12/21/2018

980 days left.

Biopharma/Investing
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Relay raising $400m is a bit silly and should mark a top for the private biotech world. I know a lot about in silico chemistry (helped design a cloud platform with two very talented people)–there is nothing on the cutting edge here that will meaningfully change drug discovery. In silico modeling has been around since the 70s and the QM framework for calculating ligand affinity has not really matured meaningfully since then. Atomic simulations have improved and more and more drug discoverers are using them, which seems to be Relay’s schtick. Crystallography is still a gating factor followed by synthesis and in vitro work. Get a MOE, Schrodinger or open source suite and you have 95% of what you need to be a successful in silico researcher, but you still need to, you know, verify that your drug works by actually making it. The CEO is from Allergan which is probably the last place I’d want my high-tech drug discovery company CEO to come from.

Doing a ‘deep dive’ on Amgen, should be available in a few days. Don’t worry, I’ll look at some smaller companies soon.

Poor DBV huh?

And how about SPPI!? Is “breakthrough” designation a thing anyone cares about? CLDN received breakthrough designation.

RTRX finished enrollment of the drug I (and two wise colleagues) conjured for PKAN. I think this first try is not the best effort, unfortunately. The logP of the drug is quite low. I give this a 50-50 of working. We’ll find out if my first attempt at drug design works in about 6-9 months. My newer drugs are a little more exciting, but I’m rooting for the hundreds of dying PKAN patients.

Papers I’ve Read
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FGF signaling deregulation is associated with early developmental skeletal defects in animal models for mucopolysaccharoidosis type II (MPS II). Belless et al. Hum Mol Genet 2018.
Substrate accumulation and its sequelae is thought to be the primary defect in MPS/LSDs. These authors put forth a bit of a new theory and the data is somewhat interesting.

Clinical Trials I Noticed
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A Novel Therapeutic Target for Alzheimer’s Disease in Men and Women 50-85 Years of Age. University of Rhode Island. Dabigatran vs. placebo n=60.
Good luck!

Personal
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Projected release date: 8/25/2021. Day 464/1443. Loading… 32% complete.

12/18/2018

Biopharma/Investing
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I never thought Elizabeth Warren could be agreeing with me on a “solution” to the drug pricing “problem”. About a year ago on Maria Bartiromo’s television show I proposed a government-run drug company, owned by the USA taxpayer. Such models have proven very successful in China. A SEO is hardly unheard of in the US, where we have had many GSOs with variable success. Anyway, if the citizenry deems certain generic drugs to be so vital that they are utilities, a state-sponsored generic drug company is not a bad idea. It is especially worthwhile if the company has a publicly traded minority equity, so the financial results are transparent. If it is worth anything, it is an asset for the American people and contributes against our deficit. Such a company would have good scale and could sell products outside of the US, as well. There would be no excuse after the creation of such a company for “high drug prices”, at least from the purported “generic cartel” or alleged “bad actors” such as Mylan (not my opinion). Warren may be surprised at the lack of profitability of selling these old medicines, and would be stockholders might cringe at the negative margins in this business, but at least a “problem” would be solved. The subsequent “problems” would come to light: multi-year FDA regulation and review, unclear interpretation of the law, etc.

Clinical Trials I’ve Noticed
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A Safety, Efficacy and Systemic Exposure Study of CD5789 Cream in Adults and Adolescents With lamellar Ichthyosis. Mayne Pharma International Pty Ltd.
CD5789 is a new kind of retinoid (I think).

G-Pen Compared to Glucagen Hypokit for Severe Hypoglycemia Rescue in Adults With Type 1 Diabetes. Xeris Pharmaceuticals.
XERS is public–I recall the private company from a few years back.

Efficacy of a Plant-derived Quadrivalent VLP Vaccine in the Elderly. Medicago.
This is a n=12000 flu trial. Medicago was acquired by Mitsubishi Tanabe a little while back.

Intratumoral/Intralesional Administration of MK-4621/JetPEI With or Without Pembrolizumab in Participants With Advanced/Metastatic or Recurrent Solid Tumors. Merck Sharp & Dohme.
This is RGT100 from the Rigontec acquisition. I believe expectations are quite low here.

