The Sick Economist's Blog, page 12
August 12, 2020
GILEAD: DANIEL O’DAY DOES M&A
Gilead, one of the most stories biotechnology companies globally, creates medicines for some of the most life-threatening illnesses. The company has currently approved medication for HIV/AIDS, liver diseases, and a wide variety of other bodily diseases.
In the past year, Gilead’s remdesivir has gained considerable recognition in its treatment for Covid-19. In the description of their fight against Covid-19, the company mentioned that “In the United States, the Food and Drug Administration (FDA) has authorized the emergency use of remdesivir to treat hospitalized adult and pediatric patients.” Although this may be great news to Gilead, the company is growing at a slower rate, and in their reported Q1 financial results, reported a 21% decrease of net income from 2019 to 2020, or $1.975 to $1.55 billion. With the company going in the wrong direction, can the new man in charge, Daniel O’Day, turn things around?
A New Sheriff in Town
In March of 2020, Gilead announced that Daniel O’Day would serve as “Chairman of the Board of Directors and Chief Executive Officer.” Before being the Gilead CEO, O’Day served as the CEO of Roche Pharmaceuticals and other roles for over twenty years. On their website, the Swiss biotech company states, “We have been at the forefront of cancer research and treatment for over 50 years, with medicines for breast, skin, colon, ovarian, lung and numerous other cancers.” With being such a successful company in the cancer field, amassing a market share of over $300 billion, this experience from O’Day will be vital in Gilead’s further research and treatment of cancer.
Gilead’s Acquisition of Kite Pharma
Known for their many types of medication for severe illnesses and diseases, Gilead, in recent years, has started a new journey in treating and stopping the spread of cancer.
On August 28, 2017, Gilead, in a significant move, acquired Kite Pharma for $11.9 billion in cash. This acquisition, as suggested by Gilead in their announcement, “immediately positions Gilead as a leader in cell therapy.” Before the acquisition, Kite Pharma was “an industry leader in the emerging field of cell therapy, which uses a patient’s own immune cells to fight cancer.”
Among their excitement for the acquisition of Kite Pharma, Gilead was most interested in Kite’s Axicabtagene ciloleucel, a “CAR T therapy candidate.” Before the acquisition, Axicabtagene ciloleucel was approved by the FDA for adult use in treating large B-cell lymphoma. By acquiring Kite Pharma, Gilead could now use this therapy and similar candidates to treat the spread of cancer. Through just one acquisition, Gilead has positioned themselves for success in the cancer treatment field.
Gilead’s Acquisition of Forty Seven
Along with their acquisition of Kite Pharma, Gilead has also acquired another cancer research company, Forty Seven. On March 2, 2020, Gilead announced that they would acquire Forty Seven, Inc. for $4.9 billion. In their announcement, the Gilead mentioned Forty Seven’s “Investigational Immuno-Oncology Therapy” or according to CancerCare “the study and development of treatments that take advantage of the body’s immune system to fight cancer.” Within Gilead’s interest in this acquisition lies Forty Seven’s magrolimab, “a monoclonal antibody in clinical development for the treatment of several cancers.” Although less than half of the price of Kite Pharma, this acquisition allows Gilead to venture further into the cancer treatment field through Immuno-Oncology. Hey, if you can’t beat them, buy them!
Gilead’s Agreement with Arcus Biosciences
Gilead doesn’t just buy out their competitors or future competitors but also make agreements with, like Arcus Biosciences. On May 27, 2020, Gilead announced a “10-year Partnership to Co-develop and Co-commercialize Next-generation Cancer Immunotherapies” with Arcus Biosciences. Acrus, similar to Gilead’s other acquisitions, makes therapies and drugs for battling the spread of cancer. According to Gilead, this partnership will “Access to Arcus’s Clinical and Preclinical Pipeline of Immuno-Oncology Product Candidates that Target Critical Biological Pathway.” Gilead, in a 6-month timespan, has set up a far-reaching control of the cancer treatment business with new technology by acquiring and partnering with companies.
Gilead + Kite Pharma = Cancer Treatment and Approvals
Through the acquisition of Kite Pharma, Gilead has also acquired Kite’s T Cell Therapy. According to Gilead, “Cell therapy is a cutting-edge approach that begins with collecting a patient’s T cells through a process called leukapheresis.” The cells are then modified to target specific cancer cells, which Gilead calls “Harnessing the power of the immune system to treat cancer.” According to Gilead, T Cells “sometimes fail to recognize and eliminate tumors.” Although, with Kite Pharma’s CAR T Process, which engineers T cells to attack cancer cells, the immune system can effectively attack cancer tumors.
