Seeking Alpha

Poonam A. Arora

View as an RSS Feed
View Poonam A. Arora's Comments BY TICKER:
Latest  |  Highest rated
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    You are most welcome. Thanks for visiting.
    Jul 8 10:47 AM | Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    I believe by "early clinical experience" they mean preliminary Phase I data. At the Q114 earnings call, management guided to reporting data on EPZ-6438 during second half 2014 at a medical conference. Typically, oncology focused companies prefer to report important data at annual cancer meetings of ASH and ASCO. The August ASH meeting is ancillary.

    However, with EPZM one cannot be sure, as they reported Phase I preliminary data on EPZ-5676 on a random day last November. As the press release suggests analysis of early clinical data on EPZ-6438 and since EPZM has not reported any clinical data on the compound as yet, it is possible that they will release top line Phase I data at the August meeting, and provide additional details at annual ASH in December.
    Jul 8 03:33 AM | 2 Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Thanks for visiting. EPZM was undervalued at the levels it was trading at when I wrote the report. My current Price Target incorporates a 45% probability of approval for EPZ-5676 in MLL-r and EPZ-6438 in an NHL sub-type. Data are expected from both programs this year.

    If the data are positive, and I believe, at least based on the research I have done on the clinical side, that they will be favorable, I will reduce the risk of the drugs failing at the FDA. That will drive my Price Target significantly higher.

    But, frankly, there is more upside in the near term, before data are reported in 2H14, as investors stake positions in anticipation of data, but obviously getting in at higher levels is more risky. This is a high risk high reward stock for risk seeking investors. So please keep that in mind, invest based on your risk levels.

    Longer term, EPZM could turn easily into a multi-bagger. If EPZ-5676 and EPZ-6438 are successful in one or more indications, then the probability of HMT inhibitors working in other types of cancers increases significantly. Right now EPZM's drugs are focused on rare cancers, but imagine if the company can get drugs approved for cancers such as breast and prostate (where EZH2 activity has been observed) which represent large patient populations.

    Once, they initiate trials in more indications, I will add the value of the drugs in the new indications based on market opportunity, risk, and an appropriate multiple, to my Price Target. So, the long term potential for this company is considerable. But one step at a time, I will adjust my Price Target as data are reported and new indications come on board.
    Jul 3 02:47 AM | 1 Like Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    If your contentions on shares held by EPZM's CEO and CFO are accurate, then I agree, it is a bit strange. However, they could be indirectly invested through a hedge fund or alternative investment vehicle. But, that does not really reflect on the potential data, it could go either way, and I have attributed a 45% chance of approval (in my Price Target) which is less than an equal probability of success. There is significant potential for near-term and long-term upside to this story.
    Jun 29 07:50 AM | Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Very true. But if you look more closely, most of the selling is linked to the expiry of their options. In addition, given the SEC's stringent monitoring of insider trading, I doubt management is selling shares in anticipation of poor data.
    Jun 28 12:53 PM | Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Constellation is not a public company. Investors can't invest directly in it. End of story.

    The latest development stage that Constellation's drugs could be in right now is preclinical. Since EPZM is going to file for approval on Phase II data, Constellation is not going to pose a challenge to their drugs for 4 years at the minimum.

    HMT's belong to a family of epigenetic proteins of which HDACs and DNMTs are already approved. So although HMTs are a new class, there are approved drugs on market which have a fundamentally similar MOA. In addition, the preclinical data on the EPZM drugs is compelling.
    Jun 25 06:21 AM | Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    EPZM's valuation is based on future revenues of EPZ-5676 and EPZ-6438 in 5 indications. Find out the market opportunity for CLDX's and BLUE's drugs and then come up with a Price Target for the companies.

    Price Targets are not based on the phase of development a company’s drugs are in, they are based on revenue potential incorporated with a multiple and appropriate risk, including risk of clinical failure. Just saying that BLUE’s and CLDX'S drugs are further in development so should be priced higher is absurd. You can certainly have lower risk of failure attached with those companies but you will still need the peak revenue potential of each company.
    Jun 25 06:16 AM | 2 Likes Like |Link to Comment
  • Puma Biotechnology: A Short Thesis For Investors [View article]
    I have developed extremely detailed market models for Neratinib in the indications described in my report. Happy to send the models over if investors are interested in viewing.

    Please feel free to email me at poonamarora3@gmail.com
    Jun 22 01:41 AM | Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Absolutely, going after the relapsed and refractory patient population is a sound strategy in oncology. Given the very sick patient population and lack of alternative therapies sets the bar relatively low for FDA approval.

    In my research, I did not find any public company with drugs in the clinic that target either DOT1L in MLL-r or MLL-PTD, or EZH2 in NHL or synovial sarcoma. These are specific mutations and really the competition will be agents that target those mutations in the indications. I believe GSK has an EZH2 inhibitor in the works but not clear if it is in discovery stage or preclinical stage. So, in the relapsed and refractory setting for those indications, EPZM's drugs will enjoy a competition free market for at least a few years.

    However, from a stock perspective based on your comment, AGIO and EPZM would likely compete for investment dollars.
    Jun 21 03:50 PM | 2 Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Now you are grasping at straws to create an erroneous perception. I know Constellation Pharma and referenced it in my chart in relation to Roche.