A Clinical Investigation to Assess the Performance of Natural Rubber Latex Condoms in Couples. Reckitt Benckiser.
Need a few volunteers. For science.

Papers I’ve Read
———————-
Insights into the pathogenesis of dominant retinitis pigmentosa associated with a D477G mutation in RPE65. Choi, et al. Hum Mol Genet 2018.
Ever try too hard? These researchers go quite a few extra miles to determine the structural relevance of D477G in RPE65, the gene responsible for LCA/RP. Talk about work: they generate a mouse model and do ERG, they do comprehensive in vitro work and for good measure some XRC. Well, they learned everything there is to know about ONE mutation in a rare disease, for all of the handful of people that exist with that disease. Kudos?

Personal
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Go go go, criminal justice reform! Let’s get that vote done today! When I get out I think I’m going to Genghis Khan the USA. Is the country ready for 5000 Lil’ Shkrelis?

12/14/2018

Biopharma/Investing
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It is interesting to see which hedge funds are struggling. Alpha, which we can define as human-discoverable arbitrage opportunity, is a variable that has specific behavior. I conjecture alpha is correlated to the VIX. When volatility is high and markets are in panic, alpha opportunities exist as investors lose it. So, it is no surprise hedge funds have weak absolute and relative performance. Therefore, Balyasny’s flat return for the year is no surprise as the firm employs very few quants. Somewhat more surprising is Point72, whose quant team has grown (some say half of the firm’s money is managed statistically), which is also flat for the year. Citadel, a quant firm in multi-manager clothing, is up. Millennium, a hard-to-describe multi-manager fund, is up nicely. Deep value investors are getting destroyed as alpha is close to zero, so there are no rewards for ‘right’ calls and plenty of punishment for wrong ones. Alpha will rise again, and I’ll see you there when it does. In the meantime, my little asset class is more competitive with the Roivant, BioBridge, etcs. of the world. Staying nimble is key–most hedge funds can’t go from 100% exposure in one asset class to another very quickly (nor do they want to!).

How great is Quanta magazine? Finally, real science journalism for intellectuals. These articles give me a frisson I haven’t felt since childhood. Why? Because Nature is so vast, profound and inscrutable–irreducibly complex in its beauty–how could that not be fodder for great stories? (This magazine was brought to you by Renaissance Technologies, taking 0.0005% out of every trade in the stock market, 30 years running. Joking. Kinda.)

Remember, only one 30 month stay per ANDA! Looking at you, CORT.

Gotta love the pricing dynamics for EpiPen. $50 –> $300. Generic one: $300 sounds good. Generic two: Meh, $250. Turning a $50m drug to a $400m drug for a few years, then sharing the $400m market with 2 other players means you stll double your revenues long-term. Doubt many people want to make this product for a lot less than $250. There is a silly logical fallacy that prevails with price increases: BUT IT MUST HAVE BEEN PROFITABLE BEFORE!!!! BRING IT BACK! No. Not the way it works, unfortunately. Emotions cannot replace reasoning–no matter how heartfelt.

Interesting to see LCI and TLGT maneuver in what are tough times.

Merck spending 10x sales to buy a animal health software company. How is this not the worst strategic big pharma there is? SGP merger-of-equals to get MORE Vytorin/Zetia exposure, luckily bailed out by Keytruda… and how many other dud acquisitions?

The JNJ stuff is dumb. Stock not cheap enough to dive in but if Vioxx can’t take down Merck, talc isn’t going to bruise JNJ.

Papers I’ve Read
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Nuclear cereblon modulates transcriptional activity of Ikaros and regulates its downstream target, enkephalin, in human neuroblastoma cells. Wada et al. Biochem Biophys Res Commun 2016.
Wada makes up for the prior poor work by demonstrating that cereblon, our 442-amino acid friend, is a nuclear/cytosolic shuttled protein with no obvious NLS but two NES (nuclear localization/export signal). They then show (fairly convincingly), via CRBN domain deletion, that the N-terminus of CRBN binds to Ikaros. They also demonstrate downstream gene effects on enkephalin, an Ikaros target. I always thought enkephalin was a pain target, but perhaps it does more. Recall the CRPS trials for Revlimid (they failed).

