Nov 122017
 

November 09, 2017

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Since Last Issue: BTK: 0.8%; NBI: -1.0%; Model Portfolio: -0.6%; Trader’s Portfolio: -4.1%

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Biotech Sector Analysis

SENTIMENT — Bifurcation

As we head into the home stretch of 2017, a true split of performance has emerged between large cap, earnings driven companies and small-to-mid cap (or SMID), mostly development-stage firms. Recent quarterly results of the Big Bios disappointed across the board in Q3, with top-line results for key new drugs and legacy franchises coming in on the low end. Led by CELG, but joined by BIIB, GILD, REGN, ALXN, leading to negative fund flows over the last five weeks.  As we went to press the streak was broken with positive inflows reported for the current week. A not small item we have also noticed of late is that the Big Boys (Pharma/Bios) have been slashing jobs, while the smaller, well financed biotechs can’t fill their many openings (i.e., “Old Biotech” vs. “New Biotech”?). Add in the fact that technology companies posted powerful earnings beats (FANGs+), the momentum players have rotated into technology for the time being. That is keeping the IBB in oversold levels for now. The large cap stocks are trying to bottom as we write, however, and history suggests fund managers are still keeping some powder dry for the year-end performance. As biotech investors surely know, sentiment can quickly shift on the drop of another mid-cap takeover or unexpected clinical win.

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On the flip side, SMID caps stocks are behaving much better than their big brethren with positive individual company catalysts (e.g., SAGE) and/or M&A comments from Merck et. al. driving year-end takeover speculation. A new list of major players have continued their respective winning streaks, including ALNY, BLUE, JUNO, NKTR and NBIX.

Technically, the sector has been weak and the IBB (310) is nearing support levels (307) so it is important that index holds here. It is too early for us to think fund managers have wrapped up the year already, as we haven’t yet reached Thanksgiving. With everything positive that’s gone on during the past three months (including KITE/GILD), we would be hard pressed to think another real takeover or another unexpected catalyst isn’t likely to happen by year-end. Despite the astounding performance by individual stocks, the recent biotech indices remain weak. We are no doubt at oversold levels (RSI=29, MACD= -5.4), and we’re still in the camp that the IBB will end 2017 higher than it is now. As for the longer-term weekly chart below, the IBB is in a neutral position (RSI=46) and trending downward, but still holding the steady upwards long-term trend line.

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DATA – BLUE (+), NKTR (+), IONS (+/-), FPRX (-), SAGE (+)

Medical and scientific conference after conference has led to a period of too much information and, as a result, Wild West type trading for many biotech stocks. Shoot first and ask questions later with regards to investor’s initial reaction of online abstract releases and/or data presentations for the ACR (last week), SITC (this weekend) and ASH (December) meetings, to say the least. Data at the TTR meetings were interpreted as wildly positive for ALNY and the opposite for MTSL Recommendation IONS, although we believe the playing field here is a bit more level than the consensus implies (see IONS below).

ASH abstracts took stocks like BLUE (sickle cell abstract) and JUNO (CAR-T) even higher, while SITC abstracts were good for MTSL’s NKTR but not for MTSL’s FPRX (see both below). While it’s too early to tell, at first blush BMY’s IDO does not appear to be a major threat to INCY’s IDO (see INCY below). Of course, more mature data will be at the actual meeting in December (when there will likely be another round of volatile trading).

As we went to press, new MTSL Recommendation MYOV announced positive top-line results from a Phase III study evaluating the efficacy and safety of relugolix for the treatment of pain associated with uterine fibroids. Also on Thursday, in two Phase III studies SAGE’s brexanolone helped patients with post-partum depression (PPD) within a matter of days. In the first, women with severe PPD improved between three and six points more on the 29-point Hamilton depression (HAM-D) scale compared to those taking a placebo, depending on dose. In a second study in moderate depression, women improved two points more than those who received placebo. The majority of the stocks with positive news saw significant upward moves in their stock prices, ranging from ~10-50%.

LEGAL – Tax Plan Details Emerging But Always Changing

Headlines are swirling on a daily basis between the overwhelmingly pro-business tax cut proposals that may include sizable slashes to Obamacare, although nothing is at all certain and no one really knows if or when a new bill becomes a new law.

REGULATORY – Genentech’s Orphan Drug OK; DVAX Approved

The FDA approved Genentech’s Zelboraf as a treatment for patients diagnosed with the rare blood disorder known as Erdheim-Chester disease who now have a new treatment option. Zelboraf (vemurafenib) was approved for the treatment of ECD patients with BRAF V600 mutation. The FDA agreed to NKTR’s ’181 NDA being filed by April and PCRX’s Exparel has a PDUFA date by April as well (see both NKTR and PCRX below).  Late on Thursday the FDA approved DVAX’s Heplisav for immunization against HepB in adults.

DEALS/M&A – NVS Spends $4B on AAAP, PFE/ONCE Reset

While the Novartis deal was somewhat expected, it is still a decent-sized transaction although not necessarily a pure biotech play.  As for PFE/ONCE, it seems that ONCE changed its manufacturing/promoter in the hemophilia B studies that may cause a delay in the clinical trials. SNY announced a license agreement to develop an oral BTK inhibitor (PRN2246) for multiple sclerosis. Sanofi paid $40 million upfront to privately held Principia Biopharma; future milestones could put the total value at over $805 million.

