7/15/18

Biopharma & Investing
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A mega-price increase from a small company I had never heard of before: Aytu, who increased the price of their Ambien-containing nasal spray. This is actually a neat product, as some people have difficulty swallowing pills and it makes sense that a non-pill Ambien by the bedside may be easier to use. I once tried to buy a company (for $0 EV) called Transcept who made a ODT version of Ambien. That drug is now generic. If I worked at an HMO, I’d mandate people take that drug instead of the nasal spray. So, some price increases don’t work (or shouldn’t work). People who are on and are comfortable on this drug, however, are unlikely to be forced to switch. Maybe a higher copay (maybe much higher).

Beigene and Alnylam have similar valuations but extremely dissimilar prospects. Beigene is late-to-market in China for PD1 and extremely late to a crowded market in the US where they “share” economics with CELG. Their other drugs don’t target large markets. Alnylam has revolutionary technology which has proven successful in many clinical settings, with at least one drug that will sell well over $1 billion.

I’m starting to get worried about Bluebird. Wiping out your bone marrow and living in a hospital for 6 months may not be the cure for what ails you in the shadow of gene therapy for some illnesses and traditional modalities for others (sickle cell). But, BCMA!, you might say? Well, lots of companies have BCMA CART. The MM market is starting to worry me, too. We have lots of great drugs and we haven’t seen commercial success for CART yet. I’m starting to wonder about the upside here.

Some people want more from me on the subject of investing. I write this blog mostly for my teammates around the world who can study my notes and help my companies grow. I’m an unemployed passive investor, but if my philosophies and notes can be of use to someone, great. It’s free. I doubt I’ll give any structured theory of investing despite interest in a book on the subject. The grand unified theory for investing is still unclear to this observer, but I’ll share some explorations as they occur. I will probably write extensively on quantitative investing, value investing and other topics as time marches on.

One of my favorite questions in investing is how do you reconcile taxes in long-term market ‘expectations’? I, of course, believe that the expected median return for an individual global equity is actually negative. But if you are in the polyanna crowd, and you think for some insane reason that future stock performance will be 5% pa or something like that, how do you reconcile having to pay ~25% taxes (long-term rate) in the US? Does that make a 4% return a 3% return? How do you account for the asymmetry? And what about inflation, what is that really? In a world where the “price of goods and services” are irrelevant to a millionaire (any reasonable investor), shouldn’t the price of asset classes be your new inflation? After all, I’m not so worried about a tank of gas and a carton of milk. The prices of a Hamptons house and a La Ferrari are not in the current CPI basket, but your frame of reference is crucial to understanding inflation, in my opinion.

Anyway, if you believe, for whatever reason, that US stock markets going forward, measured by the S&P 500 index (implicit bias here, too), will average 5% per annum, what are you really getting? Well, you have to pay the 25% taxes, no matter what. I’m being generous as there are all kinds of hidden taxes, such as consumption tax, legal and accounting costs (which are, in essence, taxes). So that’s 3.75% net, but net of 2% inflation (whatever that is), you’re at 1.75% real returns. That’s including your massively foolish implicit bet that large-cap United States stocks have their best days ahead, as compared to say, China, India or any other country. You’d have to buy the Russell to avoid the large-cap bias, and perhaps hedge with international MNCs to avoid the US bias. If you could construct a basket of diverse market cap stocks, with their % of business in the US at perhaps 20%, you’d have a truly equity-like instrument. I think your performance net of inflation and taxes would be negative or zero. You might ask how this “system” could do anything but fall apart, in the long run. I’m not a perma-bear or anything like that. First, I don’t think expected return on equities is massively negative. Next, I think a large part of our financial system is constructed on a strange and amorphous foundation that still holds surprises for us. The stock market is ‘everything’ to so many, but real estate, private equity and other fields dwarf equities. Events in those markets impinge on stock performance such that sometimes its a good idea to pay $750 billion for $6 billion in annual (but growing!) cash flow and sometimes it isn’t. I’ll have more to say next time.