A genome-scale CRISPR-Cas9 screening in myeloma cells identifies regulators of immunomodulatory drug sensitivity. Liu, Anderson, et al. Leukemia 2018.
Great expertiments here from Chinese researchers and Harvard’s eminent myeloma expert Ken Anderson which reveal more about CELG’s IMIDs. We see here that the degrader of the cereblon E3 ligase that the IMIDs bind to (creating/modifying a protein-protein interaction) is SCF(Fbxo7). Interestingly, and for the first time, we see that CSN9 deactivates SCF (via deNeddylation. So the homeostasis of this complex apparatus is putatively revealed. There’s a good cartoon of it in the paper.

Marcogliese et al., IRF2BPL Is Associated with Neurological Phenotypes, The American Journal of Human Genetics (2018), https://doi.org/10.1016/j.ajhg.2018.07.006
Another newly discovered rare disease. I was suspicious of the drosophila ortholog work until it actually recapitulated the bizarre human phenotype of neurological regression. Definitely impressive work, but not much to do from a pharmaceutical perspective. Learning that this protein is implicated in neurological processes is a victory itself. What it actually does (E3 ligase domain!?) will be even more interesting. Nothing to do from a therapeutic standpoint yet.

Chess – Martin is Black
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1. d4 Nf6 2. e3 d5
I am a horrific d4 defender, where I try to play the Budapest to throw White off. I am even worse at playing against thematic ‘systems’ where sometimes no obvious response exists. I am much better at memorization than abstract concepts in chess for some reason. So this is the Colle or Stonewall? I don’t know but I do know 2…d5 isn’t the best response. Perhaps 2…g6 is better?

3. Nf3 c6
Again, I’m a bit lost. 3…c5 stronger as well as 3…g6.

4. Bd2 Bf5 5. Nc3 e6 6. a3 Bd6 7. Ne5 Nbd7 8. f4 O-O 9. Be2 Ne4 10. Nxe4 Bxe4 11. Bf3 Qh4+ 12. g3 Qd8 13. Bxe4 dxe4 14. O-O f6 15. Ng4 e5 16. c3 exf4 17. exf4 f5 18. Nc5 Nxe6 19. fxc5 Bc7 20. Bf4 g5 21. Be3 Kh8 22. Qh5 f4 23. gxf4 gxf4 24. Rxf4 Rxf4 25. Bxf4 Qg8+ 26. Kh1 Qd5 27. Be3 Rg8 28. Rg1 Rxg1+ 29. Kxg1 Qg8+ 30. Qg5 Qa2 31. Qf6+ Kg8 32. Qe6+?? Qxe6 33. Kf2 and the rest of the moves are omitted. I chased the King down and mated.

Personal
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32 months or better with CJ reform and 36 months worst-case as of yesterday.

12/10/2018

Biopharma/Investing
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GILD couldn’t have hired a better CEO than O’Day. Severin Schwan was never going to give up his job, so makes sense, even after 31 years with Roche. The only question is what to do with Gilead? Can you gain scale in cancer from zero? Does the O’Day hire imply a continued focus on oncology? Seems challenging… acquire/merge with Celgene or Jazz (not much scale) could be an option. If I were CELG, I’d hit the sell button on a $90b part cash/stock bid. Accretive to GILD, for a little while. Another option is to try and buy Genmab as Gilead has very little large molecule infrastructure. Morphosys is a favorite of mine and another obvious candidate, but one-drug-at-a-time doesn’t bring you scale. Another option is to actually just sell GILD to JNJ or PFE which I doubt could be accomplished (too big and probably not enough interest–JNJ does have an HIV vaccine in phase 2, though). I guess if I were O’Day, I’d start talking up a HIV clearance (cure) by 2030 as the next big commercial opportunity. The drug to end all drugs–a $50-100bn revenue per annum medicine that rids the world of HIV. Who better than GILD?

Poor Axovant with another failure.

Hikma drops its clobazam generic. This was a super-expensive medicine that many have/are raced/racing for an ANDA.