FINANCING – Still Going But Slowing?

VYGR did a follow on (at a big discount) while many firms want to/have done their year-end deals by now. Holidays do get in the way. Others like to wait for January, during the JPM Healthcare Conference, when new money added to successful funds gets put to work.

Clinical Trials Watch

Company Updates

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ACAD – Delivers Strong Q3 Nuplazid Sales and Presents Phase II Data at CTAD

Acadia reported a nice Q3 with Nuplazid net sales in Parkinson’s disease (PD) psychosis of $35.6 million versus a consensus forecast of $32.2 million. As a result of the positive revenue trajectory and the recent price increase in October of 19%, Nuplazid FY17 sales guidance was increased to $124-$127 million.  In our view, the revised guidance is likely to be conservative given the strong organic growth trends and positive launch metrics.

The company recently presented pimavanserin Phase II data in PD psychosis at the CTAD meeting which was in line with the prior top-line efficacy and safety.  However, some on Wall Street remain concerned about the separation of drug-placebo curves at 6-12 weeks and the resulting translation to the Phase III dementia-related psychoses (DRP) trial, HARMONY.  In the symposium titled “The Importance of Serotonin in Alzheimer’s Disease Psychosis and the Role of Pimavanserin” at the CTAD meeting, KOLs discussed a variety of topics that lent further support to positioning pimavanserin in DRP ranging from mechanism of action to clinical evidence to support pimavanserin for the treatment of DRP.

In our view, the Phase III HARMONY trial has implemented several trial designs that should improve the probability of positive data: (1) both the time to relapse analysis and the 12-week run-in period should help to control the placebo effect; (2) patient enrichment in modest-to-severe DRP population as assessed by a battery of tests; and (3) flexibility of dosing (34mg and 20mg) would further mitigate adverse events, and may lead to an increased efficacy in some patients.

Acadia continues to execute the launch of Nuplazid with skill and we are impressed with management’s continued ability to grow sales.  In our view, a number of factors including the awareness campaign, patient and physician satisfaction, and psychiatrists/neurologists engagement have combined to point to a continued strong growth trajectory for Nuplazid.  With additional clarity on HARMONY’s improved design over Phase II, in our view, the odds of Phase III success in DRP has increased.

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ESPR – Initiates Combo BA/EZ Pivotal Trial

The start of the pivotal Phase III study to assess the efficacy and safety of the bempedoic acid/ezetimibe (brand name Zetia) combination pill in patients with hypercholesterolemia and atherosclerotic cardiovascular disease (ASCVD) and/or heterozygous familial hypercholesterolemia (HeFH), including high cardiovascular risk primary prevention patients, whose LDL-C is not adequately controlled despite receiving maximally tolerated lipid-modifying background therapy (https://clinicaltrials.gov/ct2/show/NCT03001076?term=Bempedoic+Acid+%2F+Ezetimibe&rank=1). Top-line results are expected by the fourth quarter of 2018.

Phase II results were rather impressive and showed that the addition of BA to ezetimide (EZ) significantly lowered LDL cholesterol on top of EZ. The six-week study met its primary endpoint of greater LDL-C lowering from baseline of 64 percent (p<0.001) in the BA/EZ combination plus atorvastatin group, as compared to placebo. Ninety five percent of patients receiving treatment achieved greater than or equal to 50 percent LDL-C lowering reduction and 90 percent achieved LDL-C levels of less than 70 mg/dL. The BA/EZ combination plus atorvastatin also demonstrated a reduction of 48 percent (p<0.001) in high-sensitivity C-reactive protein (hsCRP), an important marker of the underlying inflammation associated with cardiovascular disease.

The new 12-week, pivotal Phase III, randomized, double-blind, placebo-controlled, parallel-dose study will consist of four treatment arms evaluating the efficacy and safety of a once-daily, oral, fixed dose combination pill of 180 mg of bempedoic acid and 10 mg of ezetimibe versus placebo, 180 mg of bempedoic acid alone and 10 mg of ezetimibe alone. The study is expected to enroll approximately 350 patients at up to 125 U.S. sites. The co-primary objectives of the study are to assess LDL-C lowering efficacy in patients treated with the bempedoic acid / ezetimibe combination pill versus placebo, 180 mg of bempedoic acid and 10 mg of ezetimibe alone. Secondary objectives include assessing the safety and tolerability of the bempedoic acid / ezetimibe combination pill versus placebo, 180 mg of bempedoic acid and 10 mg of ezetimibe alone and effects on other risk markers, including high sensitivity C-reactive protein (hsCRP), non-high-density lipoprotein cholesterol (non-HDL-C), apolipoprotein B (apoB) and total cholesterol.

The initiation of this program puts ESPR on track to report results from all five pivotal Phase III studies for the bempedoic acid franchise in 2018 and targeting 2020 for FDA approval. The clinical plan was further detailed at the Company’s Analyst and Investor Day (10/10/17). Continuing to execute at an exceptional level, ESPR appears to own (outright) the next big cholesterol pill.

