    Seppbio (MGNX) – I still think it’s too expensive although I thought their R&D day was great, especially some of the earlier programs.

    Kevin (RGNX) – It depends a lot on extent and duration of benefit… definitely if one extrapolates from nusinersen’s data and pricing, there is a multi-billion dollar opportunity across SMA types.



  3. Hi Ohad

    Have you come across CLRB and their phospholipid drug conjugates (PDC) platform? Claim to be superior to ADC.

    Many thanks


  4. IMGN: I think you’re talking about IMGN289? It vanished from view after quarterly cc with a quote about it being put back into development after an unexpected safety issue; a pretty big disappointment I agree. That ADC was armed with DM1 though, so its linker wasn’t cleavable:

    However, as the 779 preclinical experience seems to show, the overall situation is much more complex than the linker lability alone would imply.

    I do believe that IMGN share prices are pressured by a misguided investor perception of technical inferiority to SGEN and that it’s tantalizingly close to a major wholly owned source of revenue. It seems like SGEN had little little success in solid tumors whereas IMGN related products have had more traction in human trials.

    Its precarious cash to burn rate is a more pressing concern, but I like the moves the new CEO has made and propose.

    ARIA: Any thoughts about where Takeda saw the most value here? I’m thinking it’s Brigatinib?


  5. Hi Ohad

    It looks like STML going for approval of ST 401 for BCDPN in 2017 based on Ph II Study. Do you think the market for BCDPN is large enough for an increased valuation for STML? Their valuation is so low to begin with, what’s the fear? too small a market? competition for other ADCs?
    Do you think getting approval will attract any buyout offers?
    What do you make of their ongoing phase 2 for AML indication?


  6. Hi Ohad

    It looks like STML going for approval of ST 401 for BCDPN in 2017 based on Ph II Study. Do you think the market for BCDPN is large enough for an increased valuation for STML? Their valuation is so low to begin with, what’s the fear? too small a market? competition for other ADCs?
    Do you think getting approval will attract any buyout offers?
    What do you make of their ongoing phase 2 for AML indication?


  7. Hi Ohad, you had a good call on ARRY, it is a 2 digit stock as I write this. Unfortunately you sold too early. What do you think in the future of ARRY form here? the stock has doubled in no time. DO you think is a BO candidate by AZN or other pharma?
    Also, are you still bullish on ABEO? I have read very negative SA articles recently. Most probably is a short target but wanted to hear your view.
    Also, are you selling at any point your BIS or still not positive to the sector? Looks like bios are braking out.
    Disclosure: Long ARRY and no position for the moment in ABEO


  8. Kevin (CLRB) – Don’t know them well but in general I’m not a big fan of the approach. Prefer the new directions pursued with ADCs (new payloads, conjugation techs, probodies etc.)


    IMGN – Kadcyla is a major success story (not as effective as I had hoped though) but beyond that neither company has a clear winner in solid tumors. SGEN’s bladder cancer data are exciting but need to be corroborated. IMGN’s meso data are also intriguing but sample size is too small.

    ARIA – I also assume it was brigatinib but still struggling to justify the price Takeda paid given the competitive landscape.

    roland (STML) – Sounds like the FDA were very supportive and the requirements for 1st line approval are very favorable. I guess there is a lot of uncertainty around market size given lack of approved agents plus safety profile with immunotoxins has always been challenging. I wouldn’t be too worried about competition given the challenges with CD123 bispecifics.
    I don’t have high hopes for their AML study. Efficacy as monotherapy was underwhelming imo.

    lgonber (ARRY) – They have an effective combination regimen but imo it will be hard for them to get significant market share as to me efficay profile isn’t differentiated.

    ABEO – Yes I am still bulish about them and very curious to see updated data next month. Can’t say their history doesn’t bother me but if the data hold it’s a risk worth taking imo.

    Gruber – Actually it is hard to find reasonably priced oncology stocks, even EXEL became expensive imo…



  9. Hi Ohad,

    o if you like ADCs why don’t buy some IMGN? 😉

    PGNX has a ADC programm too – but you only hold SGEN which is quite expensive ?

