Long/short equity, research analyst, biotech, healthcare
Long/short equity, research analyst, biotech, healthcare
Contributor since: 2012
Company: Daily Biotech
Reading is fundamental. All this talk about ejection fraction is way off base.
The point is that the high dose in CUPID-1 showed stabilization of EF compared to placebo. And the P-value was extremely close to significance (p = 0.057). Higher sample sizes mean lower variance, which typically translates into higher p-values. So CUPID-2 should report a significant result on this important biomarker.
And the talk about patient imbalances is moot. They did post-hoc tests showing that imbalances were not the primary factor driving these results in CUPID-1. So stop it.
Just to flesh this out a bit more so non-scientific readers understand this issue.
Some authors, such as this one, have tried to make a big deal about some minor "imbalances" regarding the patient sub-populations across Mydicar's dosages in its Phase 1/2 trials.
If you look at the SD's, however, you will quickly realize that they all overlap significantly in baseline characteristics. Yes, the mean is different, but what matters from a statistical viewpoint is that they have significant overlap. They are statistically similar populations!
Again, if these imbalances were such a big deal, CUPID-2 would not have earned multiple accolades from top-notch journals.
I personally have no idea if CUPID-2 will work out as planned, but to say that it's "likely to fail" based on a superficial look at the mean values emanating from CUPID-1 is a giant leap of faith.
What seems to confuse lay authors is the wide variance due to the small sample size. That is to be expected in such a small trial because variance itself is affected by sample size. In effect, the spread goes down as sample size goes up.
CUPID-1 had some heterogeneity issues, no doubt, because of its small sample size, but this issue was statistically controlled through the appropriate data transformations in the analysis.
So your conclusions based on raw mean data values are way off base. And your failure to discuss the SD's and their significance is a huge blow to this article.
You make a mountain out of a molehill regarding minor "imbalances" and claim that CUPID-1 is "inconclusive" based on quite literally nothing.
Do you know more than Editors at Nature or the American Heart Association? Both of whom called CUPID-1's results unprecedented?
Sorry, the scientific community disagrees with your neophyte analysis..and so does big pharma. Weak results wouldn't have grabbed their attention, as you claim.
This article should be pulled ASAP. It's straight up wrong in so many regards I don't know where to begin with the criticism.
Cutting to the chase, why would 4 major pharmas (Pfizer, JNJ, Novartis, BMY) invest millions in CLDN and QURE if it had a high chance of failure? And why are multiple funds loading up on shares ahead of the topline data readout?
This is a blatant attempt at stock manipulation and a misrepresentation of the clinical trial data to date.
CUPID-2 may fail because this is an extremely difficult indication to treat, but the clinical data so far has been so impressive that it made headlines around the world and was featured in Nature of all places.
Glad you know more than professional scientists, hedge funds, and big pharma combined. Good job.
Earnings are worthless for stocks like this one. Just keep an eye on their cash levels and the rest is all about the data.
@ SR - also a nice piece! Good work!
SB-Fantastic article! I already own 1200 shares but want to buy more after reading this piece.
Over an 80% drop in the last few days. Damn good call if I do say so myself.
JNJ underperformed? When factoring in dividends reinvestments, I have this stock being a better than average performer for at least the last 15 odd years. And management even states in their 10-K that they have beaten the DJI for 10 years running on an annualized basis. I guess if you look at short time periods like a year or so you can make this argument. But JNJ is a stock you buy for a lifetime and even multiple lifetimes by passing it on to your children.
To drive this point home, an investor that bought JNJ in the 1980's and used a DRIP would be looking at close to a 5000% ROI! The DJI, by contrast, would have returned less than 1700% in the same time period. And JNJ would have also crushed KO over the same time period as well...just saying.
Great stock that everyone should own, in my opinion. Growth outside of pharma is suspect, however.
See my comment above. It will be either by formulation (28.5%) or by therapeutic contribution. There might be more info out there on the specifics but I haven't come across it. The way it is worded in the SEC filings, it sounds like the royalty structure isn't set in stone yet.
Thanks for the stellar comments everyone! I really learned a lot by reading them.
Hi Barry,
Thanks for the excellent comments! Here are my quick thoughts...
1. While this therapy is supposed to compete directly with Sovaldi, it's important to remember that Sovaldi is an effective pan-genotypic treatment. My understanding is that AbbVie's therapy is indicated primarily for genotypes 1a/b.