On July 24, 2020, the U.S. FDA approved Kite Pharma’s Tecartus
, a “CAR T Treatment for Relapsed or Refractory Mantle Cell Lymphoma.” This approval is the first of its kind, regarding CAR T treatment and crowns Kite Pharma as “First Company with Multiple Approved CAR T Therapies.” Tecartus or brexucabtagene autoleucel shows significant results in ZUMA-2, “a single-arm, open-label study.” Patients who were given Tecartus showed an 87% response rate and a 62% complete response rate. These results show promising results for the future of T Cell Therapy. With Kite Pharma owning a significant market share and approval share of this new therapy, any new approval or progress will significantly impact Gilead.
Financials and Cancer Treatment
As previously stated, Gilead, throughout the past year, has been struggling with revenue growth and net income. In its most recent quarterly earnings report, Gilead reported a 7% decrease in Q2 revenue compared to Q1. In response to their weak financial report, Gilead stated that Covid-19 has significantly affected their patient starts, which have led to lower sales in treatments, such as Ranexa and Letairis. Although company revenue may be lower due to the pandemic, Gilead has previously seen slower growth in recent quarters, not attributed to Covid-19.
With Gilead reporting weak revenue and sales results due to Covid-19, the cancer research and further treatment may become more viable to company revenue. As previously stated, the CAR T Treatment has gained further recognition through the July 24 approval, even during the pandemic. If Kite Pharma can obtain additional approvals from their new cancer therapy, and bring treatments to the market, Gilead’s revenue will likely increase. With Gilead seeing slower growth over the past years, Kite Pharma’s new cancer therapy may provide needed revenue growth in the cancer field.
Gilead’s Stock
Gilead, under the ticker symbol (NASDAQ: GILD), has seen stagnant growth over the past year and a constant downtrend over the past few years. Currently, Gilead is 40% off its all-time highs and sits at $70 share. If Gilead, with a new CEO and Kite’s new cancer therapies, can see new growth, investors may find a reason to buy into Gilead’s falling trajectory.
For a value investor, Gilead is the perfect stock to own. With a 3.91% dividend yield and smaller percentage moves, an investor can be comfortable to hold Gilead during unstable times like Covid-19.
The Future ford Gilead and Kite Pharma
Gilead’s future, although being darkened by decreasing revenue, remains relatively bright. With treatments ranging from HIV, Covid-19, and other severe diseases, Gilead is well diversified. In particular, with their new acquisition of Kite Pharma, their market share of CAR T therapies will enable them to grow revenue if such methods prove successful.
Their new CEO, Daniel O’Day, will only provide more support in the cancer research field and company growth along with their diversified medicine and treatments. Although Gilead may not be in the glory days regarding company growth, prospects such as cancer treatment and CEO guidance provides an investor with the assurance of Gilead’s great future.
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August 6, 2020
WHAT ARE MONOCLONAL ANTIBODIES, AND WHY DO THEY MATTER TO A BIOTECH INVESTOR?
By John Coughlin, Biotech Analyst
What is a monoclonal antibody?
The scientifically correct definition of a monoclonal antibody is a laboratory-produced molecule engineered to serve as substitute antibodies that can restore, enhance, or mimic the immune system’s attack on cancer cells, and now Covid-19. Monoclonal antibodies have gained popularity in recent years, especially for their experimental use in treatments for Ebola. The drugs that used these monoclonal antibodies, Mab114 and REGN-EB3, had reduced the mortality rate of Ebola from 50% to 35% within selected trials. These promising results have shown the effectiveness of monoclonal antibodies and their possible use in fighting Covid-19, which has a much lower mortality rate.
Monoclonal antibodies vs. cancer
Along with their use in Ebola, monoclonal antibodies are widely used to treat and prevent the spread of cancer by “eliminating damaged or abnormal cells, such as cancer cells.” Along with eliminating cancer cells, monoclonal antibodies also stop blood vessel growth in tumors and block cancer cell growth. These efforts provide significant help for the immune system by carrying out specific actions in fighting bacteria or a particular virus. Along with their common uses, monoclonal antibodies can be manipulated to receive the best results in treatment. During radiation treatment, “the antibody can be engineered as a delivery vehicle for other treatments.” This versatility of monoclonal antibodies shows the potential for how they can be applied in treating Covid-19.
