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. Hi Ohad, congratulations again for BOLD and thanks. RGNX jumped in response and QURE too. Maybe time to buy more RGNX at the current low price.

    CLVS has had a great run… congrats to all those (including me ?) who cost averaged and loaded up between $3-6. Looking for it to run back up to $30 from
    It’s current $15 price.

    MDCO always looked great to me and it’s acquisition was great news. Hope ESPR follows suit. Congrats on KRYS as well and hoping ABEO sees better days ahead.

    Would love to hear your opinion. Thanks again!


    Curious, what they have in common …
    Probably nothing, just coincidence

    Ric & Christian
    I think the XENE mgmt massage is clear – get 1101 approved and sell the company. All r&d activity will be limited to support and will be paid by NBIX for 3 years.


  3. 1. Awhile ago you mentioned CARA. Data released today. Thoughts about it and your general thesis?

    2. VKTX/MDGL – once the hottest, now dead. Was the NASH hype just hype? There are investors that dumped hundreds of millions during the high of hype and are down -75% in 1 year on 9 figures

    3. RLMD/AXSM – similar to my question #2 above, is MDD just the hype of 2019? Will 2020 for MDD become the NASH of 2019?

    4. APLS thoughts?


  4. Hey Ohad, Would love to know your thoughts about TBIO’s mrna drug for CF?

    Also, do you have an opinion on Hookipa and their arenavirus platform?


  5. Ohad – How much interest do you think big Pharma would have in ADVM/RGNX Wet AMD assets? I would imagine a successful gene therapy for that disease would be a massive drug.

    Also, do you like PTCT/FOLD/RARE for gene therapy exposure?



  6. Hi Ohad,

    I’d like to get your opinion on CRSP, you mentioned previously their programs are too early. Now some preliminary data on SCD etc rare blood diseases have showed very promising results. Is it time to have some exposure in gene editing technology? Thanks so much!


  7. Ohad
    AUPH delivered outstanding results.
    Most importantly – mortality was one in the voclosporin arm vs five in the control.
    So the ph 2 imbalance was a fluke !?!
    Considering 10B market opportunity, what about jumping back into AUPH.


  8. Andre,

    where do you have the 10 billion market opportunity from?

    After all the company did a good job of explaining the death imbalances. Their explanation sounded good to me, and together with the fact that there were no further deaths for the drug arms in the second part of P2 study and that deaths were anyway lower in the higher dose group convinced me to sit this out with (unfortuantely) a bit reduced exposure.

    Safety profile looks really clean in the P3 study. Percentage with CR is a bit lower than the low-dose (= p3 dose) in P2, but still very ok imo:

    – CR placebo 24%, low dose (= P3 dose) 49%, high dose 40%
    – CR placebo 22,5%, low dose 40,8%

    Ohad and others, what could this company be worth?? More than yesterday for sure, but would be nice to hear your inputs


  9. Christian,
    Looking into my old notes from 2017.
    200K pts x $50k -> potential $10B/ year peak sales
    Not sure how accurate it is since I didn’t follow auph in the last 2 years.
    About what the co is worth – I would say ~2B today, considering 70% coverage, 70% probability for approval and 10% per year discount.


  10. $CYCN (Ironwood spinoff) CEO mentioned at conference on monday they have developed the only SGC stimulator to cross the blood brain barrier(Bayer has adempas for PAH). Phase 1 proof of concept study out 1st week of Jan 2020 at medical conference).


  11. Hey Ohad!

    Yeah SAGE failure not good and makes me nervous about AXSM Imminent read out- difference is that AXSM has not outsourced trial, which might translate in better control. But yeah, SAGE failure a reminder of how hard an indication depression is, and that ph2 results are no guarantee of successful ph3.

    What kind of molecule is sage-217 anyway- seen people say that there is actually very little innovative about it, just a modified benzo-mimetic with high risks of addiction. Any views on this?



  12. hi Dan,

    I think that the MDD readout should not be thaaat difficult since it compares to Plaecebo (GEMINI-trial).

    STRIDE-trial next year seems to be a much higher hurdle, but that’s sometimes next year so I don’t care 😉



  13. Christian,

    I actually think that placebo response will be high (similar to BUP response)- I also like odds of Stride TRD ph3 trial better than Gemini 3 for MDD as it is two stage phase3 trial where in stage 2 they randomise inadequate responders – closely following the sequential parallax comparison design which generally eliminates placebo (and in this case BUP) responders.