Papers I’ve Read
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A Phase 3 Trial of Semagacestat for Treatment of Alzheimer’s Disease. Doody et al. NEJM 2013 369;4:341-350.
This is maybe the third time I’ve read this paper from 5 years ago. It’s rare in medicine to get a hypothesis so wrong that the drug does a statistically significantly WORSE job than placebo. This gamma-secretase “inhibitor” worsens cognition and functioning. Some believe it is in fact, not a gamma-secretase inhibitor, but I don’t agree. Peripheral reduction of the putative causative agent of Alzheimer’s, amyloid-beta, was seen, but CSF (no mention of cortical) amyloid-beta was not. Brain disease is region specific (paracrine) and that makes treatment quite difficult. For instance, hippocampal amyloid-beta may be harder to target than perhaps more vascularized areas of the brain. So what explains -9 ADL for placebo and -13 for drug, a palpably worse effect? Two possibilities come to mind.
First, this drug is inhibiting some enzyme that is causing the effect seen. Whether that target is gamma-secretase or not is an entirely different question. If it is gamma secretase, two more sub-questions result. 1) Does regiospecific inhibition explain this phenomenon? We have APP for a reason. It is possible APP aids cognition or synpatic function or something in one cortical area and is problematic when it aggregates in another (hippocampus, amygdala). Oxytocin, serotonin and other neurotransmitters work this way. 2) The second major question is this drug is inhibiting gamma-secretase but that is not the primary causal effect. Many enzymes like GSAP are in this cascade and enzyme conformation often is a signal onto itself for feedback purposes. Stopping gamma-secretase, which ordinarly processes (cleaves) a precursor protein (a common theme in peptide signal biology, see endothelin, angiotensin), may prevent a key feedback signal telling some gene to stop making APP, resulting in paradoxically greater APP. We see reductions in AB, so one is tempted to reject this hypothesis, but AB alone may not be the whole story.
If semagacestat’s target is not gamma-secretase, what enzyme is it, and how could it serendipitously have such a profound impact on cognition? This seems highly unlikely, and we should use this opportunity to probe semagacestat further to understand AD biology. We see immune changes with human dosing, raising the possibility that AD results from immune aging, a hypothesis that was once also speculated for cancer. With no CSF AB or PET changes, one still has to question target engagement for sema. The dosing of 100mg vs 140mg is terribly awkward and hardly seen in medicine. That we see an increase in AB40 and AB42 reduction at 140mg is somewhat puzzling. Why not 200mg? What is DLT here and where is it coming from? Everyone seems to be pointing the finger at NOTCH inhibition but would that really explain increased dementia? If so, why not reverse this process? How about some CSF PK data?
Anyway, this one is an important mystery for current, future and prospective drug hunters to look back on and learn from. A pharmacological mystery.

Phase 3 Trials of Solanezumab for Mild-to-Moderate Alzheimer’s Disease. Doody, et al. NEJM 2014 370;4:311-321.
A lot of observers felt Lilly could have filed and received approval for sola on these barely-missed Phase IIIs. Certainly they stoke the idea that beta-amyloid intervention in AD should begin as early as possible and tantalize potential benefit with predictive diagnostics. That EXPEDITION 2 wasn’t repowered for only mild disease is unfortunate, they probably would have met a primary endpoint. Then, EXPEDITION 3 failed. So, just remember that subgroups are still subgroups and even with an a priori mechanism of action, there is a bit of luck involved in these trials, and trying to squeeze out a really small treatment effect in a new trial powered for that small effect is likely to backfire. Why develop a drug that is, at best, a modest therapy? The lack of binding fibrillar AB probably did this one in. A prodromal study is ongoing, I believe.

Personal
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Some people are interested in how sentencing works. Given that almost no one is a criminal defense attorney (a very tough job!), allow me to explain to the uninformed. In federal prison, there is no parole. “Good time” is roughly 15% of one’s sentence, assuming serious no violations (so far so good, on my end). However, the 15% is overstated, and actually works out to 13.8% or something like this. Some speculate that the entire 15% will be restored in a soon-to-come criminal justice reform. While I won’t hold my breath, you can look up and calculate the exact number of DAYS you would get on an 84 month sentence by statute. My attorneys and sentence consultant have done this, it’s around 12 months. As you may know, I was sentenced to 84 months, and as of two days ago, I have been in prison for 10 months, meaning I have 74 months to go. When you include “good time”, I would have 62 months left. We’ve only gotten started on calculating, however. Prisoners like me are able to do 10% of their sentence as “home confinement”, which would be 8.4 months. This option is not available to everyone, but for nonviolent crimes, it is available. It used to be 5% until very recently. Next, there is a program available to certain prisoners that reduces a sentence by 12 months. Finally, any half-way house time would overlap with home confinement time, but if greater than that time, would count. For instance, if halfway house of 12 months were assigned to a prisoner who had 8.4 months of home confinement time, that prisoner would simply get halfway house/home confinement of 12 months. So, 84 – 10 – 12 – 12 – 12 = 36. Of course, the final 12 could be as little as 8, and one of the 12s could be anywhere from 11.0 to 12.6. My lawyers and I are confident in those numbers, but the full range best case/worst case would be 35 to 40 months. So, I project I’m 37 months away from home at this time. I also have an appeal pending, don’t sleep on that 🙂 Anyone playing along at home is free to do their own calculations and comment on the site!

