Biotech Investment Paradigm - Latest Comments

Re: Exelixis Reports Positive Data in EXAM Trial of Cabozantinib in Medullary Thyroid Cancer

Shyronnie68 — Sat, 07 Jan 2012 14:19:07 -0000

How big is MTC market?

Re: Will the FDA Remove Zevalin’s Bioscan?

David Johnson75 — Fri, 18 Nov 2011 09:34:03 -0000

My favorite stock....

Re: Will the FDA Remove Zevalin’s Bioscan?

Thekid — Fri, 18 Nov 2011 08:13:35 -0000

Lets do this...stock of the century

Re: Pharmasset’s Potential to Shift the Hepatitis C Treatment Paradigm

Trevor Sherwood — Thu, 22 Sep 2011 17:56:04 -0000

Could you link me to the study you are referring to? If its 7128 alone or with just RBV/IFN, then it is a different therapy than a multiple nucleotide therapy (7977/938) or a multiple nucleotide and/or RBV and/or other directly acting antiviral (DAA) drug.

Beyond these various cocktail combos, 7128 is a different drug from 7977, which means clinical outcomes can differ. We see this with many drugs, but I'll use Victrelis and Incivek as an example of two HCV drugs with the same mode of action (protease inhibition) with different stats for the clinical outcomes.

Re: Pharmasset’s Potential to Shift the Hepatitis C Treatment Paradigm

Klkjhkl — Wed, 21 Sep 2011 16:48:27 -0000

Any reason relapse seen win phase 2 with 7128 should not occur with 7977?

Re: This Week’s Watchlist

mutuelle senior — Wed, 21 Sep 2011 13:47:34 -0000

Nice! Thank you

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

Investor — Mon, 29 Aug 2011 20:07:13 -0000

I know more about this and pharma than you ever will.

Forget the useless LDL argument, the FDA is not going to approve AMR101 because of that.

No chance.

Patients with hypertriglyceridemia have an altered lipoprotein metabolism and LDL may or may not increase, but that is not what matters for these patients, the important thing is to reduce trigs.

And Lovaza does not increase LDL for patients already on statins (mixed dyslipidemia/Anchor) either and is more effective in reducing trigs for BOTH groups.

These are the facts and Amarin has been looking for a partner since the stock was under a dollar and no one is going to pay a billion + for this now.

No chance.

Of course I know that these are pharmaceutical grade products and that is also a MAJOR issue for Amrarin.

It wil cost them or their suppliers several hundred million to produce this in a large scale and it will actually take years to set it up.

These invesments cannot possibly be justified with rational calculations.

So even IF Amarin was to be approved for the first indication (unthinkable IMO) the company is overpriced at today's levels.

Lovaza is not going away and will be generic before Amarin can supply this in a large way (see the recent agreement between Lovaza's producer, (a Norwegian company called Pronova) and Apotex.

These are also irrefutable facts.

And why on earth would doctors prescribe expensive Amarin to patients with just high trigs (Anchor-indication) when much cheaper Lovaza and supplements will be available?

As I said, Lovaza does not increase LDL for patients already on statins either.

And the trigs are not as big a problem here as for patiens with hypertriglyceridemia.

So Trevor Sherwood's numbers are just blue sky fantasies and are frankly laughable for people with serious insights into these matters.

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

Jonah — Sun, 28 Aug 2011 09:33:47 -0000

A nitpick is that assuming you got AMRN's marketcap off of yahoo finance, the actual number of common shares is approximately 133 M and there are approximately 24 M warrants priced at 1.5 and 3.5. So the actual marketcap when using just common shares and a share price of 10.66 is 1.4B and when warrants are included the marketcap is 1.67 B and when 10 M stock options are included the MC is 1.78 B. So the share price is still undervalued but not by as much as before.

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

c. Rangel — Fri, 26 Aug 2011 18:21:43 -0000

Whhhaaaat you have no clue on pharma. AMRN is better than Lovaza since it work in patients with high TG and doesnt increase LDL. Thats very big!! Most people with high TG's have high LDL. Second you have no clue about the pharmaceutical grade products as they're not like an over the counter fish oil. I mean would AMRN be around if it was like any other fish oil??? The FDA will approve a product if it's safe and efficacious. They dont decide on what should be on the market. For instance there is 7 growth hormones on the market, was 5- 6 statins on the market and many many hypertensive medications. Big pharam will pay for a billion dollar drug more than ever as their cupboards are bare. Look at Lilly! They're falling off a patent cliff set to lose 40% of revenue! Pfizer losing lipitor. Roche losing boniva. Its all over. Btw I've worked in pharma and still do for 10 plus years. Im an expert

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

Trevor Sherwood — Fri, 26 Aug 2011 12:46:38 -0000

First of all I never mentioned anything about partnering/buyout speculation.