  14. Dan, thanks for your valuable insights. do you really think placebo effect can be as strong as BUP would do, and still then AXS-05 despite small n showed very good improvement compared to BUP arm in P2? Do you know which delta in MADRS between placebo and AXS-05 would allow to call it a success?


  15. Ohad, I just noticed that you became a partner at Pontifax meanwhile. My greatest appreciation! I am very happy for you! Thanks a lot for all your valuable insights, I am well aware of how time consuming it is for you, which makes your commitment even more special!


  16. Hey Christian,

    There is a likelihood of high placebo response in Gemini 3 because patient enrolled in the trial are aware of the success of the ASCEND phase 2, and this will boost their expectations and placebo effect. This is the nature of the challenge in CNS drug development: high placebo response. I expect (or fear) that the placebo effect for Gemini 3 might be in line with Sage Mountain trial, namely a 10 point decrease on MADRS–which is what the BUP arm achieved in ASCEND. Management has made clear that they have recruited patients with a minimum MADRS score of 25 and have been diligent about double-checking who is admitted, including identifying nd excluding professional trial patients (which supposedly is quite a problem in the USA). In ASCEND, AXSM-05 achieved a 17 point reduction -7 delta compared to BUP… Crossing my fingers we can still get close to that delta for Gemini 3.


  17. I suppose the development strategy for AXSM-05 in MDD seems to have been executed as best as possible:
    1. phase 2 comparing 05 to active drug
    2. phase 3 comparing 05 to placebo (and reminding everyone: you will get placebo or the active drug, unlike in Ascend! yes, you may be given placebo which has no effect! –which may help manage expectations and placebo effect to some degree?)



  18. hi Dan,

    thanks a lot for your comments!

    yes it is also my impression that they are designing really smart trials. I found the crossover study for AXS-12 also very interesting for example. Gives you effectively an n of 40 with 20 (ok 21) people and increases the reliability of the results because of the crossover.

    The high placebo response in depression is certainly always a high risk for sure. I am still hoping it will come in at least as positive as the P2 with active comparator, and it is good to know that either a positive Gemini or a positive Stride study will be enough for the NDA in MDD.

    Let’s keep fingers crossed for this week… It will go down a lot in case of Gemini failure, though it is good that there is more promising stuff in the pipe with AXS-07 and AXS-12 and other indications like AD for AXS-05 which should put a floor somewhere…. (where? haha)


  19. hi again,

    found this quite interesting:
    “Sinyor et al (14) reported that, if there was no placebo control in an antidepressant trial comparing two antidepressants, the magnitude of symptom reduction was 65.7%. If the trial included two antidepressant treatments and one placebo arm (33% placebo exposure risk), the magnitude of symptom reduction with the antidepressants was 57.7%, while that with placebo was 44.6%. If the antidepressant trial included one antidepressant arm and one placebo arm (50% placebo exposure risk), the magnitude of symptom reduction with antidepressant was 51.7% and that with placebo was 34.3%.
    In short, the apparent therapeutic effect of antidepressants is related to the risk of exposure to placebo, when this is known to clinicians and depressed patients from the consent form. If you lower the risk of exposure to placebo, then the apparent therapeutic effect with the antidepressants and placebo is greater.”
    The comments made by Brown (15) regarding the experience of patients assigned to placebo are pertinent. He states: “The capsule they receive is pharmacologically inert, but hardly inert with respect to its symbolic value and its power as a conditioned stimulus. In addition, placebo-treated patients receive all the components of the treatment situation common to any treatment, i.e., a thorough evaluation; an explanation for distress; an expert healer: a plausible treatment; a healer’s commitment, enthusiasm, and positive regard; an opportunity to verbalize their distress”.
    Indeed, Frank has argued that these elements of the treatment situation are the active ingredients of all the psychotherapies (16). Since antidepressant clinical trials involve extensive evaluations, long visits, many experts and “new and exotic treatments”, it is not surprising that, under such conditions, the differences between active treatments and inactive treatments including sham acupuncture and placebo are, at best, small”
    This finding translates into the design of a prospective antidepressant trial as follows. This trial should compare a known effective dose of the test antidepressant to placebo (50% placebo risk), a two treatment option. Each treatment arm should consist of a minimum of 120 depressed patients and should be implemented at a maximum of twelve investigative sites.
    The effect size of current antidepressant trials that include patients with major depressive episode is approximately 0.30 (modest), and this fact needs to be heeded for future antidepressant trials.
    (source is PMC4592645 from ncbi.nlm.nih.gov)

    Regarding Gemini, hurdle for placebo as comparator in the P3 is at least lower than it were with BUP (instead of placebo in the same study), and their study is designed in accordance with the above recommendations. So, fingers crossed!