There’s a guy here who doesn’t know any Beatles songs. I think there are a few guys here. He wanted to know their most famous song. I said: “Yesterday, Hey Jude, Lucy in the Sky With Diamonds, err… Imagine? Yellow Submarine?”. Drew blanks. Did I miss one?

I think the left needs to talk about unity instead of resistance. I’d be willing to apologize to Lauren Duca for nagging and teasing her, apologize to Lena Dunham for offering to afford her private plane trip to Canada, and others. The right needs to reach across and stop the flame war, as fun as it is. People like Hannity, Carlson, Dinesh, Milo, any standard bearer for Republicans, should begin this process. If the left won’t agree to “lay down arms” and focus on strengthening our country instead of dividing us further, then their party will dwindle into irrelevance and implode in hatred (has it already happened?) But we shouldn’t follow that lead. Let’s find common ground and cease the incessant and overwrought narrative that everything left-of-center is malignant and everything right-of-center is righteous. My reasoning for this change of pace arises from witnessing the miserable sorrow of various pundits and commentators. Losing stinks, but cheer up. We can get through this together. We lose, too. Being happy is more important than having your life subsumed by complaining. You can be happy with Trump. I was happy with Obama. I was happy with Bush. I’m always happy because there are more important things than driving yourself (and others) crazy with politics. Some of us like politics, and are passionate about it, and that’s fine, too. But we can use a different, less inflammatory and flamboyant language to convey what we’re thinking. Sometimes the understated is far more effective than bombast.

32 thoughts on “7/15/18”

    1. He will stream video frames from his jail cell through the prison email system.
      Information true and confirmed.

    2. He will stream video frames from his jail cell through the prison email system.
      Information true and confirmed.

  1. On your next podcast, could you include some medical books or textbooks you would recommend reading so we can get a better understanding of your research paper analysis? Mo please make sure Martin sees this!

  2. Yeah I apologise for my behalf on getting aggressive. That being said, people are going to go into these modes if they have their rights on the line. That’s a big problem with Trump is we don’t even know what he believes half the time, and people are always on edge because his decisions are of poor impulse control to that could ruin many people’s lives for a long time. I can’t predict if anyone can repair our country from being damaged. This happening between the peaceful global alliances we’ve made the past 20-30 years is being destroyed as we speak.

    I don’t think any of these media pundints or speakers like Milo, Hannity, and Carlson only serve to trigger people. Not one of them has wanted to actually reach out and help anyone. They’d rather protect Trump and watch our country burn to the ground “triggering libs” than admit they’re a huge a part of the problem.

    It’s hard to reach out the people who see your rights as a gamble and wants to abolish them. The right and Trump are far more dangerous than someone like Lena Dunham, who most people can ignore (which has no political power). They have all the power in this country and have won the propaganda war all the way to three branches of government.

    There’s really nothing people on “the left” to change the minds of people who hate your guts or actively want to repeal your rights through Trump as president. It’s like a sheep trying to compromise dinner with a wolf.

    Also, I’m not saying the left doesn’t have issues and doesn’t contribute, but there is far more power that these extreme right candidates have. There shouldn’t be any reason why these protest about saving their rights from Trump is even happening.

    1. “I can’t predict if anyone can repair our country from being damaged. This happening between the peaceful global alliances we’ve made the past 20-30 years is being destroyed as we speak.”

      What has been damaged in our country and how have the global alliances been destroyed? I understand there is endless media rhetoric, but can you please be specific in pointing out concrete examples?