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FPRX – Stock Sells Off On SITC Abstract Concerns Regarding Safety and Efficacy of Cabria/Optivo Combo in Pancreatic Cancer

FPRX’s stock took a big hit when the SITC abstract book was released earlier this week based on safety and efficacy concerns regarding the Cabira/Opyivo in pancreatic patients. The key takeaway is that the combo produced a “durable clinical benefit” in 16% of the patients (5/31) enrolled in this study so far.  Durable responses are rare in pancreatic cancer.  Bristol and FPRX also noted that the therapy has an acceptable safety profile when assessed across its broader clinical program for solid tumors, although there were three treatment-related deaths in the pancreatic arm.  In a sign of confidence in the indication BMY has said they are enrolling an additional 30 pancreatic patients in the ongoing trial.  As a reminder, the Phase Ia/Ib trial will enroll a total of 280 cancer patients in PD-1 resistant NSCLC, PD-1 naïve NSCLC, head and neck, renal, ovarian, pancreatic and glioblastoma.

While a 16% durable response rate may seem low, it is actually quite respectable for this extremely difficult to treat cancer.  Five year survival rates are just 1-3% for advanced stage pancreatic cancer.  We look forward to reviewing more of the data details on efficacy and safety for the drug combo when the final results are presented at SITC this weekend.  In our view, the stock decline has been overdone and the current price represents an excellent buying opportunity.

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INCY – Delivers Solid Jakafi #s, Strong Presence at ASH and Presents Bari Data at ACR
Strong Quarter and Raise

INCY recently reported their Q3 financials and Jakafi delivered another beat and was followed by a slight raise to both 2017 topline guidance and R&D spend to account for the initiation of several pivotal trials. Investor focus remains squarely on the continued clinical progress of the company’s IDO inhibitor epacadostat.  The company’s broad Phase III program remains on track with the Phase III ECHO-301 top-line results expected to read out in H1:18 and could be a significant catalyst for the stock.  Additionally, a new IDO/PD-1 collaboration for earlier-stage (Stage III) NSCLC was recently announced with AZN.  Remember INCY recently added their own PD-1 which adds both flexibility and leverage for future IDO deals.  BMY has their own IDO (INCY is suing them over it) and some have begun to speculate that it could rival epacadostat.  In our view, INCY has one of the deepest and broadest I/O pipelines in the business.

Deep ASH Presence

INCY has also announced that more than 30 abstracts including data from its clinical development programs for Jakafi® (ruxolitinib), JAK1, PI3Kδ, PIM and BRD will be presented at the upcoming American Society of Hematology (ASH) Annual Meeting 2017 in Atlanta, Georgia from December 9-12, 2017.  Data accepted for presentation include long-term, 4-year follow-up from the Jakafi RESPONSE trial, updated data from the PI3Kδ inhibitor program in relapsed or refractory B-cell malignancies as well as first-in-man data from the BRD and PIM kinase inhibitor programs.

Positive Bari Data at ACR

Lilly and INCY recently presented data at the American College of Rheumatology meeting (ACR) showing that patients with moderate-to-severe rheumatoid arthritis (RA) treated with baricitinib reported greater improvements in pain control when compared to Humira (adalimumab) or placebo.

  • Patients treated with baricitinib reported 30-percent pain improvement at a median 1.9 weeks post-baseline, compared to adalimumab at a median 2 weeks and placebo at a median 4.6 weeks.
  • Patients treated with baricitinib reported 50-percent pain improvement at a median four weeks post-baseline, compared to adalimumab at a median 7.9 weeks and placebo at a median 14 weeks.
  • Patients treated with baricitinib reported 70-percent pain improvement at a median 12.4 weeks post-baseline, compared to adalimumab at a median 20 weeks and placebo at a median of greater than 24 weeks. From Week 24, non-rescued patients in the placebo group were switched to receive baricitinib.

Lilly plans to resubmit the NDA for baricitinib as a treatment for adult patients with RA before the end of January 2018. Baricitinib is already approved for the treatment of adult patients with RA in several geographies, including the European Union and Japan.

INCY is posed for solid news flow through the end of the year with ASH data coming soon and the Phase III IDO melanoma data due in the first half off 2018.  The baricitinib resubmission in early 2018 and regulatory review is another potential catalyst for the stock.  Additionally, we expect Phase III data for Jakafi in GvHD in the first half of 2018.  We also expect updated Phase II data from multiple I/O combinations from the company’s wholly owned early stage pipeline.

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IONS – Inotersen in TTR Battle With ALNY’s Patisiran, Filed For Approval in Both US & EU

IONS Last week at the EU ATTR meeting, data was presented by both IONS’ inotersen and their competitor ALNY’s patisiran. While ALNY’s drug is expected to dominate the market, in our view, IONS may capture up to 20-30% of the market. It is important to remember that it is difficult to compare across clinical trials for a number of reasons including differences in design, duration of treatment and baseline characteristics.  Using this example, we believe there are a number of reasons that the consensus may be overly optimistic for ALNY and overly pessimistic for IONS. Ease of use with an injectable SQ drug compared to IV delivery will help inotersen compete with patisiran.  In addition, IONS has recently filed for approval in both the US and EU, ahead of ALNY, and should also be first to market.  Following recent data Phase III data presentation for inotersen of the NEURO TTR study in Europe, IONS highlighted strong KOL support and a differentiated profile in patients with ATTR, and suggested a target population of 50,000 patients with overlapping neuro and cardiac manifestations of disease. This is hardly a winner take all market.