2. Your calculation of the second, less bullish, scenario is definitely important to consider. However, I haven't seen a press release where the two companies have agreed upon either royalty calculation. And the word "allocable" could mean a couple of different things and I wasn't sure how they were defining it quite frankly.
Namely, they could define it based on formulation--most straightforward and this appears to be what you are referring to. By contrast, they could be defining it based on the protease inhibitor's contribution to the the overall therapeutic effect (perhaps hard to define but critical to consider).
For example, Enanta's protease inhibitor is arguably the most important component of this therapy. In that case, Enanta would be doing a major disservice to its shareholders by agreeing to a deal that amounts to a paltry 5% of net sales. And if you consider the substantial premiums paid for Sovaldi and Idenix's experimental hep C drugs, I have a hard time believing Enanta would agree to such a deal.
Based on the data I've seen for ABT-450, it looks like the star of the show. Glossing over some of the details, the clinical trial data would seem to indicate that ABT-450 is the main component, whereas ABT-267 and 333 act to make the drug more effective across a broader range of patient subtypes. And even then, that's not always the case.
In short, ABT-450 looks like it does about 80-85% of the "work", but it's only 28.5% of the formulation by weight. Complicating matters, genotype 1b patients appear to respond better to treatment with simpler DAA regimens containing a protease inhibitor--giving Enanta all the more reason to argue for a royalty rate based on "effect" rather than "weight".
Honestly, these are issues I'm still not clear on, but am glad you brought them up in the comments section. If you have a press release that sheds more light on the royalty structure, it would be greatly appreciated!
I fully concede that I may be in error in how "allocable" is being defined in this deal, but the formulation scenario would make this the cheapest licensing deal for a next generation hep C drug to date. In that case, I am even more bullish on AbbVie. Food for thought.
Sort of surprised the market is so bearish on NBS. Nice article. I'll probably take a spec position in the near future.
Thanks for this article. Fundamentals are improving, management looks top notch, and a galaxy of ANDA's that give the company deep value.
This article contains multiple factual errors. First off, there are MULTIPLE lawsuits filed against GALE right NOW for this "insider selling nonsense" as you put it, with more on the way. That could close the company down given their cash position. Danger.
Secondly, NeuVAX FAILED its clinical trials but GALE failed to alert shareholders to the truth. Read the peer-reviewed articles, or at least my summary. Stating otherwise is more misinformation. I gave the p-values proving this point. Where is your proof that it works? You only use what the company is stating, and I have clearly shown that to be a falsehood.
You are dangerously misleading investors with your article that fails to cite primary sources, and is based on propaganda from GALE. They can't even be bothered to report correct statistics in their SEC filings, and you believe what they are saying for a single second?
Finally, I caught Mr. Ahn red handed telling a fib to investors on SA, and cited the SEC filings to back up my assertion. If anything, investors need to be protected from his misinformation.
Either cite primary literature backing your assertions, or state them as opinion.
7 law firms do not believe Galena's story.
Stock is a buy here.
I said ICPT, and it was a tongue in cheek piece. Unknown bio working on liver disease. Aegis later named GALT the heir to ICPT. Again, totally random guess on their part. Point was, this is all tantamount to fumbling around in the dark. Sorry if my sarcasm was mistaken for sincerity.
I generally only go truly long on sound companies like GILD, CELG, PFE, etc...small bios are a gamble.
interesting you say "facts" and "truth". scientists believe in neither. we don't accept a hypothesis, rather we try to reject it. big difference.
According to clinicaltrials.gov, your hospital is a clinical site for NeuVax. Perhaps I missed it but I don't see where you disclosed this important information. Conflict of interest?
Are you directly involved in the NeuVax trial or oversee the researchers that are? That's important for investors to know.
Just like I have to disclose that I'm short, you need to disclose if you are directly or indirectly involved in this research. Perhaps it's just coincidence. So, please clarify.
I would cover that short QTR. QCOR has $90 written all over it.
I like most of your work, so I won't be too harsh here. But your analysis of gilead is lacking. First off, insiders have sold all the way through the stock doubling. So, this isn't news to anyone. Secondly, Gilead is trading at a multiple of about 20 pre-sovaldi revenues. A short here is a waste of money. The company is also buying back its shares, which will further help share price. On a final note, if Gilead went to $69 based on short selling, I'd push all in. That's an incredible bargain.