Secondly, let's look at Lovaza w/statin (from it's label) vs. ANCHOR.
AMR101 4g TG lowered 21.5%, LDL-C down 6.2%
Lovaza 4g TG lowered 23%, LDL-C up 3.5%
Hardly inferior, and the LDL-C difference is important IMO

Finally, why do you think this has zero chance of being approved? Approval = efficacy and safety. AMR101 has demonstrated such in trials.

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

Trevor Sherwood — Fri, 26 Aug 2011 12:34:39 -0000

Even if they do have to pay royalties, plugging in a royalty rate into my model at 40% of sales (which is ridiculous) still gives an upside of 1% over today's market cap. Looking in the 10K I only see future royalty possibilities of 1%, 0.5%, and 0.25% on AMR101 sales listed as a possibility in addition to some small lump payments.

Do you have any info on that possibility? I'll price it into my model if I can find some concrete numbers.

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

Investor — Fri, 26 Aug 2011 12:25:53 -0000

You have to be totally INSANE to believe that the FDA will approve another "fishoil" unless it is MUCH better than Lovaza for lowering trigs (hypertriglyceridemia, the Marine-indication).

IF they where to approve AMR-101 EVERY big pharma would scramble together some omega-3 and file for this indication.

AMR-101 is basically a 30 year old Japanese product developed by Mochida and Nippon Suisan Kaisha, two well known Japanese companies:
http://www.mochida.co.jp/engli...

And AMR 101 is not as effective as Lovaza in lowering very high trigs either, that is the main issue.
WHY do you think Takeda (Japans largest pharma co. are introducing Lovaza in that country next year?

Surely not because Epadel (AMR-101) is better than Lovaza!

And let's take the other (Anchor) indication for mixed dyslipidemia.

AMR-101 was less effective than Lovaza in lowering trigs for this group also!

And Amarin has been looking for a partner since the stock was under a dollar:
http://www.theday.com/article/...

And now someone actually believe that big pharma will pay billions for this Japanese "fish-oil" with no serious patent protection and ZERO chances for approval??

This is PURE and UTTER madness IMHO!

Re: Why Amarin’s IP Situation is Overblown: Valuation of the Worst Case Scenario

Bill — Fri, 26 Aug 2011 11:37:40 -0000

You neglected to mention that if they don't get the patent they will have to pay royals to the other company and we don't know if that is possible or for how much.

Re: Why Vertex is a Buy: Second Quarter Results

Jennifer of emanaged futures — Thu, 04 Aug 2011 16:20:49 -0000

We have a few clients on another investment site investing in Vertex's HCV and CF programs as well and they are seeing very positive results. I agree with the advice presented here.

Re: Affymax’ Peginesatide for Anemia in Chronic Renal Failure

imane — Tue, 02 Aug 2011 07:41:25 -0000

Love it. Thanks again my friend.

Re: Three Problems with Questcor’s Acthar IS Approval

Arun Singh — Sun, 31 Jul 2011 10:53:39 -0000

Do you want to know how to get 30-50% plumper lips? check that lip plumper gloss

Re: Biotech Valuation Part 1: Science, Patents, and Management

Ivan — Fri, 15 Jul 2011 10:24:13 -0000

A great article.
Looking forward for your Part 2.

Re: Managing Risk in Biotech Investing: Part 3

J. — Sat, 25 Jun 2011 16:18:47 -0000

I have Tony Pelz' book and have been practicing his methods. I agree that holding a properly structured option position through FDA approval is far better than holding the straight equity, because the FDA often does the unexpected. Even so, it is very difficult to make money. Case in point is the recent PTIE event. I held the 8/10.5/12.5 butterfly spread for a cost of $650 which was rendered worthless by the stock at 5.5 after the decision. That was OK because I also held 10 $8 puts and had written 35 $5.5 puts, entered for no net cost. With PTIE at 5.5 this position would yield a net profit of $2.5k at expiration; $1.85k net including the cost of the call butterfly. The problem is that we don't yet know the details of the FDA response. I was uncomfortable holding the equivalent of 2500 shares of PTIE long at 5.5 while waiting to find out, so I closed the position. The $8 puts were trading with no time premium, whereas the $5.5 puts were trading at $.50. So I ended up with a small loss after commissions and option spreads. There were certain details I could have executed better - Tony caught a better entry for the puts, and I could have written fewer 5.5 puts and more 10.5 calls. Even so, it was certainly a disappointment to end up with this result after the stock made the ideal move.