    CTMX also interesting company…



  10. OCRX is closely held, and it’s drug candidates for ammonia scavenging is unique in liver disease treatment. Seems extraordinarily cheap given the unmet need, and potential for buyout or deal like CNAT. Any thoughts on this company?


  11. Hi Ohad,
    Wondering what your thoughts are on some of the stem cell companies given our interest in gene therapy? Full disclosure that I own shares in Athersys- ATHX, Cytori- CYTX, and Avita- AVMXY, but I am much more interested in hearing any thoughts you might have on this approach to treatment more generally.
    Thanks as always to your generosity in continuing to share your insights with your community via this site. It has helped me greatly over the years and is a rare beacon of objectivity in a cyber-world full of hype and uninformed opinion.


  12. Hey Ohad
    Given its lie valuation I have initiated small position in QURE. This also in light of ONCE immunogenicity. Market cap is $32M!
    Any thoughts on VKTX? Market cap is $32M too. Two phase 2 programs reading out in 1h17. They have, similar to SAGE, LGND developed compounds.
    Thanks Dan


  13. Hey Don and Ohad

    regarding OCRX
    there are many companies in NASH space, some of them in ph2 with very low valuation:VKTX, CANF, GLMD among others.

    Not sure how come many companies like AGN, GILD and SHPG make huge investments when it seems there’s an array of smaller companies with excellent science that are valued so low: companies like ESPR, QURE, DMTX that seem so undervalued compared to peers. While biotech and pharma seem to be splurging and snapping up private companies…

    I feel that the better investments in biotech for 2017 will be in microcaps, here is a list of small caps I am following. Please let me know if you have any knowledge or opinions in any. Thanks.

    VKTX – NASH (drug competes with MDGL) and hip fracture testosterone-like drug
    APHB – cocktail of phages to treat CF – just had positive phase in rhinosynusitis
    GLMD – NASH in ph2
    QURE –
    RLMD – Ketamine-like drug
    VTGN – ketamine-like drug
    ATNM – DC33 drug competing with SGEN program (uses radioisotope, seems to be less cytotoxic)
    TRIL – CD47
    PIRS – anticalins – biven bispecific antibodies deals (MRUS) seems that PIRS should bring in more partners
    ENUM – io antibodies
    FATE – cellular immunoterapies
    MBVX – targeted antibodies
    CFRX – lysins that overcome antibiotic resistance


  14. horst (IMGN) – I am not against the idea in general given the low valuation and number of programs, I just wonder about the right timing.
    Agree about SGEN’s valuation but the bladder caner programs could become important catalysts this year.
    CTMX – On paper their technology has tremendous potential although some of teh ADC-related tox is not target-specific.

    Paul B (ADXS) – Not a big fan of cancer vaccines (even in the context of viruses)… Have to admit I don’t know them that well but overall not a big fan of the approach and I find the totality of their data quite hard to interpret (single arm, survival as an endpoint etc..). One thing I cannot argue with is the durable CR in one of the patients but there have been so many failed vaccines with such an index patient that eventually didn’t pan out so personally for me it’s not enough.

    FGEN – I like the CTGF antibody as well as the HIF-PH program. Valuation is an issue though.
    BPMC – Strong believer in their approach although data so far haven’t been as exciting as I had hoped. Also here, valuation is too high imo.
    PIRS – Don’t know them well, not convinced their platform is superior to mAbs.

    Gruber (ESPR) – I sure hope so. Upside is huge if things go well given the low EV.

    Bionerd (MRNS) – Not strong opinion, tempting as a binary option play later in 2017 with PPD data.

    Don (OCRX) – Sorry don’t know them well.

    Will answer the rest later today



  15. TRVN

    Valuation low in front of key catalyst in Q1 2017. Do you expect much upside when trial suceeds? Maybe the market for olicerine not as broad as expected?



