Welcome to the World (Of Biotech)

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

What a show we have been having in the markets.  From 10% down one month, to 20% up the next, it is truly a spectacle to behold. 

In my small world, biotechs are a fantastic investment, but the area is saturated with complex targets (aka any kinase inhibitor – see below), unknown mechanisms of action (cough! cough! ITMN), and mismanagement (DCTH anyone?), but there are always diamonds in the rough that catch the eye of a scientist (me).  We are heavily invested in big pharma (i.e., MRK, BMY, GSK) for their dividend yields and pipelines, and we have our speculative plays for growth (CRIS, SGEN, IMGN, PLX, DEPO, MITI, YMI, etc).  At this point I think it is prudent to trim some winners and losers, so that we can focus on a few more that may warrant our attention in the coming year.

I have begun to reduce OPK (winner) and DCTH (loser).  The paired loss is a bit more than I would like, as DCTH has not shown us any love due to mismanagement and setbacks.  I find the technology very sound, but the way things have been handled, I would rather move to something that may have more upside, keeping 1/2 of my position in DCTH to recover any future upside.  OPK is supported by the CEO (he owns a lot of stock), but there is nothing in the immediate future that excites me at this time, so why not take some off the table and let the rest run to see how/where the stock goes. 

Immunogen (IMGN) is on a tear, and we have been in and out of them since ~$5.   SGEN is the comparator here for stock price, and Seattle Genetics (SGEN) trades at a premium due to: 1. no partner (takeout candidate?), and 2. their drug is approved.   That is where I believe IMGN can go….time will tell.  I am adding to IMGN slowly, selling calls and puts along the way.

Ariad (ARIA) is also on a roll.  The company has the best in class mTOR inhibitor (Ridaforolimus for bone sarcomas), and MRK has taken over all clinical development.  ARIA have a few new drugs in the pipeline, and they have a Phase 3 candidate unlicensed (Ponatinib), and this one is another drug that could bolster the company’s prospects of being bought out by Merck. Recently a MRK senior manager joined ARIA….so that tells you that he believes in the company and its potential.  Slowly adding to the stock, and I would definitely buy on any pull back.

GTHP is also awaiting data and at 70c, I doubled down on my position.  FDA guidance is due at any time, and a CE mark is due in 2012…They should easily double….easily!

MITI partnered with AMGN, and we are waiting for more clinical data (late 2012 for their primary mAb, blinatumomab).

CRIS has been trading in the $3 range for months.  That is what I consider support.  Unless some horrible information comes out on them, they should be moving here very soon to the up side.  This is the second largest holding in my portfolio.  They are now $3.77.

PLX has risen from the ashes, and this is my single, largest position in any stock.  That is how much I believe in the technology. 

As promised, here is my take on Exelixis.

Exelixis is developing cabozantinib (XL-184, their lead compound), an inhibitor of tyrosine kinases including MET, VEGFR2 and RET, for the potential oral treatment of medullary thyroid cancer (MTC).  The Company has Orphan Disease Approval for XL-184. Cabozanitnib is in Phase 3 for MTC, and a few days ago the Company announced that the trial met its primary endpoint of improving progression-free survival compared with placebo. It substantially exceeded the threshold of a 75% increase in PFS assumed at the onset of the trial. Exelixis CEO Michael Morrissey called the results "an important advance for MTC patients and for Exelixis."  The Company is now requesting permission to begin a rolling NDA submission for MTC, and expected to complete the filing in 1H12.  Cabozantinib has a ton of promise in other trials, and one in particular is garnering some attention, but as Hammer puts it best, ‘Cabo’ is going where no drug has gone before.  I think they are worth a chance not only on their positive outcome, but IF the reduction of bone ‘mets’ in different cancers is true….watch out!

Cabozantinib is also being developed for a number of other cancers, including:

Other compounds that are out-licensed:

A few new trades that we initiated in chat were:

YMI, UTHR, EXEL and many others noted above – so join us in chat to stay abreast of our virtual trades!