Papers I’ve Read
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Transcription factor IZKF1 is degraded during the apoptosis of multiple myeloma cells induced by kinase inhibition. Liu et al. FEBS Letters 2015.
These Chinese researchers try, but fail to elucidate very much about the cereblon-IZKF1 interaction that is heavily implicated in Celgene’s IMID drugs. By using non-specific kinase inhibitors they tried the hypothesis that phosphorylation impacts degradation of IZKF1–they found the opposite of their hypothesis but did poor scientific work with cell line choices and the ugly choice of kinase inhibitors. We will see some better papers in the next blog post.

Personal
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Toothache completely disappeared and some modest pain is now back. Going to the dentist for the third time in two weeks tomorrow.

Happy 15th month in jail is coming up in a few days!!! Going to miss this place!

Football was quite “stochastic”. I dodged the Patriots-Dolphins, Redskins-Giants massacres, but did fall victim to the Rams-Bears and Broncos-49ers upsets. Thankfully, the Bengals kept it close enough to cover. This was the weekend that probably blew up quite a few bankrolls.

12/9/2018

Biopharma/Investing
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Chugai’s SKY59 C5-antibody may be a real threat to Alexion… Phase 1/2 data at ASH looked good.

China’s stock market is -30% this year. In US terms that’d be one of our worst years in history. US is flat YTD.

Alnylam is developing a RNAi for hypertension and also an amyloid-beta RNAi. You can’t make this up… talk about awful targets.

The Altria investment in Cronos is stunning. This isn’t related to healthcare but this is a sight to behold. Bubble or birth of a new industry?

Papers I’ve Read
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De Novo Truncating Mutations in WASF1 Cause Intellectual Disability With Seizures. Ito et al. Am J Hum Genet 2008;103,144-153.
These researchers used the Matchmaker Exchange to link together and find de novo mutations of WASF1. WASF1 is a fairly unique protein and I don’t see how one could therapeutically target it. It assists actin polymerization by creating a complex… complex. Maybe someone smarter than me can figure it out but I see brick walls. One of the problems is actin is so important in neuronal development and these patients had very profound intellectual disability from birth. Very sad.

Extramedullary Myeloma whole genome sequencing reveals novel mutations in Cereblon, proteasome subunit G2 and the glucocorticoid receptor in multi drug resistant disease. Egan, et al. Br J Haematol 2013.
Again, CELG background research. Interesting case report.

Cereblon is recruited to aggresome and shows cytoprotective effect against ubiquitin-proteasome system dysfunction. Sawamura, et al. Biochem Biophys Res Comm 2015.
One of many weak papers which grope for clarity on the IMID target cereblon. CELG background reading.

Personal
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I saw the very qualified and excellent dentist here today, again. He shaved the tooth down and it appeared the filling he did last week was a bit high and occluding a proper bite. I am suspicious and believe I am harboring an infection. He is of course, right, and there is almost certainly no infection, despite the pain I feel in my jaw. X-rays showed no abscess. Despite all this I will happily down a prescription of clindamycin, gleefully overusing antibiotics, destroying gut flora, all cost-free to me and $50,000 of annual taxes to you.

What is the DOJ doing arresting a Chinese MNC CFO? The rogue EDNY has again lost its mind. There are evidently not enough American criminals to prosecute. The ever-growing leviathan needs to be slayed. A 50% budget cut to DOJ and FBI would restore piority to these afflicted institutions.

12/6/2018

Biopharma/Investing
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Samsung Biologics has been halted for 3 weeks? These accounting issues have been persistent and the stock did fine. I wonder what is going on in Korea.

Papers I’ve Read
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Isosteric analogs of lenalidomide and pomalidomide: Synthesis and biologic activity. Ruchelman, Muller, et al. Bioorg & Med Chem Lett 2013.
Not the world’s most impressive SAR paper, but exploring the decorations of the indole (phthalimide) and glutarimide moieties led to little improvements. Of course, the only measured changes were TNF response to LPS, IL-2 increase and cell line anti-proliferative effect. At the time, cereblon was already identified as the therapeutic target for the “IMIDs” so it is a bit surprising to see these assays. Also, the “isosteres” aren’t very creative. 4-CH3 improves Revlimid but ethyl does not and other, longer variants were not attempted.

tp53-dependent and independent signaling underlies the pathogenesis and possible prevention of Acrofacial Dysostosis – Cincinnati type. Watt et al. Hum Mol Genet 2018.
This ultra-rare disorder has only been described in a few humans. A ribosomopathy, I’m not sure if its embryonic lethal in all homozygotes or some hypomorphic alleles are compatible with life, or what. This one is caused by a mutation in a RNA Pol I subunit, creating the fundamental and ubiquitous ribosome. Despite that, the pathogenesis is very tissue-specific. It was exciting to read tp53 -/- somewhat ameliorates the POLR1A -/- phenotype but it doesn’t rescue it completely. This CCH group also discovered and named the first patients with the illness. I find it incredible how quickly progress can be made in these ultra-rare/newly discovered illnesses.