  20. Missed it…but that’s ok. I started investing in biotech because of very sick family members and tried to do research on what medicine approved or yet to be approved would help them. Obviously the perfect investment would be one you make money, contribute to its research, and a cure for an illness….but that would be almost s miracle in my case…lol. Anyways congratulations to anyone who invested in it to made money and that this money brings themselves and others happiness.


  21. Ohad, BIG CONGRATUATIONS to you and your colleagues! This will for sure be a big payday for you.

    And Ohad, thank you very much! Without your knowledge on this name I would not be in it today.

    Thank you!



  22. Hi Dan,

    What’s your take on APTO? SNSS had another failure… any thoughts on their future? It went up as well on ARQL buyout as did APTO

    Hi Ohad, would love your thoughts on APTO as well.


  23. I have been an investor in APTO for over a year now. They are finally getting clinical data – albeit very slowly – they seem over cautious. The next two-three months will be crucial to see if they an maintain a clean safer profile and comical response.


  24. Dan,

    APTO is a Canadian biotech (enough said) with limited financial resources (dilution coming soon). Plus, they are VERY early-stage What is so great about them in your estimation?


  25. Comical response 🙂 I meant clinical

    Hey Richard
    They have two unique molecules and have been very diligent in their development. The two molecules, if successful, could address large markets. 806 is a highly diversified reversible BTK and FLT3 inhibitor that supposedly also inhibits many cancer rescue pathways. So far (very early stages) it has a clean safety profile and has shown signs of clinical activity – inflection point is coming as more patients take the drug and efficacy and durability will be in focus.
    Risky because it is early stages – but market cap under $200M and considering ARQL story has a lot of upside if the molecule turns out effective and reasonably safe.


  26. Yeah, RE ARQL price rose above MRK offering today…
    I am going to hold on to the shares. The strange thing is they announced buyout before releasing data and allowing market to decide fair value, which I think was poor strategic decision by management…


  27. Interesting to see $ARQL bouncing today over the $20 MRK offer.
    Is there any chance of a second bidder coming over for a bid war?
    Hard to see it happen especially with the all cash offer, but maybe BMY want to stay in the run!? Thoughts?


  28. Options are not pricing any other bidder for Arqule. In fact, huge call and put selling. I may buy itm options if they come cheap enough. However, I would rather hold other companies with much more potential with ground breaking science and exceptional management…getting much harder nowadays. Still like reading his articles because they are also like little stories of possible miracles in the making (at least that is how I feel).


  29. Ohad,
    Happy Holidays.
    2 Questions:
    What’s your current sense about MTEM? Last time I asked you were interested but waiting to see more. They’ve traded well since but that doesn’t necessarily reflect on the Science.
    From a strictly trading perspective, what current positions to you feel are still undervalued and should be added to. Of course, if you have new positions that you’re considering adding, that is always appreciated and would be a great gift for the holidays…..Cheers


  30. Hey Christian!

    Yeah, I think it looks good!

    Maybe only small issue is the 6% discontinuation, but otherwise looks like an amazing result also considering so few drugs have gotten approved in the indication in decades, and this is a new MOA. Likelihood of doing quite well commercial, also considering the SAGE setback.

    Result als bodes well for next readings (Migraine and TRD), management is executing at a high level.


  31. Folks,
    Thanks to one of you who first highlighted AXSM on this blog. What a run it’s had and 2 or 3 more results yet to come. Certainly made up for SAGE and WVE losses. Thanks guys.

    Ohad- would love to hear your impressions on AXSM results. Are you a believer now?


  32. I believe it wasn’t right for Arqule management to sell just days before positive results were released….Arqule would of had a much brighter future as an independent company. It seems like it is going to be a difficult to invest in this biotech tape.


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