Portfolio updates –ADC data readouts, AVROBIO, Chiasma

Crucial ADC readouts at WCLC 2019

The coming months will be very important for the ADC industry which has been struggling to bring forward effective treatments, especially for solid tumors. While there have been some positive news (mostly utilizing Seattle Genetics’ technology like the recent  update on GSK’s BCMA program in multiple myeloma), existing platforms are still limited by side effects. In order to address this need, the industry has to find new technologies that would minimize off -target toxicities.

To me, the most intriguing ADC platform today is that of Daiichi Sankyo, which has been quietly developing its next generation ADC platform at a time when most of its peers de-prioritized their ADC programs.

Daiichi’s bet started to pay off with DS-8201, now partnered with AstraZeneca (AZN), which demonstrated unprecedented efficacy in breast cancer. The company has 6 additional ADC programs, including two in clinical testing:  DS-1062 (anti-TROP2) and U3-1402 (anti-HER3). Both programs will report data at WCLC 2019 next month that, based on previous results, could demonstrate impressive efficacy.

The TROP2 program looks particularly promising based on preliminary findings presented at ASCO 2019. The study was able to reach high doses not typically achieved with ADCs (8 mg/kg) without severe toxicity issues (although side effects were clearly observed) and demonstrate very encouraging dose-dependent efficacy. If the trend continues and no safety show stoppers emerge, the 6-8 mg/kg cohorts may demonstrate a >50% response rate, which is unprecedented for an ADC in NSCLC. Response rate could actually be higher in TROP2 expressors as the trial did not include TROP2 expression as an entry criterion.


Data for DS-1062 and U3-1402 will be crucial for the entire ADC field as they could potentially validate Daiichi’s ADC platform and provide the first differentiated next-gen ADC platform in over a decade. Most importantly, they might mark the start of the next innovation cycle in the ADC space.

Positive results for DS-1062 will have a material impact on Immunomedics (IMMU), which has a TROP2 ADC. While Immunomedics’ lead indication is TNBC (triple negative breast cancer), their ADC could become irrelevant even before an expected approval next year as both ADCs use Topo-1 inhibitors as payloads. If DS-1062’s data are as good as expected, it will be very hard to justify Immunomedics’ valuation of ~$2.5B. Therefore, I would stay out of the stock going into WCLC 2019 given the asymmetric risk/reward profile.

AVROBIO – Back in the game

I was previously very skeptic about AVROBIO’s (AVRO) Fabry program (AVR-RD-01) given the decline in enzyme (AGA) levels and VCN seen 3-6 months post treatment. Based on the trajectory at the time I thought transduced cells will eventually vanish after ~2 years which could make AVR-RD-01 irrelevant.

I am now much more optimistic following  last month’s update that demonstrated stabilization of the slope of AGA levels and VCN in two patients 18 and 28 months post treatment, respectively (three additional patients did not have long enough follow up).

While more data are needed (# of patients and longer follow up) the new data suggests AVR-RD-01 may have a long lasting “tail” of enzyme activity. Enzyme levels generated by AVR-RD-01 appear clinically meaningful based on substrate reduction to levels below what had been achieved with ERT in these patients. Importantly, patient #1 is ERT free for 10 months with no significant changes in substrate levels, which unequivocally demonstrates the treatment’s activity with ERT’s “masking” effect.


Substrate levels are considered a good surrogate for long term tissue damage (mainly kidney and heart) but the clinical impact will have to be evaluated in the long run. A read-across from AVROBIO’s P2 in ERT-naïve patients further supports the notion that levels achieved in P1 will lead to clinical improvement.

The company presented biopsy data from an ERT-naive patient that had a dramatic reduction in substrate in the kidney, which is the approvable endpoint for Fabry. Enzyme levels in this patient were similar to long term expression levels seen in patients in P1. In theory, long term clinical outcomes should be better with AVR-RD-01 vs. ERT as the prior produces constant, stable enzyme levels vs. the typical peak/trough profile with ERT.

Things look much better for AVROBIO today but long term durability will remain an overhang for a long time as the company aspires to provide life-long treatments. Risk is still high but with the new data demonstrating stabilization or near-stabilization of enzyme levels in P1 coupled with kidney biopsy data in P2 and experience with other bone marrow transplant technologies, the company is attractive at the current valuation.

AVR-RD-01  is competing with AAV-based treatments for Fabry from  Amicus (FOLD), Abeona (ABEO) and Freeline. These treatments from are more straightforward to administer as a “drug in a vial” but their distribution profile and durability are still unclear.