Exploring the speed limit of toehold exchange with a cartwheeling DNA acrobat. Li et al. Nature Nanotechnology 2018.
I don’t know anything about engineering but how this DNA literally cartwheels (while one strand is bound to the “floor”, the other strand moves end-over-end to move its free-end to bound again) is fairly incredible. Still, don’t expect DNA nanomachines fixing up your cells anytime soon.

Personal
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7 days in and my tooth is still killing me. All that anyone can talk about here is Meek Mill’s new album.

12/4/2018

Biopharma/Investing
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GSK acquisition of TSRO is very value-destructive and weakens faith in new GSK management. For $5bn, a drug that is a 50/50 to reach $500 million is quite the price tag.

GBT is probably a better long “up here” than before. The risk of an approval is gone. Commercial risks remain with Novartis’ drug seemingly superior in efficacy. A combination study would be wise. The market is big enough for both, though. I see GBT trading over $100 sooner or later.

DEEP DIVE – CELGENE – PRICE TARGET: $91.00
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Revlimid (lenalidomide) is 2/3rds of Celgene’s revenue, with $10 billion in revenue expected for this year. The composition of matter patents on Revlimid expired (the IND for Revlimid was filed in 2000), as Revlimid is simply a derivative of Thalomid (thalidomide). We will spend some time on the indole-pyridine scaffold of thalidomide. While the structure of Revlimid is very similar to Thalomid, the drug does have some advantages over its predecessor. Nevertheless, nearly 30 patents which “protect” Revlimid will likely be found invalid or not infringed by would-be generic entrants. The first entrant, NatCo (partnered with Teva), has settled with Celgene for a partial distribution deal starting in 2022. The strongest patent is the ‘800 polymorph patent, expiring in 2027. NatCo is allowed a full launch in 2025, with their 2022 “low-single-digits” participation in Revlimid growing to one-third in that year. This would have been a fairly good deal for Celgene if no further ANDAs were filed. But when you have the world’s second best selling drug, you can count on competition. Dr. Reddy’s is at the plate as we speak, with expert discovery concluding in the near future and a trial likely for late 2019 or early 2020. More importantly, their 30-month stay will expire in late 2019. So, how strong is a polymorph patent? I initially felt that Celgene would have a very low likelihood of prevailing at trial, and their Natco settlement indicates weakness. Further research revealed polymorph patents do occasionally prevail, and I believe Celgene has a roughly 50-50 chance of having the patent upheld. The details of the ‘800 fight are beyond the scope of this review, but take a look at the docket and some case law in polymorph patents–many white papers are available. After Dr. Reddy’s, 5 more ANDAs have been filed: Zydus, Cipla, Lotus, Apotex and Sun are all waiting in the wings.
Ultimately, there isn’t enough Revlimid to go around for Celgene and the generics. The Natco settlement worked for one company, and there is enough room for Dr. Reddy’s, but ultimately Celgene will not be able to settle every generic as each subsequent filer finds each subsequent settlement offer less attractive than a trial. Imagine being the fourth ANDA here–do you really want the 3.5% of Revlimid starting in 2024 and up to 2025 but nothing if the patent is overturned in the future? Someone will break ranks and go to trial and overturn what is probably a flimsy patent. So, I have 2019 revenue of Revlimid at $11.5b, 2020 at $12.7b and 2021 at 50% of that: $6.3b, 2022 at $3.5b. Someone launches in 2021 is my best guess. One year later adds roughly $10 per share, so risk is weighted to the upside (probably) here. The three remaining points on Revlimid are the success of generics, replacement by the IMID portfolio and recent data.
Revlimid generics may not do so well, commercially, from the outset. Somewhat like the dynamics of a biosimilar, I predict that the first generic entrants for Revlimid may not find the marketplace too easy. Revlimid’s REMS program has a lot of mindshare with doctors and their assistants–switching to a Dr. Reddy’s program may not be facile and the near 100% generic switch rates we see with oral solids may not take place here. See Clozaril and Accutane for historical reference.
Revlimid is still alive, with the AUGMENT data showing remarkable efficacy. AUGMENT is actually a bad thing, I think, for Celgene, as it takes the wind out of potential NHL data for avodomide and iberdomide, the two named “IMID” follow-ons. If I wanted to transition revenue to those drugs, I’d delineate and differentiate them from Revlimid. Instead, we see Revlimid is potent in R/R NHL with Rituxan. So, where do we go with iberdomide and showing how it is different from generic Revlimid? It may not matter as clinical data you can see is better than hypothetical differences, but if I had my druthers I’d have saved non-MM/MDS for the follow-ons. I have no revenue at all in my model for the next-generation IMIDs. Part of the reason for that is they share the indole/pyridine scaffold. They are the same-old structure of thalidomide, which is really disappointing. A direct cereblon modulator should be doable at this point, and even Novartis has created such molecules. Again, I’m being conservative, but perhaps for good reason.
Pomalyst is also a thalidomide derivative and is relying on a polymorph patent. I have it going away in 2023. It is remarkable that practically the entire company is disappearing in a few years. The pharmaceutical world has never seen such a dramatic patent cliff combination in its history.
Otezla is also a thalidomide derivative, with a sulfonamide decoration which makes it a PDE4 inhibitor. It also relies on a weak polymorph patent, and there are many ANDAs on file, just like thalidomide, lenalidomide and pomalidomide. I suspect generics will enter in 2023, if not sooner.
Abraxane is going generic soon too. Like I said, the entire company disappears in a few years.