Monoclonal antibodies vs. Covid-19
Commonly used in treating cancer, monoclonal antibodies can find a similar purpose in stopping the internal spread of Covid-19. When someone contracts Covid-19, the human body will release antibodies to attack the foreign virus. In recent months, taking blood from past Covid-19 positive patients or a-symptomatic people has become a widely accepted process in getting antibodies.
Although successful, this process takes time and is not scalable to treat large populations of Covid-19 patients. With monoclonal antibodies, which are “laboratory-produced molecules,” the “fake” antibodies serve the same function as “natural” antibodies and can be used to treat severe cases of Covid-19.
In a recent article published by Yahoo News, experts have called the monoclonal antibody a ‘bridge to a vaccine.’ Within the article, a link between the saying “Give a man a fish and you feed him for a day; teach a man to fish, and you feed him for a lifetime,” and these antibodies were related to treating Covid-19. Yahoo News suggested, “Monoclonal antibodies are like giving the man a fish; the vaccine teaches him to fish.” This connection shows how vital the monoclonal antibody is to finding a vaccine and the further, the investment opportunity it provides.
The Growing Market for monoclonal antibodies
According to Fortune Business Insights, “the global monoclonal antibodies therapy market size is projected to reach USD 350.10 billion by the end of 2027.” This projection, according to Business Insights, represents a 14% YOY increase from 2020-2027. From an investor standpoint, this increase rate provides a 6% advantage over the average growth of the stock market. Along with projection, Covid-19 will only accelerate the growth of monoclonal antibody use, which could provide a safe-haven for investors wary of the future outlook of global markets.
According to Fortune Business Insights, the lead companies using monoclonal antibodies are AbbVie Inc., Merck & Co., Inc., Johnson & Johnson Services, Inc., and many others. By investing in these individual companies, biotech investors expose themselves to great companies and the potential success of monoclonal antibody therapies.
Individual Company Success with the Monoclonal Antibody
Johnson & Johnson) On November 16, 2015, Johnson & Johnson published an article titled “DARZALEX® (daratumumab) Approved by U.S. FDA: First Human Anti-CD38 Monoclonal Antibody Available for the Treatment of Multiple Myeloma.” Within the article, the company announced that “DARZALEX is the first human anti-CD38 monoclonal antibody (mAb) approved anywhere in the world.” This early success of monoclonal antibodies, especially in well-known companies like Johnson & Johnson, shows the potential for wide uses in treating and preventing the spread of bacteria or viruses within the human body.
Merck & Co. ) Published on October 21, 2016, Merck & Co. posted an article titled “FDA Approves Merck’s ZINPLAVA
(bezlotoxumab) to Reduce Recurrence of Clostridium difficile Infection (CDI) in Adult Patients.” Later in the article, Dr. Nicholas Kartsonis, vice president of clinical development, explained that “ZINPLAVA is a human monoclonal antibody that binds to C. difficile toxin B and neutralizes its effects.” This effectiveness of monoclonal antibodies shows the potential use in future treatments. Along with their potential, the FDA approval shows the success of monoclonal antibodies within the approval process, vital for biotech companies.
Eli Lilly) In my most recent article, I wrote about Regeneron and Eli Lilly’s race to find a vaccine for Covid-19. In Eli Lilly’s article titled “Lilly Begins World’s First Study of a Potential COVID-19 Antibody Treatment in Humans,” the company stated their potential treatment, LY-CoV555, “is a potent, neutralizing IgG1 monoclonal antibody (mAb) directed against the spike protein of SARS-CoV-2.” If LY-CoV555 shows success, monoclonal antibodies can potentially offer better treatment for Covid-19 and will gain further recognition within the field of biotechnology.
Concluding Remarks about the Monoclonal Antibody
Before writing this article, I did not know the efficacy of the monoclonal antibody. The headlines that many biotech writers publish fail to recognize the importance of these laboratory antibodies and their use to treat Covid-19. Without monoclonal antibodies, finding a vaccine for or even treating Covid-19 would be out of reach.
Along with their significance within the biotechnology industry, monoclonal antibodies provide a value investor with serious gains. With many companies, such as Eli Lilly and Merck & Co., using these antibodies, the potential for more FDA approvals rise, which are vital for company success.
