Jan 102014

2013 MTSL Portfolio Review – We’re #1!

According to the Hulbert Financial Digest (HFD), the Trader’s Portfolio of the Medical Technology Stock Letter was the #1 performing Portfolio of 2013 – with a return of 215%. This was out of more than 500 portfolios tracked by Hulbert. The Model Portfolio posted a solid 103% gain. In addition, The MTSL was the #1 performing Newsletter of 2013, out of more than 200 newsletters included in the HFD survey. The Trader’s Portfolio utilizes margin and, therefore, has higher volatility than the Model Portfolio. Below we briefly summarize each Company’s key value drivers from last year and offer a quick outlook for 2014 (in order of 2013 YTD performance). A much further detailed preview for 2014 will be included in the next Issue, as the majority of companies will make full presentations at the JPMorgan Healthcare Conference next week.

JP Morgan Healthcare Conference MTSL COMPANY SCHEDULE January 13 - 16, Westin St. Francis Hotel, San Francisco, CA

JP Morgan Healthcare Conference
January 13 – 16, Westin St. Francis Hotel, San Francisco, CA


The MTSL Portfolio – 2013 performance

2013 performance for The MTSL Portfolio
Mod Port  NBI & BTK

Isis (ISIS +282%)   

What Went Right – Landmark year. Just about everything went right except for the CRP drug.  Management executed very well by delivering a combination of steady encouraging data and more quality partnerships in 2013. R&D pipeline is up to 31 compounds under development.

Where We Stand Now – Various clinical updates including BIIB partnership and SMN data; cardiovascular compounds to begin larger trials.

Pacira (PCRX +229%)                    
What Went Right – Consistent and solid execution of the EXPAREL launch – positive clinical data and pharmacoeconomic studies, publications, presentations and partnerships – led to increased sales and earnings forecasts.

Where We Stand Now – More of the same, led by an important EXPAREL nerve block study. FDA OK of a new manufacturing suite will lead to major capacity expansion and gross margin improvement.

Incyte (INCY +205%)                   
What Went Right – Jakafi sales exceeded and delivered Phase II pancreatic data, opening up solid tumor opportunity.  Pipeline and management vastly exceeded Wall Street’s expectations and IDO emerged as huge sleeper.

Where We Stand Now – Catalysts galore with Phase III PV data for Jakafi coming soon, Jakafi pancreatic data at ASCO and multiple IDO trials.

NovaVax (+170%)                  
What Went Right – Three consecutive positive RSV vaccine trials, new CFO and investor relations programs, renewed BARDA flu vaccine contract, increased institutional shareholder base, raised enough capital to 2016 – enough to complete key trials.

Where We Stand – Momentum accelerates in 2014; Phase II RSV trial results due in Q2, flu trials by year-end.

 Sangamo (SGMO +131%)      
What Went Right – The company delivered pre-clinical data in multiple disease models and human data in HIV that has shown the promise of their ZFP gene editing platform.

Where We Stand Now – SGMO remains somewhat controversial as the HIV data has yet to convince the skeptics.  In our view, the company will continue to deliver data that proves them wrong. Three new INDs to be filed. Updates due on hemophilia, Huntington’s disease, sickle cell and beta-thalassemia.

Alkermes (+120%)             
What Went Right – Taking it to a new level. Initial breakthrough ALKS-5461 data in MDD, AL Phase III completes enrollment, multiple novel pipeline additions and increased sustainable earnings visibility.

Where We Stand Now – Busy year ahead – AL Phase III results, AL 2-Month version, ‘5461 to begin Phase III program, Tecfidera pro-drug, new cardiovascular compound, etc.

Celgene (+115%)                    
What Went Right – Basically everything. Pomalyst launch, Abraxane/Apremilast data, Revlimid MM-020 results. Pipeline advances and multiple collaborations.

Where We Stand – Launch of Apremilast, continued solid Pomalyst trajectory, Revlimid label expansion and pipeline plethora.

Pharmacyclics (PCYC +83%)               
What Went Right – Three Breakthrough Designations by FDA lead to approval of Imbruvica in MCL (and soon CLL) roughly two years ahead of schedule; initial launch trends appear favorable

Where We Stand – RESONATE data solid – stock recovers all of post-ASH selloff. CLL approval due 2/28, EU launch by JNJ at year-end. Further data in multiple myeloma and additional B cell cancers; a BTK autoimmune update could begin next chapter and answer questions of lack of pipeline.