IONS Inotersen for TTR amyloidosis (ATTR) and volanesorsen for familial chylomicronemia syndrome (FCS) are both expected to be approved in 2018 providing IONS with two significant catalysts.  Before the Q3 call this past week, Wall Street expectations for IONS having two more drug approvals next year was very low. Another potential catalyst is the upcoming Phase I/II data for IONS-HTT-Rx in Huntington’s disease by year-end. The company has highlighted an expected reduction in both mutant and wild type HTT protein.  With a dose of only three months, IONS has stated that any signal of efficacy would be an unexpected surprise. Don’t forget the ongoing strength of BIIB’s Spinraza launch. With the original Kynamro approval and another upcoming FDA ok in alicaforsen (UC), that will make five IONS drugs on or approved by 2018. Oh yeah, and the 40 or some odd other IONS compounds in the pipeline

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MDCO – ORION Phase III Trials Are Underway, Starting The Clock

As promised, ORION-11 will enroll 1,500 patients who will be randomized 1:1 to receive either inclisiran or placebo in a double-blind Phase III study. The primary objective is to evaluate the effect of inclisiran treatment on percent change in LDL-C levels from baseline at Day 510 and time-adjusted percent change in LDL-C levels from baseline between Day 90 and Day 540. Inclisiran will be administered subcutaneously (300 mg) on Day 1 and Day 90, followed by maintenance subcutaneous doses (300 mg) on Day 270 and Day 450. Patients in ORION-11 will be treated and observed for 18 months. This will be a global endeavor – approximately 100 clinical sites in seven European countries and South Africa are participating in the study.

The ORION-11 trial is one of four Phase III pivotal trials for inclisiran which together are expected to support the submission of an NDA in the US and an MAA in the European Union in late 2019. In addition to the ORION-11 trial, ORION-10 will study approximately 1,500 ASCVD patients in North America; ORION-9 will study approximately 400 patients with heterozygous familial hypercholesterolemia (FH) in North America, Europe, Israel and South Africa; and ORION-5 will study approximately 60 patients with homozygous FH in Europe, the Middle East and North America. The company continues to expect that all of these trials will commence before the end of 2017.

In our view, inclisiran has the potential to be a best-in-class therapeutic. Among the 497 patients treated in the ORION-1 Phase II study, a mean LDL-C reduction of 52.6% and up to 81.0% at Day 180 was reported. In addition to the compelling efficacy and safety profile demonstrated in ORION-1, the dosing regimen (small volume, subcutaneous doses twice a year) may improve patient compliance, which has been a significant problem with all other LDL lowering drugs.

Furthermore, incliran’s manufacturing cost is a fraction of the antibodies – a fact that should bode well for both financial leverage, patient acceptance and payor satisfaction. With the stock still closer to 52-week lows, we believe MDCO remains extremely undervalued. No one seems to care about the progress occurring right now and the work put in to design and implement such a large program, but as the PCSK-9 market continues to evolve and grow, inclisiran is poised to become a market leader.

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MYOV –Takeda Delivers Second Positive Phase III Trial For Regugolix

MYOV‘s partner Takeda has reported positive top-line results from a second Phase III trial evaluating the efficacy and safety of relugolix for the treatment of pain associated with uterine fibroids.  In the trial relugolix significantly decreased heavy menstrual bleeding and pain associated with uterine fibroids, with the majority of women in the current study experiencing little or no pain by the end of the 12-week study.   In our view, the second positive Phase III from Takeda further de-risks MYOV’s pivotal clinical trials (LIBERTY 1 and LIBERTY 2) and adds to our confidence that they will deliver positive data.

This Phase III trial was a multicenter, randomized, double-blind placebo-controlled study conducted in Japan to evaluate the efficacy and safety of relugolix in the treatment of pain symptoms associated with uterine fibroids compared to placebo. 65 patients were randomized 1:1 to receive either relugolix 40 mg, administered orally once daily, or placebo for 12 weeks.  Of the women treated with relugolix, 57.6% achieved the primary endpoint compared to 3.1% in the placebo arm (p < 0.0001). Common adverse events (≥10%) reported more frequently in patients treated with relugolix relative to patients treated with placebo included hot flush, metrorrhagia, hyperhidrosis and menorrhagia, which are consistent with the mechanism of action and adverse events observed in previous studies.

MYOV‘s Japanese partner Takeda has now delivered two positive Phase III trials and is poised to file for approval in Japan.  While the trial design and endpoints of Takeda’s Phase III trials differ from those in MYOV’s Phase III trials (LIBERTY 1 and LIBERTY 2), the data from the Takeda trials will be used to support MYOV’s anticipated NDA filing.  Importantly, the second positive Phase III trial from Takeda further de-risks Relugolix and adds to our confidence that the drug candidate will deliver positive Phase III data.