In conclusion, the biotech industry is filled with unrecognized potential, whether in the company itself or their treatments. The job of a biotech investor is to find this evolving technology and use it to their advantage. In this case, monoclonal antibodies are no exception and have the potential to change the world and your portfolio balance.
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August 4, 2020
NOVOCURE INC: THE TESLA OF ONCOLOGY?
Biotech Analyst John Coughlin investigates…
Founded in 2000 by Yoram Palti, Novocure is an oncology company that creates technology to fight cancer tumor growth. According to their about us section, Yoram Palti “sought to leverage his expertise in biophysics to develop a new way to treat solid tumor cancers that would destroy tumor cells while sparing healthy tissue and avoiding many of the life-altering side effects of existing cancer therapies.” This effort by Palti has set apart Novocure from other oncology companies through treating cancer with electric fields. Ever since its founding in 2000, the company now has 600 employees and “active markets, including the United States, Germany, Austria, Switzerland, Sweden, Israel, and Japan.”
Novocure’s secret?
As previously stated, Novocure has taken a new angle to fight the spread of cancer tumors through electrical fields. According to the company, “Tumor Treating Fields is a cancer therapy that uses electric fields tuned to specific frequencies to disrupt cell division, inhibiting tumor growth, and potentially causing cancer cells to die.” Aside from the other practices of chemotherapy, this new treatment takes a new angle of treatment and has shown promising results.
Created by its founder Yoram Palti, the company currently holds two patents regarding this electric field treatment. Their first patent, expiring in 2029, and the other expiring in 2031, includes Palti’s targeting certain tumors and stunting their cell division. Along with electric treatment, Novocure’s method can also be combined with other chemotherapy treatments like Paclitaxel, Doxorubicin, or Cyclophosphamide, as provided in Patent #2.
In many modern-day chemotherapy treatments, healthy cells are sacrificed in the process of eliminating cancer cells. According to Novcure, the Tumor Treating Fields “do not stimulate or heat tissue and targets dividing cancer cells of a specific size.” This means that the Tumor Treating Fields do minimal to no damage to healthy cells. It seems like the Tumor Treating Fields, in all aspects of therapy, triumph over other chemotherapy methods.
Electric Field Treatment Legitimacy
Like any new technology in the biotechnology space, many investors are skeptical of its legitimacy and further applications. Although Tumor Treating Fields are a “new” technology, the treatment has been met with great enthusiasm and approval from the FDA. On May 23, 2019, the company published an article titled “FDA Approves the NovoTTF-100L System in Combination with Chemotherapy for the Treatment of Malignant Pleural Mesothelioma” This FDA approval shows how Tumor Treating Fields can be applied to the most severe cases of cancer, and further its approval from the FDA. Within the article, the company pointed out that the “Tumor Treating Fields delivery system is the first FDA-approved mesothelioma treatment in more than 15 years.” With such a low approval rate regarding mesothelioma treatment, this approval is monumental regarding treatment for one of the most aggressive forms of cancer.
Along with their approval in the United States, Novocure also has a wide range of foreign markets such as Germany, Austria, Switzerland, Sweden, Israel, and Japan. With doubling revenue YOY in Japan, and an established market within Europe, Novocure’s Tumor Treating Fields has been received with open arms worldwide.
How Tumor Treating Fields are Administered
With many modern-day chemotherapy treatments in hospitals, especially difficult during Covid-19, treatment can be hard to receive in isolated patients. Although with Tumor Treating Fields, the patient can be administered treatment at home or on the go, as far away from the hospital as they would like to be.
Possible through the Optune® delivery system, TTFields treatment can be administered easily for cancer patients. According to Nature.com, the Optune® delivery system “delivers alternating electric fields through transducer arrays placed on the patient’s shaved scalp.” This on-the-go treatment delivered through the scalp enables cancer patients to have a relatively active day, as the device is hands-free. Along with its hands-free ability, Nature.com states the Optune® delivery system weighs approximately 1.2 kg (2.7 lbs). Think of it as carrying a half-gallon of milk around in a plastic bag. With carrying little weight, cancer patients can participate in daily activities and not be held back by other chemotherapy treatments.
Enabled by Novocure, the future of cancer treatment can be transformed into allowing cancer patients to keep an active lifestyle while battling the most aggressive forms of cancer.