      “change the minds of people who hate your guts or actively want to repeal your rights through Trump as president.”

      Rights cannot be appealed. Inalienable rights can simply be outlined by the governing body appointed by the people. For instance, you have the right to defend yourself against physical threats. It is an innate capability of your human organism as long as you have a functioning mind and operational limbs. You can also grasp an object to aid in your defense i.e. mace, gun, etc. Therefore the 2A does not create a right that can be “appealed”. It simply declares a pre-existing right and conveys that the government instituted by the people shall not infringe upon that right. If at some point in the future a government oversteps that clause and infringes or restricts the people’s capacity to defend themselves, it still does not remove that right, because it is inalienable.

      That said, which of your rights do you believe is in danger of being constricted?

      1. Where have you been when Trump just chose to defend Putin (who is hostile to America and the West) over America. He calls UN and NATO enemies, which are global alliances that kepy us together, including free trade agreements, paris accord, and the Iran deal we’ve worked on so hard for with allies. This has kept us from major world wars and were pacts to go in a peaceful direction.

        Meanwhile, Trump is siding with Putin and many other dictators that hate what US stands for. Not to mention the putting babies in a cages and held them hostage because he wants a stupid wall built.

        The man has shown to be a full blown psychopath to many people. Trump supporters are not paying attention to the bigger picture and not realizing how dangerous he truly is.

        1. Yeah, no so much. Get out of your bubble and think for yourself. If you think the world is a more dangerous place than it was last year, you need to relook at where you are getting the news.

  3. Talk about your improvement in chess. I bet you anything that you’re reading chess books in prison and playing strong opponents OTB. I’d be surprised if you hadn’t gotten stronger by now.

  4. I want to hold your hand, Revolution, Come Together, While My Guitar Gently Weeps, All You Need Is Love, A Day In A Life, Don’t Let Me Down, With A Little Help From My Friends. I mean how is it possible to not have heard The Beatles? How? How? How? How?

  5. What the hell Jane! Just because Martin said, “chill” you’re going to raise your white flag?!?! WE WILL NEVER SURRENDER, MARTIN!! VIVA LA LIBERTE!!! La izquierda es el rey, pandejo!!! 💜

    1. Nah his rant is right. It’s just easier on paper than it is to actually get people to drop the shit. People always tell the left to be the ones to do it, but just last week, Milo alone wanted people shot and played the victim when that guy went shooting people. Hannity spreads dangerous conspiracy theories, and Carlson doesn’t bring on someone for a debate that isn’t meant to put them in a bad light. Those people have shown they don’t care about unity. That and most Trump supporters seem to be willing die to protect him.

      1. It’s fitting that Martin mentions The Beatles….
        I am the Walrus
        I am he as you are he as you are me
        And we are all together
        See how they run like pigs from a gun
        See how they fly
        I’m crying
        Sitting on a corn flake
        Waiting for the van to come
        Corporation T-shirt, stupid bloody Tuesday
        Man you’ve been a naughty boy
        You let your face grow long
        I am the egg man
        They are the egg men
        I am the walrus
        Goo goo g’joob
        Mr. City policeman sitting
        Pretty little policemen in a row
        See how they fly like Lucy in the sky
        See how they run
        I’m crying
        I’m crying, I’m crying, I’m crying
        Yellow matter custard
        Dripping from a dead dog’s eye
        Crabalocker fishwife, pornographic priestess
        Boy, you’ve been a naughty girl
        You let your knickers down
        I am the egg man
        They are the egg men
        I am the walrus
        Goo goo g’joob
        Sitting in an English garden
        Waiting for the sun
        If the sun don’t come you get a tan
        From standing in the English rain
        I am the egg man (How do you do sir?)
        They are the egg men (The man maintains a fortune)
        I am the walrus
        Goo goo g’joob, goo goo goo g’joob
        Expert, texpert choking smokers
        Don’t you think the joker laughs at you (Ho ho ho, hee hee hee, hah hah hah)
        See how they smile like pigs in a sty
        See how they snide
        I’m crying
        Semolina Pilchard
        Climbing up the Eiffel tower
        Elementary penguin singing Hare Krishna
        Man, you should have seen them kicking Edgar Allen Poe
        I am the egg man
        They are the egg men
        I am the walrus
        Goo goo g’joob, goo goo goo g’joob
        Goo goo g’joob, goo goo goo g’joob, goo goo

  6. Love you man. I believe that you were wrongfully convicted (not that you didn’t do it, but that what you did do was not as bad as they make it seem). However, I believe that your time in prison may give you a different perspective on things, perhaps one that can help in some way. Anyways, best wishes to you and your family. You are not the mean person that the media projects (you are an asshole at times, but that’s just for fun).