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NKTR – ‘181 NDA Filing Date Set; Presents New ‘214 and I/O Data at SITC and Pre-Clinical Data on NKTR-358 at ACR:- Raising BUY to 35 &TARGET PRICE to 45
NKTR-181 Set For April NDA Filing

The Company recently met with FDA and the agency agreed that NKTR can file for approval based upon a single Phase III trial and two HAL trials of NKTR-181. In the current global epidemic of opioid abuse, NKTR has met with members of the White House and Congress and there is a lot of interest in ‘181 as it offers a major option for the tens of millions addicted to the current opioid drugs on the market. In our view, ‘181 will be Fast Tracked and receive an accelerated review and approval time. Labeling discussions will be discussed over time but there is no doubt there is less abuse with ‘181 than drugs like oxycontin.

The Company is working on a corporate partner for further development and global commercialization of NKTR-181. Management stressed that partnership discussions are underway and that NKTR itself has morphed into an oncology company; hence the strategic decision to partner ‘181. The Company’s track record of forming high value-added collaborations makes us believe a sizable deal for ‘181 is due in the near-term, especially now that the regulatory path/timeline has been defined. The accelerated time frame for ‘181 appears to be a best-case scenario for this compound.

Expect NKTR-214 To Shine At SITC – NKTR 214 is the main reason that NKTR as a whole has “morphed into an I/O company.”

While the data will be presented over the weekend, the oral presentation on Saturday will show waterfall and spider plots of all the cancer patients in the PIVOT-2 study (https://clinicaltrials.gov/ct2/show/NCT02983045?term=NKTR-214&rank=2). The initial abstract included 16 patients at the time of submission, while all 38 patients enrolled in the dose escalation cohort will be presented at the meeting. NKTR-214 is a CD122-biased agonist. Data from the ongoing PIVOT Phase 1/2 study, which is evaluating NKTR-214 in combination with the checkpoint inhibitor nivolumab. Six additional presentations for immuno-oncology (I-O) candidates in NKTR’s pipeline will also be presented at the meeting; specifically, one additional clinical and three preclinical presentations on NKTR-214; one preclinical presentation on NKTR-255, an IL-15 memory T-cell stimulating cytokine; and one preclinical presentation on NKTR-262, a novel toll-like receptor (TLR) agonist. The abstracts are listed here at The Journal for ImmunoTherapy of Cancer’s website at https://www.sitcancer.org/2017/abstracts/titles.

Nektar will hold an analyst/investor presentation/webcast on Saturday after presenting the data. Like INCY’s IDO, NKTR-214 appears to have a unique MOA and safety profile that offers multiple combination opportunities. Hence, the combo deal they formed with BMY last year where they retained 100% of the economics by sharing trial costs. We believe that this year’s SITC will make NKTR one of the more visible I/O players in the sector (e.g., INCY, BMY, MRK, AZN, KITE, JUNO, etc.).

NKTR-358 At ACR – NKTR-358 is yet another potential first-in-class resolution therapeutic that may address the underlying immune system imbalance in patients with many immune conditions.

Data for ‘358 was presented on 11/7/17 at the 2017 American College of Rheumatology Annual Meeting. Here is a link to the poster showing that ‘358 delivers sustained, preferential activation of Tregs; in cynomolgus monkey this effect is sustained for >14 days – http://www.nektar.com/application/files/6315/1001/4171/NKTR-358_2017ACR_ABS2715.pdf). As a reminder, NKTR-358 is a novel immunological therapy designed to target the interleukin (IL-2) receptor complex in the body in order to stimulate proliferation of powerful inhibitory immune cells known as regulatory T cells. By activating these cells, NKTR-358 can act to bring the immune system back into balance. This could lead to a profound clinical impact and healthy organ function in autoimmune condition.  The LLY collaboration signed this summer will investigate at least 4 difference autoimmune conditions (lupus, psoriasis, UC/Crohn’s). A Phase I single ascending dose trial in healthy volunteers will provide PK/PD measurements. A Phase Ib trial will start in early 2018 and include both healthy volunteers and patients with lupus.

With the plethora of positive new data plus the novel opioid ‘181 momentum – each blockbuster markets on their own – we are raising our BUY and TARGET PRICE.

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PCRX – Nerve Block Filing Back On Track In Q3 Results

Q3:17 results included EXPAREL sales of $66 million, 3% higher than last year despite fewer selling days in the quarter plus the negative effects of the U.S. hurricanes which comprise roughly 20% of sales. The Company lowered full year EXPAREL guidance to $280-$285 million, down from a range of $290-310 million. At the same time, PCRX profitability appears to be improving, hence the overall beat in EPS.

FDA Accepts Nerve Block sNDA

PCRX In an important surprise turn of events, the FDA has accepted the company’s resubmission of its supplemental new drug application (sNDA) seeking expansion of the EXPAREL (bupivacaine liposome injectable suspension) label to include administration via nerve block for prolonged regional analgesia. If approved, EXPAREL could help eliminate the need for cumbersome devices like pumps and catheters and shift numerous procedures to an outpatient setting. The FDA PDUFA date has been set for April 6, 2018. Despite multiple trials in various other surgical interventions (e.g., dental implant surgery, abdominal/TAP, cosmetic surgery, etc.) nerve block is the key growth driver for the Company.