So, to counter the record large simultaneous patent cliffs, you have to build the world’s best pipeline, right? Celgene has tried their best, but nothing will replace the nearly $20 billion in peak sales that will be lost to generics. Ozanimod, luspatercept, lis-cel, BCMA CART, and fedratinib make my model and only reach about $6 billion in revenue for “the new Celgene”. This is still enough, as its growing and promising revenue that is conservatively forecast (could be $10 billion if everything goes right). But make no mistake, there is absolutely no way Celgene survives the patent cliff as we know it.
Ozanimod is the tortured S1P acquired from Receptos. I have it peaking at $1.6B and this is my most conservative forecast. It is possible ozanimod does far, far better than this. There are some other S1Ps, with Novartis actually having beaten Celgene’s refiling of ozanimod with their next-generation of Gilenya (fingolimod), siponimod. Still, with $4 billion of Gilenya sales despite a toxicity profile that shocks the conscience, it is blue skies for the fumbling ozanimod. Assuming approval in 2020, they won’t have much time to replace very much of Revlimid, but they might be able to soften the blow if they execute well, which I suspect they will.
I model $1.5B in net revenues from all BCMA CARTS (Juno and Bluebird). This might be conservative as well, but with the rapidly changing environment, it is hard to be confident of any CART revenue projections. Competition abounds from all fronts, CART and non-CART, so who knows if the numbers are accurate or not. Again, I tried to keep risk skewed to the upside. There are many that feel this paradigm shift will be a $5 billion+ opportunity for EVERY player. It is possible. The 80% response rates seen at ASH are remarkable for such late-stage patients. The 50-50 with Bluebird limits some revenue potential, however.
I model $1.0B for luspatercept, net of Acceleron’s share. This drug isn’t a miracle as the ASH data shows. It is still very good, and will change the lives of many MDS patients. Where can you price it though? You’re trying to wean people off of RBC transfusions and there are other options potentially coming. Some feel this will be far larger than I think, but the XLRN stock price is perhaps telling us something different. My numbers could be conservative here as well.
I only model $900m peak for lis-cel. I am a CART bear and I think drugs like MorphoSys’ will be seen as preferable. CART reminds me of Zevalin. You can squeeze out a tiny bit more performance relative to the mab, but is it worth it? Plus, you have Allogene and others making better CARTs. I’m just not ready to have $3B+ forecast for no reason. If Yescarta puts up a few more good quarters, perhaps a revision to $1.5B may be necessary. Again, conservative in most places, but I think I’m right on here.
Fedratinib: I don’t get this one. I see $400 million peak sales in the Jakafi-dominated myelofibrosis/PV indications. This isn’t going to be a blockbuster.