Current Operations
During Covid-19, Novocure is still participating in trials for their Tumor Treating Fields. In an article published recently on July 22, 2020, titled “First Patient Enrolled in Novocure’s EF-33 Phase 2 Pilot Trial of Tumor Treating Fields Delivered Utilizing High-Intensity Transducer Arrays,” the company highlighted their use of electric field treatment for glioblastoma (GBM). If the Tumor Treating Fields show success in treating glioblastoma, then Tumor Treating Fields will gain further recognition in the cancer treatment field not only for mesothelioma but also for glioblastoma.
Novocure’s Stock Price and Financials
Under the ticker symbol NASDAQ: ($NVCR), Novocure has seen tremendous growth since its IPO in 2015, growing +250%. Currently, the stock price trades at $67; 20% off it’s all-time highs in 2019. With a P/E ratio of 768.08, Novocure is a speculative stock, only for investors confident in the growth of Novocure’s Tumor Treating Fields.
Although Novocure’s stock may be overbought, its financials are more appetizing than the stock price. In their Q1 financial report, Novocure reported a 39% increase in revenue from 2019 to 2020. Currently, Novocure has established markets within the EMEA (Europe, the Middle East, and Africa), and the United States. Cumulatively, these two regions bring in $95 million worth of revenue and have seen tremendous growth over the past three years. Along with their established markets, Novocure is expanding its reach to Japan, which has seen a 100% increase in revenue YOY from $3 million in Q1 2019 to $6 million in Q1 2020. If Japan can become a more established market to Novocure, company revenue will increase dramatically.
Concluding Remarks
Novocure is one of the only companies in the biotechnology industry that lives up to its technology’s hype. Within a growing technological world and growing space for possible cancer treatments, Novcure will continue to gain recognition through its Tumor Treating Fields. With the company seeing tremendous financial growth in the United States and other foreign markets, Novocure will continue to expand production and international influence. For all of the reasons stated above, Novocure is a BUY, for its incredible technology and original products.
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August 3, 2020
3 COMPANIES HOPING TO MAKE CASH TREATING NASH
Biotechnology Strategist Julliete Duguid investigates…
NASH, or nonalcoholic steatohepatitis, is the most severe form of fatty liver disease. It is brought on by excessive fat build-up around the liver, which can lead to a variety of problems such as cirrhosis and scarring, and in extreme cases, may lead to liver failure and even cancer. With the rising prevalence of obesity throughout the world, it, unfortunately, makes sense that there has been a rise in the number of NASH cases: this trend will likely continue.
Currently, there is no drug that treats NASH available on the market–instead, doctors usually recommend making natural changes to one’s lifestyle and diet regimen. They recommend that patients eat healthier foods and lose weight. Tarek Hassanein, M.D., professor of medicine at University of California San Diego School of Medicine has said about weight loss in patients with NASH “If I get a patient to lose more than 5% of their body weight, their liver numbers are almost totally normal…If they lose more than 10% of their weight, then fibrosis starts to improve, even without any medication”. It may seem counterintuitive, then, to produce a drug for this disease. However, there are several companies racing to develop a drug that treats NASH. Why is this the case?
In fact, there are several reasons why this is a good idea–oftentimes, patients find it difficult to maintain an active lifestyle. Also, some patients’ NASH may have progressed to such a stage that the cirrhosis is simply irreversible, no matter how much weight is lost. While it is unlikely that a NASH drug developed with today’s technologies will have the ability to completely reverse liver damages, it is necessary as an alternative treatment option for those afflicted. Here are 3 biotech companies that are in race to bring an FDA approved NASH treatment to the market.
Genfit ($GNFT)
Genfit is a company that develops therapeutic and diagnostic solutions in metabolic and inflammatory diseases, with an emphasis on liver diseases. Recently, the company entered a pivotal phase 3 study for their drug candidate elafibranor for the treatment of NASH. The drug acts simultaneously on two nuclear receptors called PPARa and PPARd, both of which play an important role in the development of NASH and its harmful effects. One of the outstanding qualities of elafibranor is that it does not have any of the unwanted side effects associated with interaction with PPARy, which has been a concern with other NASH drug candidates; on the contrary, it does not have any pharmacological activity with the receptor. Thus, unpleasant side effects such as weight gain and fluid retention are not a concern. The company’s phase 2b trial, launched in 2012, was one of the largest interventional trials and the first international trial ever conducted on NASH. Patient treatment outcomes included improvement in markers of liver dysfunction such as ALT, GGT, and ALP. Elfabinor has even reached the FDA recommended endpoint “NASH Resolution without Worsening of Fibrosis”, which was the primary goal of their global phase 3 study. All in all, it seems as though this company is positioned to produce and profit off a NASH drug in no time.