Positioning In Post-Opioid Era

PCRX provides deep education to physicians/patients to position EXPAREL as a safe alternative to the current pain drug addiction crisis. Recently, CEO Dave Stack testified before President Trump’s Commission on Combating Drug Addiction and the Opioid Crisis. The Commission was created to study ways to combat and treat drug abuse, addiction and the opioid crisis. Stack provided insights into the critical nature of clinician and patient access to non-opioid medications that can effectively manage postsurgical pain while reducing opioid use.

With nerve block back on the calendar, the Company is on its way to finally garnering the growth driver necessary to attract new investors (both public and corporate), combat the shorts’ biggest issue and move forward with the clinical and marketing expansions underway.  With so many trials and changing legislations, PCRX never seems to follow a straight path. However, in our view the Company took another big step forward with the FDA and some certainty regarding timelines for the nerve block indication. They still need to gain label expansion, but that appears much more likely to occur now that the FDA has accepted their sNDA.

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SGMO – Q3 Update Includes Major Manufacturing Expansion/Investment

Pipeline Progress –

Hemophilia A – Treatment of a second patient in the Company’s Phase I/II clinical trial evaluating SB-525 gene therapy for hemophilia A, being developed in collaboration with Pfizer.

Beta-Thal – During Q3, the FDA accepted the IND application for ST-400, a gene-edited cell therapy candidate for beta-thalassemia. ST-400 is being developed with Bioverativ focused on hemoglobinopathies.

Cell Therapy in I/O & LNPSGMO also presented new preclinical data from the cell therapy programs in immuno-oncology and their lipid nanoparticle (LNP) delivery platform at the 2017 Annual Congress of the European Society of Gene and Cell Therapy (ESGCT).

Recent data from the Company’s zinc finger nuclease-based cell therapy platform for immuno-oncology demonstrated greater than 90% double knock-out of endogenous TCR and B2M genes and simultaneous targeted integration of a CAR gene construct for the development of potentially best-in-class allogeneic (off the shelf) T-cell therapies.

New data from Sangamo’s non-viral LNP delivery platform demonstrated greater than 90% protein knockdown in mice at LNP doses as low as 0.20 mg/kg, with no elevation in liver toxicity.

Partnerships To Come

While not giving specific dates/deadlines, the Company is likely in talks to form new collaborations with large pharma/biotech companies for both its cellular immuno-oncology and tau protein/Alzheimer’s disease programs (see last Issue). In our view, these external programs are not on any investors’ radar screens yet, but the size of the deal(s) will, in our view, be large enough and the partners high-end enough for people to begin to take notice (e.g., the Pfizer hem A deal back in May).

Strategic Investment In Manufacturing For Long-Term

On the call, SGMO announced a strategic investment in large scale manufacturing capacity that represents a balanced approach to meet the needs of its rapidly expanding pipeline of genomic therapy product candidates. The expanded services agreement with Brammer Bio will provide SGMO dedicated capacity for clinical supply of the Company’s lead development programs and builds on a strong, decade-long relationship between the two companies.

SGMO is also planning to build a state-of-the-art cGMP manufacturing facility that will initially be focused on product development and Phase I/II clinical trial supply for new pipeline programs. This facility will be located on-site at SGMO’s planned new headquarters.

Steady pipeline progress, notably in hem A, and the large manufacturing investment are further examples of management’s ability to execute and position the company for both near- and long-term success in gene therapy, gene editing and cell therapies.

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ZIOP – To Present POC CAR-T Data at ASH & IL-12 Data at SNO Plus Start Two IL-12 Trials By Year End

ZIOP Abstracts Accepted for Presentation at the 2017 American Society of Hematology Meeting – In investigator-led studies conducted at MD Anderson Cancer Center, ZIOP has used DNA plasmids from first- and second-generation Sleeping Beauty (SB) systems to express CAR in clinical trials to render T cells specific for CD19. The first-generation trials yielded safety and efficacy data from treating patients with non-Hodgkin lymphoma (NHL) and acute lymphoblastic leukemia (ALL). The ongoing second-generation trial, which was designed to refine the CAR and manufacturing processes, infuses CD19-specific CAR+ T cells in patients with advanced lymphoid malignancies after lymphodepleting chemo. With this second-generation trial, the Company is testing the revised CAR design, shortening the manufacturing process to two weeks, and establishing continued safety of SB-modified T cells in patients.  ZIOP expects to stop enrollment in the second-generation study in 2018 when it initiates the third-generation “point-of-care” (POC) trial using CAR+ T cells co-expressing a membrane-bound version of the cytokine interleukin (IL)-15, or mbIL15, in less than two days.

Posters to be presented at the 2017 American Society of Hematology Annual Meeting (ASH) include:

  • Updates on patients enrolled in the first- and second-generation trials featuring response, survival data, and persistence of infused CAR+ T cells;
  • Further preclinical in vitro and in vivo data for the P-O-C technology to generate clinical-grade CD19-specific T cells will be presented at ASH.
  • Update on the Company’s ongoing Phase 1 study of CD33-specific CAR+ T-cell therapy for treatment of relapsed or refractory acute myeloid leukemia, or AML.
  • Update on the genetic engineering of regulatory T cells for the treatment of graft-versus-host-disease.

