After 5 years of a raging bull market, more than 140 IPOs and tens of billions in proceeds, there is a debate on whether the violent selloff in biotech stocks is a hiccup or the beginning of a real correction. I have no idea where the sector is heading in the coming weeks but it seems like the overall sobering experience coupled with this month’s selloff changed Wall Street’s perception around biotech. Investors are finally realizing drug development is fraught with uncertainty and that biotech is an attractive but not infallible segment, which is why I expect the correction to continue in 2016. Continue reading
Although hematology represents a small portion of human diseases, its weight in the biotech equity markets is disproportionally high. Bluebird (BLUE), Agios (AGIO), Juno (JUNO), Kite (KITE), Cellectis (CLLS), Pharmacyclics (PCYC), Incyte (INCY), Genmab (GEN.CO), Seattle Genetics (SGEN) and Acceleron (XLRN) all derive the majority of their valuations from hematology drugs. This is also the case for larger companies such as Amgen (AMGN), Celgene (CELG) and Alexion (ALXN). Continue reading
Last night, Roche and Foundation Medicine (FMI) announced a strategic collaboration under which Roche will become the majority owner in Foundation Medicine. Roche will become Foundation’s marketing partner and intends to use the company’s tests for its drug development projects.
Roche is paying $1.03B for 56.3% of the company, representing a price per share of $50 (109% premium over Friday’s close). For investors, the deal validates the bull thesis for Foundation (which I discussed here) as the undisputed leader of NGS-based tumor profiling. Turns out that being first matters also in the diagnostics business! Continue reading
Below is my traditional end of the year summary and a recap of catalysts for 2015. As always, I did my best to cover the most important events, let me know if I missed anything… I would like to use this opportunity and wish the readers of this blog a happy and prosperous new year.
Ohad Continue reading
Earlier this week at the EORTC meeting, Clovis provided an update on rociletinib (CO-1686) and rucaparib. Not only do the data prove that both drugs are highly efficacious in the relevant patient populations, they also provide key distinguishing factors (safety profile and patient selection) relatively to competing programs. The negative market reaction exemplifies the discrepancy between the progress Clovis is making and its stock behavior. Continue reading
AML (Acute myeloid leukemia) remains one of the few blood cancers in which no progress has been made for decades. This is in contrast to other blood cancers where novel treatments have turned fatal conditions into chronic diseases with long term remissions. Prominent examples are CML, which today has a low mortality rate and multiple myeloma where median survival is approaching 8 years and counting. The recent launch of Imbruvica and Gazyva followed by the anticipated approval of ABT-199 is expected to have a similar impact on CLL as well as on certain subtypes of B cell lymphoma. Continue reading
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As expected, the major theme this year was (again) Immuno-oncology with a focus on PD-1 antibodies. Another theme that is gaining momentum is segmentation of tumor types to small niches based on high resolution genomic profiling. This approach can be used to identify a drug’s target population already in phase I, as exemplified by multiple presentations I will discuss below. In most cases, these drugs are ineffective in the general population but highly effective in rare subsets of cancer patients. Continue reading
The recent pullback in the biotech sector hit the vast majority of small/mid cap biotechs. As a group, it is hard to argue biotech stocks are cheap right now but some stocks are becoming attractive after losing 30-50% in several months. Below are 6 companies that are approaching or already are at attractive valuations. A key theme for all 6 is that they have been sold off alongside the general market rather than for fundamental reasons. Market fluctuations in 2014 may present investors with attractive entry points. Continue reading