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. Ohad: After digging as deep as I can on TRVN, I have decided to keep my TRVN holdings thru phase 3 results. However, I do have a question about the 900 person Safety trial on-going called Athena. The patient can be dosed with Oliceridine for up to two weeks. If Phase 3 comes back in spectacular fashion on efficacy and safety as I hope. Can you help me evaluate the risk with the Athena(safety) trial? I would imagine 900 people taking Oliceridine for up to two weeks has a higher probability of disclosing safety issues if any exists. If you are willing , would like to hear your thoughts on these two questions:
    1. How much risk would you associate with the Athena trial? I realize “how much risk” is very subjective.
    2. Assume the Athena trial does uncover a safety issue that was significant. What would be your best guess on the specific safety issue that gets raised.

    I respect your work and view, my hope is to take your view to help me dig deeper and then decide if I hold thru the Athena trial assuming P 3 Apollos trials are good. My understanding is that the Apollo trials will be in before Athena. Thank you for your work and sharing. Matt


  2. Hi Ohad

    DMTX: As I understand they use their prop tech vectors for the hemophilia programs, the rest is from RGNX (e.g. AAV8 for OTC). On the back of this and given that they are trading way below cash might be good entry point now? Is there any data to be expected this year for OTC?

    Many thanks


  3. Ohad
    do you follow BGNE? They claim that their BTK is more selective and so with less AE. The responce rate so far was good – 83%. They just started Ph 3 with comparator ibrutinib – pretty bold move
    Plus a number of other earlier assets – PARP, RAF dimer and PD-1.
    The valuation is high, but is it justified by the pipeline?


  4. Hey Ohad
    any opinions on ESPR competitor GEMP wich has a phase 2 with positive intermediary results:
    300mg dose reduced LDL-C by 23%
    600mg dose by 28%
    benign profile until now
    They are also going after NASH (with p2 trial starting imminently).
    Valuation is $100M.

    How do you think their drug compares to ESPR’s?


  5. Nick (TCON) – I was going over the Jefferies initiation report from Dec and I agree about the eventful 2017 and low valuation. My main reservation has to do with the fact that all efficay date to date is from single arm trials in combination with active drugs so very hard to interpret. In any case, I would wait until the GBM data early 2017 before initiating a position given the very high risk in this indication.

    Dan (INCY) – Agree about expanding capabilities and platforms, the main issue is the long timelines to get clinical proof of concept.

    Salamander –

    ESPR – Yes I am still bullish (and deep in the red). Agree about the upside potential given low EV and the derisking from Amgen’s CVOT data.

    I like all the oncology names you mentioned, my personal preference is towards the smaller ones. Hard to justify INCY’s and TSRO’s valuation IMO.

    Dan (DMTX) – Data were weak and their vector doesn’t look competitive. Doesn’t mean all is lost for their earlier programs but definitely a major blow.

    Alex (DMTX) – I don’t think it has any implications to other platforms.

    Matt Bailey(TRVN) – Long term safety studies always carry a significant risk especially in non-life-threatening indications. It is very hard to predict the extent of risk because even a very low rate of severe adverse events could jeopardize the entire program.

    Kevin (DMTX) – From what I understand their metabolic programs use different vectors and capsids to read-through is limited.

    SAGE – The most important event is P3 readout in SRSE
    AVXS – Updated data from P1 in SMA1.

    Gurtus (STML) – Quite troubling and doesn’t help investor confidence either…

    Ike (EXEL) – Deal was not as rich as I had hoped, plus it implies no imminent M&A. I thought the deal would push the stock down but it’s breaking new highs…

    QURE – Not sure because it doesn’t solve competition.

    Varkler (ESPR) – Yep, assuming the benefit is clinically meaningful this is a major validation of the LDL hypothesis.

    Bouschka (GEMP) – It’s been a while, will take a look.

    andre (BGNE) – I prefer to focus on companies with first-in-class or differentiated products.

    Dan (GEMP) – It’s been a while, will take a look.



  6. Stml

    Do you guess that the fda will hold the trial due to the 3rd death?

    Bpcdn still looks good . other indications maybe suffer from the. AE?

    Stml at $6 a good buy right now? How bg is the risk?


  7. Ohad

    When you comment regarding AMGN CVOT studies”assuming the benefit is clinically meaningful” do you think a HR <.70 is something you expect or is that being too optimistic.


  8. Looking back at Pfizer’s call to discontinue their Ph3 PCSK9 mAb, do you think this was a great call (esp with the Amgen lawsuit)? And having not purchased a program to account for their PCSK9, do you believe Pfizer is deficient in terms of next generation LDL-C therapeutics?

    Garry Xo


  9. Ohad
    The deal b/n SGEN and IMMU looks pretty good for both companies.
    IMMU solved thier main problem – cash. How do you value their two ADC programs? I am sure you are not excited about their main CD22 program.

    Do you follow AGLE?


  10. Kolos (STML) – Hard to say but given history with immunotoxins, liver toxicity very troubling and the risk is higher right now.

    Dave (AMGN) – I think a 20% reduction should be regarded as very positive.

    rodolfo (RDHL) – Sorry, don’t know them well.