Nektar (53%)                  
What Went Right – Naloxegol moves closer to approval, NKTR-102, BAX-855 progress, significantly increased cash guidance, NKTR-181 mixed in OA results but moving forward to Phase III.

Where We Stand –  AdCom meeting for Naloxegol (3/10-11); BAX-855 Phase III data/BLA filing, NKTR-181 Phase III initiation, ‘102 data late 2014/early 2015.

BioMarin (+43%)                    
What Went Right – Expanded Orphan Drug industry domination with pipeline success and long-term, sustainable earnings growth. Highlights include Vimizim approval and PARP inhibitor BMN-673 progress. Takeover rumors arose.

Where We Stand – Vimizim launch and BMN-673 competitive profile versus competition; pricing pressures on Orphan Drugs to increase although sole supplier such as most BMRN products appear okay.

The Medicines Company (+25% since MTSL Initiation)
What Went Right – Pipeline successes – oritavancin, cangrelor, Fibrocaps, ALN-PCS – lead diversification away from Angiomax. Angiomax patent defense continued, more synergistic acquisitions (Rempex).

Where We Stand – Global launches of three above products, pipeline progress, Rempex integration and Angiomax patent update. Management execution leads to increasing long-term sales and earnings forecasts.

ImmunoGen (IMGN +15%)                        
What Went Right – Kadcyla was approved as expected early in 2013….&  Wrong…..Otherwise, not much went right as the pipeline experienced one setback after another.  EGFR ADC – IMGN289, TAP to folate receptor IMGN853, are intriguing. In a true sign of a great biotech market in 2013, despite multiple hiccups IMGN was still up 15%.

Where We Stand Now – TAP platform, though having taken a knock, still has multiple partners developing various compounds and diversifies risk. Initial ‘289 tolerability data will be key proprietary clinical data.

OncoGenex (OGXI -36%)                  
What Went Right – Phase III SYNERGY custirsen trial (licensed from ISIS) had several IDMC looks, favorable by our view, and continues uninterrupted. Progress with OGX-427 into multiple Phase II ignored by investors as all eyes are on SYNERGY.

Where We Stand Now – Make or break year for OGXI as we finally get the SYNERGY results.

Anthera (-35%)           
What Went Right & Wrong – A transition year for b-mod clinical development and progress. Two potential pivotal programs underway – in IgA nephropathy (BRIGHT-SC) and lupus (CHABLIS–SC); enrollment on schedule. Dilutive financings and reverse stock split executed and cash on hand will support the completion of current studies.

Where We Stand – Interim look due on BRIGHT-SC in Q1:14; and interim look at CHABLIS around mid-year. Two additional studies, CHABLIS-SC2 (lupus) and BRILLIANT (IgA nephropathy) also to begin. Japanese studies to start, too.

Coronado BioSciences (-42%)      
What Went Wrong – TRUST I and TRUST II clinical trials failures of TSO in Crohn’s disease, CEO Weisman leaves at year-end; Founder Rosenwald takes over.

Where We Stand – On sidelines for now but glimpses of positive IST activity of TSO is psoriasis and Autism late last year – follow up data due in 2014, new CEO?


Relevant New Studies or Changes Posted on Clinicaltrials.gov for our MTSL Portfolio and/or Related Companies since last Issue:

AMGN – Brodalumab in psoriatic arthritis – Clinicaltrials.gov (Amgen)

CELG – Abraxane plus gemcitabine in Chinese patients with pancreatic cancer –  Clinicaltrials.gov (Abraxane)

CELG (with PFE) – Palbociclib with Revlimid and dexamethazone for multiple myeloma – Clinicaltrials.gov (Celgene)

CELG – Abraxane as maintenance therapy after Abraxane plus carboplatinum in 1st line Stage IIIB/IV squamous cell non-small cell lung cancer – Clinicaltrials.gov (Abraxane)

CELG – Novel combinations of CC-122, CC-223, CC-292, and Rituxan in DLBCL – Clinicaltrials.gov (Celgene)

U PENN CART – Phase IIa Study of Redirected Autologous T Cells Engineered to Contain Anti-CD19 Attached to TCRz and 4-Signaling Domains in Patients With Chemotherapy Relapsed or Refractory CD19+ Lymphomas –  Clinicaltrials.gov (Immunogen)

Seattle Children’s Hospital CART – A Pediatric and Young Adult Trial of Genetically Modified T Cells Directed Against CD19 for Relapsed/Refractory CD19+ Leukemia – Clinicaltrials.gov (Immunogen)



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