Chiasma – Positive P3 but market unimpressed

Chiasma (CHMA) reported positive P3 data for its oral octreotide program, Mycapssa, in acromegaly. Despite the clear efficacy across every endpoint, the stock price is now lower than the price prior to the announcement.

Overall, results look very good to me with a clear superiority over placebo, which they demonstrate for the first time (previous P3 was a single arm study). The study, which involved switching stabilized patients from an injectable to Mycapssa, clearly demonstrated that in a significant portion of patients the disease can be controlled with Mycapssa: 58% of patients in the Mycapssa maintained an IGF-1 response (≤ 1.0 x ULN) vs. 19% in the placebo arm.

The drug’s eventual market penetration is a matter of debate but given the pain and inconvenience associated with injectables, Mycapssa should be able to capture a significant market share.  It is easy to understand why patients and physicians will prefer to start with oral and only if patients are not controlled, switch or add an injectable drug. Initial uptake is hard to predict but the eventual conversion to an oral alternative is highly likely.

Looking at rescue treatment and drop off rates during the study provides more color Mycapssa’s use in real life. 25% of patients in the active arm received rescue treatments vs. 68% in the control arm. Importantly 90% of patients who completed 36 weeks on Mycapssa opted to stay on the drug as part of an open label extension study.

The lackluster stock reaction can be attributed to future competition from Crinetics (CRNX), which has an oral agent (CRN00808) with encouraging P1 data including good PD modulation. As a highly selective and potent small molecule dosed once daily, CRN00808 represents a major threat to Chiasma but it is still in P2 and has no data in patients. One important advantage Chiasma has is the fact it utilizes a known and approved product with years of clinical experience. As a novel small molecule, Crinetics faces off target risks that will have to be assessed in long term studies.

In summary, Chiasma is now a de-risked story with a decent chance of capturing 25-50% of the acromegaly market. The indication represents a ~$900M  global opportunity so even a 20% chunk that translates to $180M in annual sales makes Chiasma a good risk/reward bet with a market cap of $216M.

Portfolio updates

I am starting a new position in AVROBIO based on the recent update in Fabry. I am also adding follow-on positions in Madrigal (MDGL) and Viking Therapeutics (VKTX), and selling Nightstar (NITE) following the Biogen (BIIB) acquisition.

Portfolio holdings – Aug 25, 2019

Biotech portfoio - 25-8-2019 - after changesBiotech ETFs - 25-8-2019

240 thoughts on “Portfolio updates –ADC data readouts, AVROBIO, Chiasma

  1. Re: APTO

    That’s a good sign, Dan, no doubt. I may have to dip my toes in the water on this one, although I just hate Canadian biotechs. LOL


  2. Hi, Ohad.
    Do you think MGTA (magenta) is too early to consider, preclinical but very intriguing pipelines?

    Again I asked you if you would consider to start biotech fund a couple years ago. I’d like to be the first to vest.


  3. Hi Richard
    Not all Canadian bios are bad. ZYME and AUPH are two examples of something good coming from Canada.
    APTO may join them, if higher doses confirm the preclinical data.


  4. Hi everybody – Really sorry for disappearing for the last couple of months. Things have been quite hectic here (not just ARQL) so I barely had time to spend on the public side. I think I’ll have to change the format in order to keep this site active so going forward I’ll try to post shorter, more concise posts. I’ll start replying to questions in portions.

    Alex (STML) – I plan on holding it, it’s a niche profuct that might fit a hem player, so far launch is going well, IMGN’s CD123 program is a comp threat to watch.

    Richard Baker (PRVB) – Don’t know them well.

    Jens (ZYME) – I though they looked pretty good, obviously hard to interpret single arm combination studies. In contrast to other HER2 programs, ZW25 has a very benign safety profile which makes it more amenable for combination regimens. Should be better than Herceptin IMO.
    Regarding the link, ZYME’s ADC platform is also my favorite one among publicly traded companies. I hope they go to site specific conjugation in the future.

    Richard Baker (DRNA) – Very impressive! Missed the siRNA train unfortunately as valuations are already high but the siRNA basket (ALNY, ARWR, DRNA) have made a huge comeback.

    Christian (XENE) – Yes, I always prefer innovative products with a differentiated clinical profile. I like both 901 and 1101 as de-risked high impact compounds.