Madrigal ($MDGL)
Madrigal Pharmaceuticals is a clinical stage biopharmaceutical company pursuing novel therapeutics to target a specific thyroid hormone receptor pathway in the liver to help improve treatment options to fatty liver diseases. In April, the company began conducting a phase 3 clinical research study called MAESTRO-NASH designed to test their investigational drug resmetirom. The drug works by interacting with a thyroid hormone receptor in the liver, which can decrease the amount of fat in the surrounding area and help with the inflammation commonly associated with NASH. In addition to its direct assistance with the disease, resmetirom proved to be beneficial in other ways, such as in reducing the amount of ‘bad’ cholesterol and triglycerides in the system. And, the company has been dedicated to continue testing safely despite the complications that come with Covid-19. Paul Friedman, M.D., CEO of Madrigal said, “In response to direction from regulatory agencies, a guidance to allow more flexible processes at sites impacted by COVID-19 was rapidly put in place to allow patients to progress through the screening process or continue their enrollment in the study”. There is also an increased incentive for those with NASH to continue participating in studies despite the pandemic–Dr. Stephen Harrison, M.D., Principal Investigator of the study, weighed in. “With their high-prevalence of diabetes and metabolic syndrome, NASH patients are at higher risk for developing life-threatening complications from COVID-19 infection. Controlling the liver disease and metabolic risk of such patients may help them survive COVID-19”. On the whole, Madrigal seems as though they are making great progress with their promising candidate.
AstraZeneca ($AZN)
AstraZeneca, a British-Swedish pharmaceutical and biopharmaceutical company, is taking an innovative approach. They are targeting several mechanisms when it comes to treatment of NASH, each focused on a particular facet of the disease. Through metabolic research, they are looking into how liver fat and inflammation can be reduced, thus halting/reversing the progression of fibrosis and liver damage. These methods can also help alleviate Type 2 diabetes. Through their precision method approach, the company is looking into how they may target and eliminate a specific genetic mutation that makes individuals 4 times more likely to get NASH. Through cell therapy and various regeneration techniques, they are exploring restoring liver health by replacing damaged liver tissue with healthy tissue. In their effort to provide patients with more holistic, and thus more effective treatments, they have been developing a dual agonist of the glucagon-like protein-1 and glucagon receptors. Many NASH patients have other conditions, such as diabetes and obesity. This drug treatment would help with all of those conditions by enhancing glucose control, reduce production of lipids and help promote weight loss, all while improving liver health. Because of their use of many types of technologies in an effort to target all facets of the problem, AstraZeneca seems to be well positioned to make impressive breakthroughs in the realm of NASH treatments.
All in all, although NASH is currently being treated largely without any medication, it seems as though there is a greater need for a drug treatment now than ever before. Because of the many, many companies focusing their efforts on delivering innovative solutions for NASH patients, the markets is expected to grow at enormous rates–in fact, from 2018 to 2028, the market is expected to grow at a CAGR of 39.36%, reaching a value of $61.60 billion by 2028. Needless to say, this is a market that’s worth investing in now.
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July 31, 2020
THREE GRAPHS FOR BIOTECH INVESTORS
Figure 1
The following figures include data from 31 firms in healthcare across six sectors encompassing biotechnology, pharmaceuticals, healthcare providers & services, residential & commercial REITs, healthcare equipment and supplies, and food & drug retailers. The market capitalizations of the firms in the sample range from $21 million to $393 billion, while annual returns range from -71.60% to 158.67%.
Figure 1 consists of the annual returns over five years, or since IPO for companies who went within the last five years, versus the companies’ market caps, in millions. A market cap of $50,000 on the chart, for example, represents a company with a market cap of $50,000 million, or $50 billion. Additionally, the annual returns strictly reflect the appreciation in share price over the period, excluding dividends.
The chart portrays that companies with a lesser market cap have more variation in returns, with a few companies providing exceptional gains while most perform poorly. As market cap increases, however, annual returns become more stable, with the majority of these firms providing a yield of around 8-12% per annum. Consequently, the larger firms generally have more extensive and stable returns, while smaller firms have lesser, more erratic yields. Furthermore, most firms provide negative or relatively mediocre gains, while a few vastly outperform.