Re: Managing Risk in Biotech Investing: Part 3

Rockford C., PhD — Sat, 25 Jun 2011 14:46:45 -0000

Thanks for the comment. It is certainly a good thing for folks to see both sides.

The wording you refer to should have been tightened up a bit. I agree, in retrospect, that saying "only" was probably the wrong way to describe the short interest. I would say it isn't into red flag territory, though.BioSante is absolutely not an ideal case, as I would argue Amarin and Pacira were. It's probably the most ideal case for biotechs currently going into big catalysts, though. It seems like we have a dearth of plays similar in quality to PCRX or AMRN in the near future.

Re: Managing Risk in Biotech Investing: Part 3

Biotech 30 Newsjoke — Sat, 25 Jun 2011 07:52:17 -0000

>>BioSante appears to fit the guidelines mentioned reasonably well... The stock
is rated unanimously a ‘buy’ by its covering analysts with an average
price target of approximately $6.00. Short interest is rising, but still only consists of about 14% of float.<<

I have no position in BPAX, but to put the word "only" in front of "14% of the float" being short is crazy! Also, look at the bank that did its last raise (Rodman) and then at the track record of the other companies for which Rodman has raised money. Finally, when all of the analysts have a "buy" on something (albeit, only four of them in this case), it's often a good reason to be cautious. I'm not making any comment here about the clinical merits (or not) of this company's products, but folks should see the other side of your comments.

Re: Affymax’ Peginesatide for Anemia in Chronic Renal Failure

Sumudu Himesha Medawela — Wed, 22 Jun 2011 11:55:40 -0000

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Re: Managing Risk in Biotech Investing: Part 2

J. — Wed, 22 Jun 2011 11:22:28 -0000

Agree with your assessment of the "short squeeze" hype. Saying "all shorts have to buy eventually" is as valid as saying all longs have to sell eventually. The question is a what price.

Re: Managing Risk in Biotech Investing: Part 2

NishkaasDad — Wed, 22 Jun 2011 11:14:43 -0000

Great article again. About dilution one more thing to consider in addition to 24 months worth of cash supply is the remaining Ph-II,Ph-III programs which company has to finish. Company may take advantage of the current pre-catalyst run up price to generate more cash in sponsoring other future programs. All I am saying is it might be helpful to have an idea of what other programs are following after the current catalyst event is finished.

Re: Managing Risk in Biotech Investing: Part 2

Rockford C., PhD — Wed, 22 Jun 2011 10:09:21 -0000

Thanks for the comment.

Indeed, averaging in is a great way to lower risk regardless of what type of risk it is.

You're right that my short squeeze opinion could have used some beefing up in terms of data. Doing so in the article would have been a little cumbersome, but let me provide a concrete example.

Here's an article from April 2007 showing a few biotech short squeeze candidates: http://seekingalpha.com/articl...

And here's how each company ended up:

AGIX - Bankruptcy in 2009.
COLY - Dropped 60% two months after this article on failed lung cancer data.
CVTX - Went up over $13 in 2Q 2007, fell back to ~$8, later acquired at $20.00. May have legitimately squeezed.
MNTA - Dropped from ~$13 to ~$5 later that year.
NKTR - Price went smoothly from ~$13 to less than $5 over the 12 months after the article.
NRMX - Share price went from ~$13 to ~$2 in 12 months following article. Changed name to Belllus in 2008 and currently trades on pink sheets at 0.065 right now.
PPCO - Was at ~$11 at time of this article, dropped to ~$1 in 2008, bought out at $5 in 2010 by Endo.

So if the author followed his own advice, he might have ended up ahead on just one of his seven suggestions and on the others he could have made huge losses. Bad investing strategy, imo.

Thanks again for your comments. And thanks for making me look up that data!

Re: Managing Risk in Biotech Investing: Part 2

Jacob — Mon, 20 Jun 2011 14:54:24 -0000

I would be careful with statements like, "Most often, the positive fundamental change never occurs and the hedge funds with short positions will profit as planned." Without data to back that up it's simply one mans opinion. Otherwise, I think you laid everything out in a very understandable way. I particularly liked this strategy, "Buy into the position over two, three, or more transactions spaced one to two weeks apart." This is how I attack all of my investments regardless of dilution risk. I believe the same strategy can be applied when you go to sell. Good piece...