    John (IPHA) – Haven’t been following them for a while but so far all attempts to activate innate cells failed. Agree about Siglecs becoming interesting as a target class but so far the ones with clinical validation are Siglec 8 (ALLK) and 15 (NXTC).

    Alex (ESPR) – No idea. Looks like the market remains uninterested, need to wait for launch and CVOT data.

    andre (FATE/AFMD) – NK field is still a “show me” story to me. So far, clinical validation is limited. There are some interesting NK-CAR platforms for allo products but the most interesting stuff I know is actually private with some cool next gen technologies.

    Karlo (STML) – So far launch is going well, I see they had data at ASH in MF with some efficacy signals but I am not sure it was good enough, especially for a chronic disease like MF.

    Richardb (ANAB) – Very disappointing outcome after the initial P2 readout in AD, chart is painful to watch. Not sure there is any value left here.

    biocqr (NXTC) – This is a real head scratcher for me… Of all IO agents, this is the only one that generated promising monotherapy data but would like to see more responses given the problematic nature of the first PR.

    andre (CNST) – I was really intrigued by their ASH abstract headline, really caught me by surprise as I ascribed limited value to BET inhibitors. Didn’t delve into the story but the data have enough red flags typical to these single arm combo studies in hem diseases like MF and MDS. See below some very important critical analyses that made me skeptical:



  5. Lawrence (OVID) – Yes, I liked the OVID story but since they put out data that were inconclusive in Angelman. Another example of challenges with CNS programs and GABA biology in particular (see SAGE recently). Still onthe sidelines here.

    andre (SWTX) – I think valuation is too high, GSIs are an interesting twist on targeting Notch biology in cancer but I prefer to wait . Combination with an ADC in myeloma does not look viable to me, there are better options.

    chrissy – Will try to post more regularly with shorter posts next year.

    Les (MDCO) – Same here. MDCO deal is super impressive, not sure I would pay that but definitely could disrupt the sleepy PCSK9 market. So far people seeem to count ESPR out but I still think it’s a potential blockbuster and the only oral drug with an effect on LDL and CRP. We’ll see…

    Kay – Nothing comes to mind. There have been so many IPOs …

    Christian (ZYME) – See above, I like it but the real asset in the pipeline is ZW49 imo.

    Dan G (AGIO) – Overall I would say results are positive but not stellar. They can’t file for cholangiocarcinoma though…

    Chriss (MDCO/ESPR) – It means nobody is intersted in buying ESPR before seeing launchor CVOT data IMO.

    Jake (BPMC/DCPH) – Both agents look really good, not sure who the winner is but the combined valuations are quite high…

    Tim – I think the real intersting allo companies are still private, but prefer to not discuss….



  6. Joe M (NLTX) – Looks like another engineered CD25-sparing IL2 (with apparently some IL15 activity as well). Similar story to THOR, looks like they are still preclinical so it’s too early for me.
    Not following MIST closely.

    Robert (ICPT/NGM/VKTX/MDGL) – So ICPT has a drug that works in NASH but magnitude of effect is modest plus there are safety liabilities (pruritis, LDL) that may prevent wide adoption IMO. NGM has an active molecule based on their P2 studies but effect isn’t as stellar as originally reported and their frequent dosing regimen makes it a non-viable product IMO. VKTX and MDGL work on the same target and are effective, safe and oral but clinical profile needs to be proven in larger studies.

    Ronald Abrams (CALA) – So far clinical data are underwhelming. It appears that cancer metabolism or cancer immunometabolism are challenging fields…

    Toby – They should start P1 next year, I think. Their payload is interesting but require clinical de-risking given past issues with amanitin and related compounds.

    Ric – So I clearly bet on the wrong psychiatric program… AXSM and KRTX both performed very well but I didn’t delve into the data so no concrete opinion there. I still always prefer novel drugs that can be protected from generic competition, especially in non-orphan indications where regulatory exclusicity is limited. Don’t know how strong their patents are.

    CCXI – Haven’t been following the story closely.

    Alex (INCY) – I think they became too big without a clear growth driver after epacadostat failed. Jakafi is very lucrative but as asmall molecule will come off patent at some point so not a lot of long term growth.

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

    andre (XENE) – I didn’t like the deal and preferred them to keep all rights to 901 and raise more money via equity. Upfront wasn’t huge (50M), royalties of 10-15% are not bad but also not great, milestones look big but very back end loaded. Hope they keep the KV7 programs…

    paul/jossi/RAM (BOLD) – Thanks! A good deal for BOLD at a nice premium.