Celgene still has a few years before “impact” and that is really important. With $25B or so of high-margin Revlimid revenue prior to expiry to deploy, and $40B or so if you count pre-full cliff of Rev+Pom+Otezla, there is plenty of capital to do a few more deals. They passed on Tesaro, which is a good start. Celgene has generally been pretty good at BD. The Acceleron deal is a good example (signed for $25 million if I recall correctly). The Juno deal makes me nervous that they’re feeling desperate, but there is still plenty of firepower for acquisitions. A few smart deals will not save Revlimid, but they don’t need to. We’ve all digseted the impact of the cliff and what is important is to value the copious cash flows between now and then, and value the “stub” remainder that the pipeline represents. It’s worth a lot, more than the current fear-based stock price of $71. If you believe my nervous nature was too conservative on all the pipeline, the stock is probably worth $100 or $110 or perhaps more if they can execute Revlimid flawlessly. With Revlimid lasting a bit longer than I think and just one drug like ozanimod surprising to the upside, you could get $120 or $130 out of the stock. For such a big company, that is an attractive return. However, a dud of an acquisition (Tesaros abound) or further buybacks make the risk profile uncomfortable. Celgene has a gun against their head and most management teams are not known for patience during shareholder pain.

Papers I’ve Read
——————–
Timing the Landmark Events in the Evolution of Clear Cell Renal Cell Cancer: TRACERx Renal. Thomas J. Mitchell, et al. Cell 173, 1-13, 2018.
Workers here did serial biopsies of ccRCC progression and unveil some interesting findings. First, mutations in UTR region of TERT abound. Next, a tiny clonal population of the 3q deleted region found in this disease of just a few hundred cells can give rise to the visceral tumor decades later. Really cool work and likely to be therapeutically relevant as we screen for these chromothrpsis-bearing patients.

Activity-based E3 ligase profiling uncovers an E3 ligase with esterification activity. Kuan-Chuan Pao, et al. Nature 2018.
Fancy footwork in this paper to discover an E3 ligase that ubiquitinates atypical substrates.

A direct link between MITF, innate immunity, and hair graying. PLoS Biol 2018. Harris ML, et al.
Harris & colleagues do a nice job of showing the innate immune system impact on hair graying. We’ve seen similar work in alopecia and vitiligo, so here comes Rituxan for balding! Jokes aside, this was impressive work, using poly(I:C) to simulate infection. Actual infection would have been interesting, but probably not necessary. The MITF-inteferon connection is made plain here by the researchers.

Personal
———–
My tooth abscess still bothers me from time to time. I am almost done with my course of amoxicillin. Fans, friends and family: Please give Trashy a good life if you don’t hear from me!

11/30/2018

Biopharma/Investing
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I’m almost done with Celgene deep dive. I have some conflicts of interest so there a few things I won’t discuss. I’ve also been busy with other reading, so, sorry for the delay. The upshot is CELG is fairly valued at worst and slightly undervalued at best. Incredible execution would allow for a good return, say, 50-100% over the next 5 years. It would take extraordinary executive performance, that is unlikely to occur, however. Probably not worth touching in general but somewhat tempting long. More details (pages and pages) soon.

How bad is “STAT”? My friends send me news summaries on biopharma everyday and the STAT one is the sorriest. STAT publishes more on public health issues than pharmaceuticals. That’s fine, I guess, if you’re morbidly interested in Ebola and don’t care about new FDA approvals and interesting clinical data. SCRIP is far better from my perspective, for the pharma professional, at least. Also, the anti-pharma and anti-Trump viewpoint of STAT shines through. It’s like they want all the failings of a major news organization without any of the benefit of being healthcare-focused. I predict a shutdown within 24 months. Mic has recently shutdown. I will not be surprised when more web properties shut down as Google/Facebook continue to gain Internet ad spend share, spend which will decline in a recession, leaving leaders like Vice, Business Insider, Buzzfeed, etc. scrambling for capital and cost-cutting, and totally bankrupting most of the “New Media” no one reads and fewer (readers or advertisers) pay for.