  16. Ohad: Love your work, I have a similar question as Vilor around TRVN Valuation. Assume that TRVN phase 3 shows itself to be as advertised, effective as morphine with less Respiratory Depression and stomach issues. I would think if TRVN captured even a small % of the market that would be big. Then….I would almost think the lawyers would drive Doctors into Oliceridine, “you had the opportunity to prescribe a safer drug yet chose not to do so?” However, people are talking TRVN down implying that a Positive phase 3 would result in simply status quo in terms of stock price. You don’t have a crystal ball, but am I misguided to think IF phase 3 results are good, that would result in big upside for TRVN? Thanks, Matt


  17. Jeff – Thanks. While I’m cautiously optimistic about gene Tx I am not excited about stem cell companies as they are highly complex, face significant challenges and are not clinically validated. IMO it will take years until the stem cell field reaches maturity, hope I’m wrong.

    Dan –
    QURE – Agree about current valuation ascribes very little value to the technology but it is hard to envision how they compete in hemophilia and the CV programs with BMS are very early.
    VKTX – don’t know them well.

    Dan – NASH is viewed as the next frontier by many companies, which are willing to pay generous premiums for preclinical assets or clinical assets with ambiguous results. Gene Tx is still not palatable to many large companies, agree about ESPR representing an attractive takeout candidate but their drug will be another LDL-C lowering drug vs. NASH drugs that have the potential to open up a huge market with no approved agents.

    Alex – I don’t use stop loss

    Vilor (TRVN) – Yes I expect a significant move if data are positive but I agree that questions around market acceptance will probably linger. Market opportunity is broad based on amount of opioids used after surgery, however, TRVN’s market share is still hard to predict.

    Matt Bailey (TRVN) – Thanks. I completely agree with your assessment of the market, there should enough incentive from hospitals, physicians and patients to allow TRVN to capture a meaningful market share especially in high risk populations but only time will tell…

    Dan (ABEO) – I sure hope so… Will wait for next month’s data to decide



  18. Ohad

    given all the talk about NASH.would you recommend AGN which made several NASH deals and/or ICPT which is a pure play on the NASH market?
    any other names we should be looking at in the NASH market?


  19. Ohad
    STML has a clear path for approval w/ their BTD, BLA in H2, potential approval – mid 2018.
    The risk looks low, comparable to LOXO, the same for the addressable market .
    But LOXO has 5x the market cap?!
    Am I missing something? Is there any particular reason for this discrepancy?

    BLCM – also looks weak after ASH, nevertheless they presented solid data –
    “All 35 children treated are alive, free from GvHD and cured of their underlying disease” – That’s 100% CR rate to me, no?


  20. Ohad
    Any interest in SELB? A sort of gene theraply play, I guess. Good deal with ONCE.
    If their SVP technology could solve the antibodies neutralization issue, it would be an effective way to increase the dosing and for re-dosing.


  21. Ruhu – Hard to choose a single stock. As you know, I like the gene Tx basket and also cautiously optimistic about TRVN’s P3 data.

    dave – Difficult to answer as I don’t know the NASH field well. II am somewhat skeptic about this segment as the disease is quite complex, not always well understood, and there are no clear biological drivers (as opposed to oncology and genetic diseases).

    Gruber – Historically I’ve been lousy at predicting buyouts… People are talking about BMRN, which sounds like a good target to me at its current valuation. INCY and EXEL are also very popular names given the scarcity of commercial oncology assets. TRVN and ESPR are very cheap and their drugs are de-risked but they are less in the biopharma sweet spot.

    andre (STML) – I agree things look good but can also understand why LOXO’s valuation is much higher. LOXO’s response rate and durability is better (completely different indications), its drug is a validated class (kinase inhibitors) and safety profile is less of an issue. It also has multiple programs based on the same rationale as 101.

    BLCM – Agree. Data looked good.

    andre (SELB) – Anyone who will solve the problem of neutralizing antibodies will have huge value in gene therapy. Definitely worth following but will take time to clinical proof of concept.