    Les (RGNX) – Thanks. RGNX seems to be dependent on its AMD program, so far data look good but somewhat ambiguous. I plan on holding it as an AAV ETF.

    Kirk Hartley (ALNY) – Yes, nice to see how the siRNA story evolved from being toxic 5-6 years ago to being super hot today.

    Kay (CARA) – Data were disappointing, it makes it less attractive as the potential of the IV drug is significant but still limited.
    VKTX/MDGL – I plan on holding the stocks, I think the drugs work.
    RLMD/AXSM – Not sure…
    APLS – I didn’t find data to be very convincing.

    Max (TBIO) – Historically CF has been a very tough nut to crack with oligos due to delivery into lung epithelium and so far data are hard interpret so not sure they solved that problem.

    Hookipa – sorry don’t know them well.

    Josh (ADVM/RGNX) – Agree about opportunity but I don’t see massive uptake for a subretinal injection unless duration and success rate is out of this world. ADVM use intravitreal but data re not clear cut so far.

    PTCT/FOLD/RARE – Yes I like the GTx exposure but not the valuations 😉

    Jinyu (CRSP) – Yes, there is clear poc for ex vivo gene editing programs (also DTIL) but I prefer to wait to see long term effects

    Dan (RLMD) – Sorry, not following closely.

    druz (EXEL) – I think they need something beyond cabo to move higher. Liver is becoming more crowded after atezo+avastin P3 data.

    andre (AUPH) – Yes well done. My concerns have been proven wrong as I thought the drug had safety liabilities. Not sure it’s a 10B opportunity but clearly a significant one, still competing with generics here.

    John (CYCN) – Not following them.



  7. Ohad…thanks again for your insights. To double up on the question from Jonas, I looked at the JCI insight study and it looks quite promising for the phase III RDEB study. Would you still recommend waiting for the funding raise? I bought about 1/2 the stock I plan to buy and hoping it will come down a little more, but I think the valuation and upcoming studies seem promising…..
    Once again…thanks for your generosity and insight.


  8. Hi Ohad, I noticed that Agios received Breakthrough designation for Tibsovo in MDS. What did you think about their data in Beta Thal with their PK activator at ASH? Seemed early but very promising. Thanks


  9. Given the m&a activity in Gene therapy the question is not if but only When the Next Company will get acquired.

    Where do you see the highest likelihood of a m&a? ABEO RGNX?


  10. Dear Ohad,
    Nice to read you once again! And I guess you have been good busy!

    Any opinions on MDNAF (another Canadian biotech;) and their ph2b result she which showed a decisive improved survival over avastin and standard of care? Market cap at $60M seems very interesting – I started small position 3 weeks ago and they just released additional data and ceo is taking about partnerships.


  11. Regarding ABEO: until recently this was my worst investment with huge losses, but I added large number of shares when the stock was in the $2s and now I am finally back at breakeven.
    Valuation is still low $250M, so I think with continued development of programs this could soar back to teens. Funding overhang still a risk- but maybe they will find a partner for one of the programs or raise money in a few weeks when market cap is decent again – keeping dilution in check?


  12. Hi Dan,
    Same here on ABEO ?. Great day today and looks like it’s recovering. Good to be positive again after being very negative. Same story with CLVS. Did not make sense when they dipped so low.


  13. Looks like ABEO issuing common stock tomorrow, so personally I will lock in my final position after the dust settles. Richard, I dont follow NERV, but what convinced me (other than seeing it on Ohad’s buy list :)) is Figure 2 in the JCI insight article. Recall that the three month window is the primary endpoint for the RDEB phase III trial. What I dont know is how much the valuation is dependent on their other studies, which are encouraging but less clear cut at this time with regard to arresting developmental delays.
    I will check out NERV–I do want to thank everyone in this group for the discussions as they have helped me immensely and, of course, especially Ohad as a guide and host.


  14. Dang, just when we thought ABEO was back it’s tanking again. Back to being negative for a while. Bad… these days you just have to sell 20% for every 20% rise.


  15. I dont disagree and glad I bought originally at that price. I am probably going in still for the other half at the same price given the science. But, I will admit that it is a big gamble….


  16. Wow! I could not have timed my post about ABEO any better 😦 disgusting dilution just when the stock had reached $5. What was management thinking of doing? terrible.


  17. Hi folks, anyone have an opinion on KRTX vs AXSM? There was/is an opportunity to switch some AXSM to KRTX. Both names look very promising but seems like a good idea.