TMO just reported generating close to $2 billion in free cash flow last year, and is expected to grow earnings by another 24% this year. I personally think they will acquire another diagnostics company, and this is a good thing with limited risk. Risk would come in the form of a capital raise, but they have more than enough cash to execute multiple transactions this year. In large part, because they can target companies flying well under the radar. Best part is that they have a proven track record of turning acquisitions into revenue generators.
If you want to discuss risks associated with the ongoing consolidation in pharma, I think the orphan drug craze would have been more fitting. Companies like JAZZ, BMRN, and ISIS fit your thesis perfectly. Although orphan drugmakers do nothing besides go upwards, I can't see any of them as a "value play". And they are paying massive premiums to consolidate the sector. One would think that a day of reckoning is in the cards...
Anyways, I definitely found your article interesting and thought-provoking!
Addendum: Forgot to read your disclosure, but I see you are short ACT and TMO. Not sure about the other stocks, but you don't want to be short these two particular companies. Just some friendly input :)
Thank you for the article. I've been eyeing PRAN for awhile but could never pull the trigger. Now that the stock has shot up, I feel like I would be chasing it. That said, the market cap is still reasonable compared to the value proposition, suggesting there is significant upside remaining.
Anyways, I'll consider your points this weekend, and perhaps take a naked long position Monday. You are dead on about the hedging being too expensive.
This article should be a primer for any newbie biotech investor. Trying to predict what they FDA is going to do based on what they should do is a waste of time. Besides not sticking to previous SPA agreements, questioning methodologies that they previously agreed to in meetings, and giving oddball passes to some drugs with horrid clinical data, this is par for the course in my book.
On a side note, there is a big push for "adaptive clinical" trials now. While this is still in the buzz word phase of its evolution, one concept that is catching on is the idea of active controls. Basically, you can't force all diseases, drugs, and therapies to conform to a universal norm. There needs to be wiggle room in clinical testing, not dogma.
Anyways, great work!
Thanks for setting up this forum Chris. Much needed IMO.
Awesome article!
Jason, you certainly do like the spicy biopharmas!
I warned investors about Dara last year and that turned out to be the right call. Can't say I share your optimism about ODS here. The way I see it is that the FDA doesn't consider this much of a priority. Even so, Dara has gotten so cheap that it's probably worth a look as a mad money play. If they did get ODS, they get bought out. Simple as that.
What I can't understand, however, is why would a company bother giving them an upfront payment when the whole company costs $16 M? There are pharmas out there that throw away triple that on seed grants, and dead-end licensing programs.
So the the fact that no one has bought out Dara yet makes me think it's ODS is looking bleak. These things aren't as super secret as they are supposed to be. And for the application to be under review that long means that someone probably knows the FDA's sentiment.
Ok, enough tinfoil theory for today. I enjoyed your article by the way.
Didn't the injunction get overturned? Why does this stock keep faltering if good news is on the way? Why can't management speak for themselves? Why do you believe this trend will change?
Nice article Mr. Smith. However I disagree with your assumption that the Kaplan Meier plots might change in favor of ICT-107 going forward. The trial is more than half done and the data are disappointing. I don't see any reason to expect a dramatic uptick in survival among the remaining patients. And that's what would be needed to change this statistical trend.
At the end of the day, management put out a highly misleading PR about the results (see my article) as an attempt to assuage the investment community. They swung for the fences and lost.
Nice article Spencer. I think you are wrong on OREX being a wait and see play, however. Takeda's marketing effort for Contrave is going to make Eisai's effort look like child's play. And Contrave will be the only obesity med approved in the EU. I don't see how Belviq or Qsymia get EU approval within the next 3 years. Of course people will make fantastical scenarios to assuage their doubts, but this is reality. The LIGHT study opened the door for Contrave in the EU. And it will probably allow OREX to expand the label much faster than Arena can for Belviq.
Nice article. When I read the adverse events part of the data release, it made me cringe (literally). Not sure patients are going to want to have soars on their penis that require medical intervention to correct a mildly painful condition. Call me crazy...
As you point out, this isn't a slam dunk approval. I won't be surprised either way it goes.
Honestly, this has crossed my mind.