  7. Come Together, Eleanor Rigby, Strawberry Fields Forever, Let it Be, A Hard Day’s Night, Penny Lane, Something, to name a few. A lesser known one but one that reminds me of you–“Fool on the Hill.”

    What are your current thoughts on your hemophilia “basket”? Time to take profits on QURE? Is SGMO still undervalued? What do you think of SNY’s acquisition of BIVV?

    Thanks for the blog, Martin.

    1. I wish I knew tune better, but here are the lyrics to ‘Fool on the Hill’. I always pay attention to the lyrics of songs.
      Day after day, alone on a hill
      The man with the foolish grin is sitting perfectly still
      Nobody wants to know him
      They can see that he’s just a fool
      But he never gives an answer
      But the fool on the hill
      Sees the sun going down
      And the eyes in his head
      See the world spinning round
      His head in a cloud
      The man with a foolish grin is talking perfectly loud
      But nobody wants to hear him
      They can see that he’s just a fool
      But he never gives an answer
      But the fool on the hill
      Sees the sun going down
      And the eyes in his head
      See the world spinning round
      But nobody wants to know him
      They can see that he’s just a fool
      But he never gives an answer
      But the fool on the hill
      Sees the sun going down
      And the eyes in his head
      See the world spinning round
      But the fool on the hill
      Sees the sun going down
      And the eyes in his head
      See the world spinning round
      Songwriters: John Lennon / Paul McCartney

  8. “If you could construct a basket of diverse market cap stocks, with their % of business in the US at perhaps 20%, you’d have a truly equity-like instrument.” – Thoughts on hand-picking the individual stocks vs. using investment vehicles such as ETFs?

    Thank you for your continuous insight!

  9. Hey Martin, I’m a long time fan, it’s nice to see you be able to express your thoughts to your fans through this blog and I will definitely be checking it once a week at least to keep up with you, I agree mostly about the left and unity, I think if the Democrats don’t get their shit together come November they will likely be getting another 4 years of Republican-dominated government. P.S. Drakes album was shit and way too long, only like 3 bangers.

  10. I hope the Left and Right get guns and draw a line in the sand and fight it out for control over the USA! That being said when will this chico Martin get out of jail? Does he think they will let him flea the chicken coupe in 2 months to a halfway house, then 1 year at his house? I don’t think so because they are worried you will start strolling and talking shit again.

  11. >>>We see immune changes with human dosing, raising the possibility that AD results from immune aging, <<<

    Martin, recent studies point to herpes/weakened immune system as a cause of AD….

    Herpes Viruses and Senile Dementia: First Population Evidence for a Causal Link
    https://content.iospress.com/articles/journal-of-alzheimers-disease/jad180266

    Microbes and Alzheimer’s Disease
    https://content.iospress.com/articles/journal-of-alzheimers-disease/jad160152

    Multiscale Analysis of Independent Alzheimer’s Cohorts Finds Disruption of Molecular, Genetic, and Clinical Networks by Human Herpesvirus
    https://www.cell.com/neuron/fulltext/S0896-6273(18)30421-5

  12. Martin, PLEASE don’t go to a halfway house. I haven’t heard of a halfway house that isn’t embedded in 12-step dogma, and didn’t you once say in one of your livestreams that you’ve never even done drugs? They’ll probably try to convince you that you ARE an alcoholic/addict somehow. They’ll micromanage your life even worse than prison; trust me, you don’t want that. Just suck it up and stay put for whatever little time I’m sure you’ll have to serve.

  13. Martin

    You remind me of William James Sidis, the part inspiration for goodwill hunting.

    Read his book, the animate and the inanimate written in 1920 and do a book report.

    His IQ was 250. Its incredible what he put together with pure logic in 1920! If he was around today. He might have solved many vexing issues and mysteries of the universe.

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