Papers I’ve Read
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Structural basis for dual-mode inhibition of the ABC transporter MsbA. Hoangdung Ho, Anh Miu, Mary Kate Alexander, Natalie Garcia, et al. Nature 2018.
Gram-negative bacteria employ a “double membrane” to maintain cellular integrity. Lipopolysaccharide, or LPS, composes the outer membrane and generally keeps drugs out of the cytosol. LPS, of course, drives our human toll-like receptors wild. MsbA (a unidirectional transporter) transports cytosolic LPS to the outer membrane. These Genentech scientists took the first high-resolution co-crystal of MsbA with an inhibitor discovered from a 3,000,000 compound screen. Normally I don’t read antibiotic papers, but this is quite the exception given the famous intransigence of the outer membrane. This high-quality work is the kind one aspires to.

Sports/Games/Poker
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2-2 in NFL weekend. The Cardinals bet was meant to be tiny. The Dolphins and Bills came through, but the Eagles disappointed by letting the Giants keep it close. The Giants looked great in the first half!

Have been playing around 1800 ELO in chess. Will post some games.

Went 1-1 with GS and IND last night in basketball. Didn’t touch the incredible DAL-NO NFL game. Formulae said go with DAL but only marginally.

Personal
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I’ve been suffering from a terrible toothache the last few days. This has led to record lows in productivity and new milestones in whining.

They sell bacon here. I have a lot of expired bacon. I eat it anyway. IDGAF.

Update: I had the tooth filled. I think I have an infection, though. The healthcare people here are really good. And free. I love my free, government-paid-for healthcare.

11/25/2018

Football today. 4 picks. Dolphins, Eagles, Bills and Cardinals. 3 underdogs. No more luck for Luck. Eagles should destroy my G-Men in reversion to mean. The Cardinals is the weakest of the four picks, but +13.5…

Good luck!

11/23/18

Papers
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Cyclin-Dependent Kinase 12, Immunity, and Prostate Cancer. Emmanuel S. Antonarakis. NEJM 379;13:1087-1089.
So CDK12 mutants are PD1-inhibitor sensitive. The bigger question is why am I reading a summary of a Cell paper in NEJM? If I wanted “basic research”, I’d read (and I do) Cell (although this work is more “translational” than “basic”, if you can figure out that meta).

Status dystonicus due to missense variant in ARX: diagnosis and management. Gorman et al. Eu J Pediatric Neurology 2018.
I’ve always followed epileptic encephalopathies. They’re tragic and have so many different causes–a good combination for a drug developer. I don’t know much about ARX–just a non-descript development protein to me–and this paper doesn’t help much. Having said that, status dystonicus is extremely rare. Sometimes found in PKAN.

Limiting State Flexibility in Drug Pricing. Bagley & Sachs. NEJM 397;11:1002-1004.
Bagley & Sachs use Exondys as a scapegoat for changing Medicaid law. This is a drug that is so rarely used it is not even close to 0.1% of drug spend. But they need to rewrite laws because of it. Is anyone else sick of this? If this was a peer-reviewed journal, it would never fly.

Personal
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Had a very nice Thanksgiving here! Turkey sandwich was banging.

Poker is a little better. I have to play more aggressively. No more 2x raises (unless it is for misdirection). Tightening up a bit in the situations where I lose a lot: Ace and low kicker (9 or less). I did get crippled on one hand:

I’m dealt AKo in late position. UTG calls, I raise 3x, villain-felon calls. Flop is rainbow AK3. He bets the pot and I call. The next card is a 7. He bets the pot and I call. I figure he has A and a low kicker, maybe even two pairs. Finally a J shows on the river. Can you predict the rest? He bets I reraise, he calls and flips the Q10o. I could have just called or folded I suppose. The hand would have cost a lot less.

From Inside A Hole – A Poem
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the slit opens.
the tiny portal to the world.
slices of fetid turkey are thrown through.
the cold floor greets the meal.
a cranberry sludge drips through the hole,
obscuring a gang oath since rescinded.
“Happy Thanksgiving.”
a surprised grunt returns my valediction
and the door slams.
it’s enough.