ZIOP has also announced the release of four presentation abstracts highlighting data from the company’s controlled human interleukin-12 (hIL-12) gene therapy candidate for brain cancer at the 22nd Annual Meeting and Education Day of the Society for Neuro-Oncology (SNO), November 16-19, 2017 in San Francisco.

With three oral and one poster presentations, the company will update data on Ad-RTS-hIL-12 plus veledimex, a gene therapy designed to control the expression of hIL-12, a powerful cytokine that has demonstrated a targeted, anti-tumor immune response for the treatment of recurrent GBM (rGBM).  ZIOP plans to host a conference call and webcast soon after the presentations of data at SNO. Details of the call and webcast, including timing, will follow at a later date.

Details for the SNO presentations are as follows:

Poster Presentation Title: Phase 1 Study of Ad-RTS-hIL-12 plus Veledimex in Pediatric Brain Tumors
Author: Stuart Goldman, MD
Session: Friday Traditional Posters
Date and Time: Friday, November 17, 2017, 7:30 p.m. PT
Abstract code: 5571

E-Talk Title: A Phase 1 Study of Ad-RTS-hIL-12 + Veledimex in Adult Recurrent Glioblastoma
Presenter: E. Antonio Chiocca, M.D., Ph.D.
Session Title: Adult Therapeutics
Date and Time: Saturday, November 18, 2017, 5:32 – 5:36 p.m. PT
Abstract Code: ATIM-26

Title: Controlled Expression of IL-12 Improves Survival in Glioma by Activating the Immune Response in Mice and Humans
Presenter: John A. Barrett, Ph.D.
Session Title: Immunology – Preclinical and Clinical I
Date and Time: Sunday, November 19, 2017, 9:15-9:20 a.m. PT
Abstract Code: IMMU-34

Title: Controlled Local Expression of IL-12 as Gene Therapy Concomitant with Systemic Chemotherapy Improves Survival in Glioma
Presenter: John A. Barrett, Ph.D.
Session Title: Immunology – Preclinical and Clinical I
Date and Time: Sunday, November 19, 2017, 10:00-10:05 a.m. PT
Abstract Code: IMMU-33

ZIOP to Start Both Pivotal Trial in rGBM and Combination Trial with PD-1 in rGBM to Begin by End of 2017

ZIOP will initiate a pivotal trial for Ad-RTS-hIL-12 plus veledimex for the treatment of rGBM by the end of 2017. Based on guidance from U.S. and European regulatory authorities relative to a registration trial, as well as feedback from key opinion leaders and other stakeholders, the Company has decided to move forward with a randomized control trial. The Company remains in active discussions with potential partners for further development of this asset.  ZIOP will also initiate a trial of adult patients with rGBM who will receive a single dose of Ad-RTS-hIL-12 plus veledimex in combination with a checkpoint inhibitor PD-1 by the end of 2017.

ZIOP is positioned for significant news flow by year end as they will present data at both SNO and ASH, and will also start more lL-12 trials in rGBM   SNO could be important for ZIOP as it may accelerate partnership discussions for IL-12 as the fresh data and the starting of a pivotal trial should attract significant attention as there are no treatment options for rGBM.  ASH will also be important for the company as they can highlight their leadership position in second- and third-generation CAR-Ts.  In our view, ZIOP’s third generation CAR-T technology which incorporates MBIL15 to shorten the manufacturing process to two days at the hospital for true POC could be a game changer.  This technology has the potential to bring CAR-T to the masses as it could reduce costs a log order less than first generation CAR-Ts.

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The Back Page

Price (52-week) # of Mkt. Value
Symbol Company Orig.Rec. Lo Hi Current Target Shares(m) ($mil) Recommendation
ACAD Acadia 33.79 29.00 30.01 29.16 55 100.9 2,942.54 BUY under $40
ALKS Alkermes 10.13 47.41 48.21 48.05 75 150.1 7,212.31 BUY under $55
ANTH Anthera 3.04 1.60 1.92 1.86 3 39.9 74.21 BUY under $1
BMRN BioMarin 12.68 81.50 83.56 82.40 130 161.3 13,291.12 BUY under $100
CELG Celgene 24.97 100.22 102.86 102.46 130 785.6 80,492.58 BUY under $105
ESPR Esperion 24.42 46.57 48.63 48.40 70 22.5 1,089.00 BUY under $55
FPRX Five Prime 16.29 25.17 30.10 27.77 55 27.5 763.68 BUY under $42
INCY Incyte 5.88 101.76 105.28 102.99 160 186.0 19,156.14 BUY under $130
XON Intrexon 34.42 15.55 16.21 15.88 60 116.4 1,848.43 BUY under $42
IONS Ionis 7.63 54.19 55.22 55.12 70 118.9 6,553.77 BUY under $55
MDGL Madrigal 17.00 42.65 44.72 44.72 65 11.3 505.34 BUY under $45
MDCO Medicines Company 31.98 30.15 31.14 30.90 75 69.4 2,144.46 BUY under $50
MYOV Myovant 13.74 14.05 14.58 14.14 25 60.8 860.30 BUY under $17
NKTR* Nektar* 4.66 30.30 32.60 31.74 45* 133.5 4,327.29 BUY under $35*
NVAX Novavax 2.44 1.11 1.14 1.13 4 269.9 304.99 BUY under $2
PCRX Pacira 15.78 39.40 41.30 40.15 75 36.8 1,477.52 BUY under $50
SGMO Sangamo 4.77 11.65 12.70 12.30 20 70.1 862.23 BUY under $15
ZIOP Ziopharm 8.00 4.49 4.68 4.55 18 130.9 595.60 BUY under $12