    Alex (EXEL) – Only a spectacular Q4 sales report

    chris (CRIS) – Actually no… I guess most upside still depends on the PD-L1/VISTA small molecule, which represent an interesting approach but very risky and not validated.

    Garry Xo (PFE) – I think they made the right decision given their timelines and tolerability issues. Yes, I think they are deficient in LDL-C lowering drugs but it doesn’t mean they must have one…

    andre (SGEN/IMMU) – I think the deal is great for IMMU but not for SGEN. Despite the BTD, I don’t think data in TNBC justifies 250M upfront.

    Not following AGLE

    Yussu (FMI) – Yes, stock is behaving nicely, don’t know why. Don’t think Roche will try to buy the rest of the company without good visibility on reimbursement.

    Swetz (ESPR) – Hard to say. I hope that Repatha’s CVOT data will help changing the sentiment around the stock. 2017’s primary risk is emergence of safety issues in their P3 studies and the primary upside is a buyout given the low valuation.

    Suberus (AFMD) – So far, data using NK for IO has been disappointing so I am not optimistic there. Innate Pharma’s recent failure with anti-KIR is a negative read-across for the entire NK field IMO.



  11. Ohad – your analysis of TCON was absolutely spot on. I forgot that I posted here and forgot to check back. But when I did, I realized that you posted about waiting for the GBM data. Great call on that. Luckily I didn’t bite yet, but I think it may be a good entry point now given that we got the tough stuff out of the way.

    What were your thoughts on the data? What is your strategy on this stock?

    I’ll share mine too: I plan to start a small position on this at 3.8 if I can rally into that. I’m going to continue adding in the 3’s if I can and play a run up into the next dataset. I’ll likely sell a few shares then and let a few ride out into the dataset. I’m very excited about angiosarcoma and think that it has huge potential to validate the MOA. If so, there is potential that this product has activity in a number of rare conditions (as well as some big ones like NASH for example).

    I always appreciate your thoughts sir.



  12. Sage

    Do you think sage 547 has a high likelihood to suceed in p3 srse? I have my doubts.. Maybe reenter after announcemenf of the results. How do you see the risk?



  13. Hi Ohad,

    IMMU: There are other promising indications besides TNBC, take a look at mUC:

    where ORR is 36% (confirmed). This compares favorably even against recently released Cabo+Nivo:

    where the more successful Cabo+Nivo arm (rather than the triplet w/ Ipi!) achieved of ORR 38%. Toxicity seems manageable as well. Other tough to treat indications like NSCLC and SCLC are showing good results too but it’s tougher to think of where it may fit in w/o a combination w/ a PD-(L)1i.

    I think the company was dragging its feet and did need a swift kick in the ass from activists, but they really do have a promising asset in IMMU-132 and finally the funding to get it approved.


  14. Curious about ARQL as well. Interesting call from Feb 17 (on website). PIII IH-CCA this summer; discussion with FDA & EMA and approval endpoint is > 10% response rate, 90% CI and 6 month durability. Also initiating P1/2 in Proteus+other overgrowth independent of NIH and P1 for next gen BTK. $30M cash + $50M recent debt to run the studies. Company has good management.


  15. Bouschka – (GEMP ) – Not yet…

    Chris (CTMX) – Yes because they have a technology that can be a real game changer but stage and valuation keep me from buying.

    Alex –
    STML – I still have some but more cautious after teh death they reported
    EXEL – Nope. It was hard but I sold all my position (see today’s portfolio update)

    Alex (BVXV) – Sorry don’t know them well.

    Ruhu (TRVN) – I am still positive on TRVN and think they have a superior product for post-operative pain. I like CARA and their mechanism (kappa agonism) for pruritis and think they have an effective agent but still not sure about their oral formulation, which is important for chronic indications.

    Nick (TCON) – Thanks. I still think their studies are very high risk because it is hard to distinguish their antibody’s effect when combined with effective treatments. The angiosarcoma case study is very intriguing but for me it’s not enough.

    Glaub (SAGE) – I think it has a fair chance of meeting the 1ry endpoint but today te story is shifting towards depression after the PPD and MDD data with 547 and 217 respectively. So if SRSE fails, I agree it could be a buying opportunity.

    Toby (ARQL) – Agree and just added to the portfolio. Good risk /reward at <$100M market cap.

    Les (ESPR) – I think people are starting to realize they may get approval based on LDL and that there is a market between oral generics and PCSK9 that can be addressed by bempedoic acid.

    Wildbiftek (IMMU) – I was always struggling with their data, never smelled right for some reason…

    Manish (ARQL) – Agree. If one of their programs succeeds this is a 10x opportunity, but stock is still very risky so I intend to keep my exposure low.

    lawrence (AGEN) – I think they did a great deal with INCY but the assets are too early and not differentiated.

    Jinyu liu (SAGE) – Still haven't decided to add before the SRSE readout. As discussed above, now that depression is becoming more interesting, perhaps it's safer to wait and add after the data.

    Kevin – Today Hard to find the time but hope to post more frequently



  16. Why is CTMX tech game changer? I find a “probody” drug with weaker efficacy and better safety profile a boring concept. Can’t believe BMY paid them so much. Poor decision IMHO. What am I missing?


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