    Constellation Pharma is a private company with no clinical stage products in development, there is no data on the products in the public realm, not sure if they are yet in discovery or preclinical stage as there has been no announcement on progress from Roche, not sure how far into drug chemistry their products are or even if they have a chemically viable drug.

    Just earlier you were attempting to sell CLDX as a more investable option to EPZM because their drug is further along in clinical development, and now you are talking about a maybe discovery stage company as being more investable than EPZM a company with two drugs in clinical development.

    Here is the bare bones Constellation website with no information on drugs or development information: http://bit.ly/1ldZY3s
    Jun 21 03:07 AM | 3 Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    See that’s the thing, I have not looked at the strength of the BLUE data, how big the beta-thalessemia market is, what it would represent in dollar value, who the competitors are, why BLUE’s drug is better, how many other drugs they have in the pipeline, what is the revenue potential of those drugs, who is funding the development of their drugs etc.

    I know that EPZM has 2 drugs which are being evaluated in 5 indications. I developed the market models for the drug’s based on conservative estimates, took the peak revenues, incorporated a revenue multiple of 6, a median probability of approval of 45%, and a discount rate of 15% and estimated a per share value for the drugs in the 5 indications, added them up with the cash/share and arrived at my Price Target.

    My current valuation incorporates the risk levels of Phase I drugs. I did not use a possibility of approval of 60%, I used 45% which is the appropriate risk for Phase I drugs so far into the Phase I, and with the kind of preclinical data and scientific literature backing them. Within my penetration rate for each indication, I accounted for the competitive, corporate, and strategic factors. In my probability of approval, I accounted for clinical risk of the trials failing, and in my discount rate I accounted for financial, market, and strategic risk. That is how my valuation tells the total story of the company. It incorporates all the research I have done. At this time, with the kind of data along with the strategic, financial, and competitive positioning the drug candidates enjoy, the valuation is accurate. If the data reported in 2H14 is positive, my PT will go higher as I reduce the risk of the drug failing.

    Also, most of the EPZM clinical development is being funded by CELG, GSK, and EISAI. CELG has rights for 16 of EPZM’s 20 possible HMT inhibitors of which only 5 are in announced development. EPZM has the international partnerships all locked up. Moreover, EZH2 which is the HMT target for EPZ-6438 has been seen in breast and prostate cancers. So you can imagine, if from the 18 other HMT’s a couple work in cancers that are seen in larger patient populations, this company has the potential to become a multi-bagger.

    My current valuation of $33.28/share takes into account only 2 drugs while there are potentially 18 more possible. My current valuation shows that the company, given its current developmental pipeline has a peak revenue potential of roughly $850 million. But if it could be successful in say breast cancer or prostate cancer, the peak revenues would be in billions. So imagine where my Price Target would be then. As I am usually conservative with my Buy ratings, I have not even considered the over $1 billion EPZM is eligible to receive in milestones.

    So for me to tell you at this point what I think of BLUE or CLDX is based on what I hear on Twitter about those companies. I need to do more analysis to tell you if EPZM is better than CLDX or BLUE.
    Jun 20 10:29 AM | 3 Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Remember EPZM has $245 million in cash, that is roughly $7.50/share of the current market value of $28.57/share or $940 million market cap.

    EPZM will report Phase I proof-of-concept data from EPZ-5676 in 2H14. The trial is designed to show initial assessment of efficacy. So no, you don't have to wait for Phase II results to know if the drug works in MLL-r. The company is looking to get approval based on Phase II studies. If you look at HDAC drugs, they were approved on the basis of Phase II studies. HDAC's too target epigenetic proteins.

    I have not looked at CLDX in detail, so can't make the comparison. I will have to consider the history of the clinical data foremost, but also pay attention to the financial, competitive, and strategic elements associated with the story.
    Jun 20 08:56 AM | 2 Likes Like |Link to Comment
  • Epizyme: Undervalued Rare Asset With Outsized Potential [View article]
    Thanks for reading.

    In the short term, from now to data release, the stock will absolutely run up. My Price Target will be reached handily.

    Most of the risk in my models accounts for uncertainty surrounding the data. However, the preclinical data on both drugs and scientific literature on HMTs as targets in the associated disorders is compelling. You should click on the links in the sections where I analyze the drug candidates.
    Jun 20 08:18 AM | 1 Like Like |Link to Comment
  • Puma Biotechnology: Risk Reward Imbalance [View article]
    The point was to show that based on Herceptin's performance in the HERA and ALTTO studies, it is difficult for Neratinib to beat Herceptin's effectiveness. The Tykerb + Herceptin data was incidental because I was referring to the ALTTO study, so it makes sense to show what Herceptin alone went against.

    I think you have a typo in saying that "they already knew that Tykerb is indicated for use after Herceptin". I think you meant Neratinib, because Tykerb + Herceptin in ALTTO was tested against Herceptin to be used commercially instead of Herceptin in the adjuvant setting. Neratinib is being studied as 2nd year treatment following 1 year of Herceptin.
    Jun 14 11:56 AM | Likes Like |Link to Comment
  • Puma Biotechnology: A Short Thesis For Investors [View article]
    Thanks for the shout out Logical Assessment! Appreciate it.
    Apr 9 03:54 AM | Likes Like |Link to Comment
COMMENTS STATS
47 Comments
21 Likes