*new recommendation

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THE MODEL PORTFOLIO*

COMPANY SHARES OWNED TOTAL COST TODAY’S VALUE
Long Positions
Acadia 3,000 102,417 87,480
Alkermes 2,500 32,695 120,125
Anthera 2,002 123,540 3,723
Esperion 3,491 105,316 168,964
Five Prime 3,250 91,136 90,253
Incyte 1,294 34,817 133,269
Intrexon 2,200 76,510 34,936
Ionis 3,250 49,123 179,140
Madrigal 5,387 105,595 240,907
Medicines Co 2,600 19,380 80,340
Myovant 6,500 63,277 106,050
Nektar 6,500 63,277 206,310
Novavax 27,000 60,984 30,510
Pacira 1,500 23,907 60,225
Sangamo 7,190 53,597 88,437
Ziopharm 12,500 101,000 56,875

(11/09/17)

Equities: $1,687,544
Cash: $10,670
PORTFOLIO VALUE: $1,698,214

*The Model Portfolio is designed to reflect specific recommendations. We began the Model Portfolio on 12/23/83 with $100,000. On 4/13/84, we became fully invested. All profits are reinvested. Stocks recommended since then may be equally attractive, but may not be in the Model Portfolio. Transactions and positions are valued at closing prices. No dividends are created, and a 1% commission is charged. We don’t use margin. Interest income is credited only on large cash balances.

THE TRADER’S PORTFOLIO**

COMPANY SHARES OWNED TOTAL COST TODAY’S VALUE
Long Positions
Acadia 3,000 102,417 87,480
Alkermes 2,000 27,189 96,100
Anthera 9,765 70,985 2,270
Esperion 4,075 100,005 197,230
Five Prime 4,020 70,679 111,635
Incyte 2,229 51,176 229,565
Intrexon 2,170 75,472 34,460
Ionis 3,300 53,501 181,896
Madrigal 2,910 49,964 130,135
Medicines Co 1,250 40,375 38,625
Myovant 7,410 102,831 104,777
Nektar 6,000 36,411 190,440
Novavax 25,000 58,025 28,250
Pacira 1,000 15,938 40,150
Sangamo 7,190 53,597 88,437
Ziopharm 12,500 101,000 56,875

(11/09/17)

Position Total: $1,618,326
Margin: –$691,228
PORTFOLIO VALUE: $927,098

**The Trader’s Portfolio joined the Model Portfolio on 1/6/05 with $500,000 and is designed to take advantage of short-term opportunities throughout the biotech sector. The Trader’s Portfolio will hold both long and short positions in stocks, trade-in options, and use margin. These strategies increase risk. Although there is no limit on the time any purchase can be held, the time frame for most investments will be weeks to months.

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BENCHMARKS

NASDAQ S&P 500 MODEL TRADER‘S
Last 2 Weeks 2.9% 0.9% -0.6%
-4.1%
2017 YTD 25.3% 15.4% 28.1% 44.8%
Calendar Year 2016 7.5% 9.5% -29.6% -30.5%
Calendar Year 2015 -0.1% -0.1% 25.1% 27.9%
Calendar Year 2014 13.4% 11.4% 29.2% 45.0%
Calendar Year 2013 38.3% 29.6% 103.4% 214.7%
Calendar Year 2012 13.4% 15.9% 25.7% 68.7%

NEW MONEY BUYS

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Contact Info

 

Medical Technology Stock Letter
John McCamant, Editor
Jay Silverman, Editor
Jim McCamant, Editor-at-Large
Mahalet Solomon, Associate
Joan Wallner, Associate

 

BioInvest.com
PO Box 40460
Berkeley, CA 94704
510-843-1857
Send us an email

Subscribe now!

 

Download a PDF of MTSL Issue #864

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©Piedmont Venture Group (2017). Address: P.O. Box 40460, Berkeley, CA 94706. Telephone: (510) 843-1857. Fax: (510) 843-0901. BioInvest.com. Email: mtsl@bioinvest.com. Published 24 times a year. Email subscription rates: 1 year – $399; 2 years – $678; 3 years – $898. You may cancel at any time for a prorated refund. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representations or warranty, express or implied, is made as to the accuracy or completeness. In no way shall this newsletter be construed as an offer to sell or solicitation of an offer to buy any securities. The publisher and its associates, directors or employees may have positions in, and may from time to time make purchases or sales of, securities mentioned herein. We cannot guarantee and you should not assume that future recommendations will equal the performance of past recommendations or be profitable.