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Come and get it! Read all about it! Biotechs, biotechs and more biotechs to buy buy buy for your portfolio! To date, almost 30 biotech companies have hit the market. Most of the time, there are fewer than 10-12!
For the last five years, biotechs have had issues obtaining offer prices above expectations. In 2013, that trend looks to be broken. According to BiotechNow, the offer prices are 4% above expectations! In addition, biotechs are going public with little more than a wing and a prayer (pre-clinical or Phase 1 data only). Really? What this means is that the drug or technology looks good in mice, rats, or dogs, etc, but there is no smidgen of evidence that it will work in humans. That's what is called an appitite for RISK!
Of the thirty or so companies, several came out of the gate and have done quite well (figures from BiotechNow):
Those are some impressive numbers, but what do the companies have that make them attractive?
Epizyme (EPZM) – One of the 'darling' companies of the IPO market, EPZM has moved into the heavens with its stock price, and a market cap of almost $1B for two Phase 1 programs that look very interesting, but have no validated human data.
The company is working on cancer, and more specifically histone methyltransferases (HMTs referred to hereafter). This family of enzymes are involved in the winding and unwinding of DNA. So, in cancer, if the specific enzyme that unwinds DNA is over expressed (more of it), then cancer cells can multiply faster. EPZM is looking at two specific HMTs, DOT1L and EZH2.
DOT1L inhibitor, EPZ-5676, is a small molecule inhibitor of created for the treatment of acute leukemias in which the MLL gene is rearranged due to a chromosomal translocation (MLL-r). Due to the translocation, DOT1L is recruited to specific locations in the chromosome where it would not normally be present. As a result, DOT1L causes inappropriate methylation at these locations, which results in the increased expression of genes causing leukemia (from EPZM website). This molecule is licensed to Celgene.
EZH2 inhibitor, EPZ-6438, is in patients with advanced solid tumors or with relapsed or refractory B-cell lymphoma. This program is currently in the dose escalation phase, and is licensed to Eisai.
So, the company has some very interesting compounds, but no data to show for it. Optionis are not traded on the company, but this is one company that needs to be followed closely.
Bluebird Bio (BLUE) – another high flier, but the clinical data are sparce. In 2009, the company licensed INSERMs technology for treating childhood cerebral adrenoleukodystrophy (CCALD). ALD is caused by mutations in ABCD1, a peroxisomal membrane transporter protein, located on the X chromosome. The exact mechanism of the pathogenesis of the various forms of ALD is not known. Biochemically, individuals with ALD show very high levels of unbranched, saturated, very long chain fatty acids, particularly cerotic acid (26:0). Basically, the fatty acid cannot be removed from the cell, and then clinical ramifications can take place. Bluebird's technology (Letni-D) is basically introducing the gene, ABCD1, into stem cells and then putting those cells into patients. It is a one-time treatment to stabilize and prevent progression of the disease.
There is a ton of work to do, and its jackpot will be the clinical evidence (um, Dendreon?). The three diseases it is targeting are: CCALD; beta-thalassemia, and sickle cell disease. Clinical trials are supposed to be underway, so time will tell if this company is worth its market cap. There are no options on the company.
Ambit (AMBI) – San Diego based Ambit was founded in 2000, has been working in the area of kinase inhibitors forever ago! They had a screening 'CRO'-type of business as the compnay cloned many of the kinases that were discovered. Their lead product is a FLT3 inhibitor for AML (leukemia). AML is a very aggressive cancer, and prognosis is not good if diagnosed. Ambit's FLT3 compound was licensed to Astellas in 2009, but the collaboration was terminated and quizartinib was returned to Ambit. There are several interesting writeups on the company, one here by Ohad Hammer, but I am much more skeptical on the overall outcome trials that will be needed to propel this drug into the forfront. I would not invest in the company at this time.
Oncomed (OMED) – According to its IPO prospectus, OMED has raised more than $325 million from investors, partners, and grant agencies since its founding in 2004. The company has burned through more than $157 million of cash, and has gotten five product candidates into clinical trials that have enrolled a total of about 235 patients. The technology is to develop targeted antibodies against cancer stem cells, sometimes called tumor-initiating cells (TICs). It is believed that these TICs resist conventional treatments (e.g. chemotherapy), and allow cancer 'survive' even after treatment appears to disposed of a tumor.
The company has two partners, GSK and Bayer. With GSK, OMED is developing an anti-CSC antibody therapeutics targeting the Notch signaling pathway, more specifically anti-Notch2/3 (OMP-59R5) and anti-Notch1 (OMP-52M51). With Bayer, OMED is looking at novel anti-CSC biologic and small molecule therapeutics targeting the Wnt signaling pathway.
For the clinic, demcizumab, has completed single-agent Phase Ia safety and dose escalation trials and is currently in Phase Ib combination therapy trials in patients with non-small cell lung cancer and pancreatic cancer. OMED will soon initiate a Phase Ib/II trial combining demcizumab with paclitaxel in ovarian cancer in the second half of 2013.
Anti-Notch2/3 (OMP-59R5), is in a Phase Ib/II trial in pancreatic cancer in combination therapy with gemcitabine (recently amended to include Abraxane®) and a second Phase Ib/II trial in small cell lung cancer in combination therapy with etoposide and cisplatin chemotherapy.
The third and fourth candidates, vantictumab (OMP-18R5) and Fzd8-Fc (OMP-54F28), are in single-agent Phase I safety and dose escalation trials in solid tumor malignancies, and OMED expects three Phase Ib combination trials to initiate for vantictumab in 2013 and for OMP-54F28 in late 2013 or early 2014.
The fifth candidate, anti-Notch1 (OMP-52M51), is in two single-agent Phase Ia safety and dose escalation trials in hematologic and solid tumor malignancies.
The clinical trials for all five product candidates are ongoing, with the intent of gathering additional data required to proceed to later stage clinical trials and product approval. This is another company I am extremely interested in, and their market cap has been cut almost in half, so it will be time to start a small starter position in them as well. Options are not available yet.
The next write up will continue on the IPO front, but for now, invest safe!
– Pharm