  22. Good morning Ohad!

    What do you think about AGIO at current valuation? Shares fall since december when Agios discontinued their AG-519 programm. Now it looks like the market is concerned.

    Thank you in advance!


  23. Hi Ohad. Wonder if you’ve looked at Exel’s pancreatic cancer results from Asco GI. Looks intriguing, though obviously highly inconclusive.


  24. hey Ohad

    Just curious, like others here, about how to play TRVN into binary event. There has been a surge in the share price but it is still very much deflated.
    In the event of positive results, what would be the likely scenarios? do you think some larger co. in pain would buy them out? Or do you see TRVN going it alone and trying to morph into a commercial company?




    You picked the right oncology stocks but had a bad timing. Also AUPH is rising again.

    You would reenter thisstocks or avoid?

    Maybe these oncology names are interesting: tsro (buyout), stml, imgn



  26. Ohad
    AUPH: Adam F has an interesting interpretation about the unbalanced deaths in the voclosporin study, which was the main reason you exited the stock after their data last August (myself included :)). One of hos strong arguments is that the dead imbalance is not collaborated by AE imbalance.
    AUPH may release the data in mid Feb. Do you think it’s worth the risk to get in before the data?


  27. Hey Ohad
    INCY has performed well, and they seem to be relentless in adding pieces and product candidates. After the MRUS deal, now it’s CALA. Is this a new GILD or CELG in the making? Also noticed they are developing an in-house PD-1 drug.


  28. Martin (AGIO) – I still think it’s a little pricey. The AML programs are effective and approvable IMO but I find efficacy a little disappointing for a biomarker-defined indication. MTAP is very intriguing and can be huge but that’s a 2018 story.

    PaulB (EXEL) – Agree.

    Seu (XLRN) – Valuation is still too high imo. I like the MDS program where they have a clear Hb effect and competition is limited but a lot of unknkowns especially long term safety profile. Not optimistic about the RCC program…

    Dan (TRVN) – I wish I knew… My sense is that it will take time for the story to unfold so a positive outcome will not lead to a 3-4x jump instantly. Eventually they will have to partner with a partner who has commercial footprint but they can start like PCRX until they reach critical mass.

    Seber (ARRY/CLVS) – That’s true but timing is as important as picking the right stocks.

    Andre (AUPH) – I still feel uncomfortable with such an imbalance, regardless of AE rates.

    ALNY – Agree it’s tempting at its current valuation given cash position and GENZ deal. Still not sure whether the overhang re: platform is completely removed.
    CLLS – Prefer not to comment on CAR companies.

    Dan (INCY) – Yep, they are certainly expanding their pipeline and setting the foundation for a significant biotech. Personally, I think they are taking very early or less validated assets that come with a significant risk but on the other hand, this is what they can afford to buy in cash.



  29. Ohad – thanks as always for the insights. I read this post a while back but I’m here again to ask a question this time.

    What are your thoughts on TCON?

    I’ve just started DD on the company and management, partnerships, science, data to date, and market cap make it a pretty interesting company to look at. They have tons of data coming out in 2017 and 2018.

    It reminds me a lot of ARRY last summer. Multiple shots on goal and small cap with a low entry price.

    Be curious to know if you’ve done any DD on this company and what your thoughts are. I always appreciate your wisdom around the cancer space.


  30. hey Ohad
    I think that INCY is doing more than buying what they can afford. They are expanding their capabilities (antibodies, bi-specific antibodies) and going after the things they know well: the CALA licensing deal follows their expertise with IDO drug and the promise of I/O combinations.


  31. Hi Ohad,

    ESPR – never thought this stock would go down this way. ATM share price $11 – do you recommend buying at this level? i see you still hold this stock in your portfolio. if things go well its a tenbagger?

    Oncology stocks – i want to invest in a basket of stocks like INCY, TSRO, STML, SGEN, IMGN, CTMX – are these good names?

    Thank You.


  32. Hey Ohad
    DMTX results in… seems they have not managed to achieve sustained 10% FIX levels,
    also various AEs. What’s your take? how do the data compare to other GT cos?



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