  18. Les/paul (SAGE) – Indeed very disappointing. Still need to re-assess the story based on 547. No plans to add more for now.

    Dan (SAGE/AXSM) – Yep, corroborating P2 is very challenging in CNS indications. So far so good for AXSM, though…
    I liked 217 as it looked diffferentiated from BZD because it modulates different subtypes of GABA but these things are always iffy in CNS.
    Dan on December 6, 2019 at 8:08 am said:Edit

    Höl (MGTX) – I don’t think they are expensive but they gave away a lot of the upside in their Oph pipeline, parkinson’s data are interesting but don’t know how clinically meaningful (not disease modifying) and whether effect will be corroborated in future studies.

    Marc – Thanks! Indeed, still trying to find the right balance…

    Christian (ARQL) – Thanks! Indeed, our biggest exit ever in absolute $ 🙂
    Thanks everybody for the kind words.

    Saldo (STML) – Not sure efficacy in MF is interesting enough.

    Frank (MTEM) – Initial efficacy with their CD20 program was better than expected but I still don’t think it’s a viable drug given competition and immunogenicity. The VRTX collaboration is interesting, though. A lot of activity in new conditioning regimens.



  19. It seems like its probably going to be difficult to find attractive risk/reward names. Even something like Arqule is trading above bo price of $20 and speculative names trading near highs and even some companies with disappointing results were not published “enough”. Any attractive opportunities?


  20. hi Ohad,

    PR from MDGL from 11.12.:
    “Madrigal Pharmaceuticals Announces Publication in The Lancet of Positive Phase 2 Results for Resmetirom (MGL-3196) for the Treatment of Non-alcoholic Steatohepatitis (NASH)”

    on this day, the stock made a high-volume pretty harsh down day, and since then fallen further 10% (so from 120 to 90 USD in a few days)

    EV some 900 mio. USD which seems not very expensive for a promising P3 asset in NASH

    Do you know why the stock dropped so harshly, what did investors not like?



  21. hi again Ohad,

    by the way, this additional P3 trial that Madrigal just started, isn’t it a bit strange that they test 80mg and 100mg and placebo? This is taking statistical power, no? and shouldn’t they know by now which dose is appropriate?

    how is it with IP-situation for this drug?


  22. Hi Ohad
    Can you look into BTAI – novel MoA, selective alpha-2a receptor agonist
    It the light the of the recent explosive development in CNS like KRTX and AXSM, BTAI looks fairly modest with 150M valuation for Ph 3 company with data readout (mid-2020); NDA submission (2H 2020), and product launch mid 2021.

    Ph2 data with BXCL501 met all primary and secondary endpoints with p< 0.0001
    Looks like a low risk CNS investment for 2020, or … I am missing something?


  23. Ohad….. Arcus caught my attention not only for their Original Venture Backing, but for their stellar leadership,and recent Genentech collaboration.Any comments appreciated !


  24. Aviv (MDGL) – I still like their drug and think it works. Plan to add more next year.

    Gene H (MGTA) – Early but I like the story, they were one of the first to recognize the need for new conditioning regimens instead of the primitive ones we currently have.

    andre/Dan – Agree, ZYME and XENE are two of my favorite stocks.

    Richard Baker (KURA) – Yes, I still like them although the HRAS H&N opportunity is smaller than initially thought.
    SYBX – I am following them but still skeptic around most microbiome programs, their PKU program makes sense but so far nothing has been validated in humans.

    Les (NERV) – So the past months made me more cautious on CNS/psychiatry drugs but I still think they have an insomnia drug with an attractive profile so if P3 for ‘101 next year fails I plan on adding.

    Brian G (AGIO) – Agree , looks quite interesting, nice to see several agents going after hemoglobin beyond EPO. It is an oral agent so could be advantageous vs. XLRN.

    Franco – Very hard to predict….

    Ric (MDNAF) – Don’t know them but data seem preliminary and hard to interpret (single arm, subset analysis etc.)

    Richard Baker (NERV) – I don’t think last week’s failure has readacross on 101. It’s still a high risk binary readout but 202 represents a fallback program so I feel comfortable owning a small portion into P3 readout.

    Les – AGTC should present data next month, don’t know what to expect but NITE’s XLRP results generated an efficacy signal that still hasn’t been corroborated with new patients.
    MRNS – Haven’t been following them but not optimistic, especially after SAGE’s failure.



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