Figure 2
Figure 2 comprises annual returns versus stock buybacks over the last year, also known as trailing twelve months. Stock buybacks are also represented in millions, just as the market caps were previously, so $2,000 represents $2,000 million, or $2 billion of stock buybacks. Stock buybacks, also known as stock repurchases, decrease the total number of shares outstanding, thus increasing ownership of existing stockholders. Negative stock buybacks represent the issuance of shares or stock dilution. By issuing equity in the form of additional shares, the company can raise capital, but at the expense of existing shareholders, as their shares represent less ownership in the firm. The firm may then use this capital to fund its growth. In the sample, stock repurchases range from a low of -$3,520 million ($3.52 billion) to a high of $7,433 million ($7.43 billion).
The graph exemplifies the relationship between stock issuances and repurchases, as some companies that have issued shares have experienced high yields through their path to growth and expansion, while others yielded lackluster results. As stock buybacks increase, however, returns become increasingly stable. The companies with the most extensive repurchase programs have predominantly positive returns. Nevertheless, some firms with $2 billion in stock buybacks also have negative returns.
Figure 3
Figure 3 encompasses annual returns versus the industry sector, represented by a sector number. A legend for the sectors corresponding to their respective number is on the right side of the chart. Each point represents a company and its annual return within each sector. Some of the data points overlap, making them difficult to view, such as the biotechnology sector, in which there are six companies with two pairs of companies having nearly identical returns. The data used in the sample is included in the link below to view these companies with similar yields more effectively if desired.
The graph portrays the difference in returns across sectors and within sectors. Healthcare equipment and food supplies firms, for example, appear to outperform residential and commercial REITs, on average. Yet, within the healthcare equipment and supplies sector, there is a firm in the sample significantly underperforming the others. Similarly, in Biotechnology, two firms have experienced stellar returns, while others within the sector have experienced inferior yields. This difference is reasonable, as some firms and sectors become increasingly popular or experience periods of exceptional growth and profitability because of their strategic advantage through economics, despite other firms and sectors being out of favor or decreasingly profitable.
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July 28, 2020
OPKO, INC AND BIOREFERENCE…DIAGNOSIS: PROFIT?
By Juliette Duguid, Biotechnology Strategist
The reason why this stock has come into the public eye is because of its recent high-profile deal with the NFL–the company’s BioReference Lab Division is now the official Covid-19 tester of the football teams. BioReference Labs is one component of Opko’s operations, which focuses on providing comprehensive testing to physicians, clinics, hospitals, employers, correctional institutions, government units, and medical groups. The company’s ability to land such high-profile clients is a testament to the excellent service it provides–and the fact that their tests are both highly accurate and highly efficient. In fact, the company’s test can produce accurate results in 72-hours, and the service can be expedited up to 24-hours for front-line workers. Furthermore, last week, BioReference also announced that they entered into a coronavirus screening contract with the National Basketball Association. According to the company, under this agreement, testing will encompass PCR diagnostics, rapid diagnostics, and antibody testing. Executive Chairman of BioReference Jon Cohen is quoted saying “Collaborating with the National Basketball Association throughout the Covid-19 pandemic has been a privilege for BioReference…Similar to testing for employers trying to get their employees back to work, professional sports entertainment is another integral part of the everyday American experience. We are proud to be part of the solution that can help the nation return to normal”. It is also quite noteworthy that Opko was able to beat out biotech giants like Quest Diagnostics and LabCorp to acquire this contract with the NFL, which is again, a testament to this group’s ability to profit greatly from the coronavirus. After Jon Cohen announced that they will be testing all 32 of the league’s teams on CNBC, the stock price jumped 23%.
On July 20th, Opko’s BioReference Lab Division received another win when it signed a contract with the CDC for Indefinite Delivery Indefinite Quantity (IDIQ) to provide Commercial Surge Capacity Testing as part of the CDC’s Covid-19 Emergency Response. In other words, the division will be working closely with the CDC in an effort to provide antibody testing and release key information and data about the prevalence of the virus in various demographics in an effort to help mitigate its spread. Cohen said in a statement that “Many studies suggest that the majority of the public has not been infected with Covid-19, but multiple factors limit these findings. Together with the leading public health authority, we are leveraging extensive depth and breadth of testing expertise to increase overall understanding of the disease burden of the virus”. The contract is scheduled to end in November of 2020.
In addition to winning such prestigious contracts, Opko has been working steadfastly to improve outcomes in the greater community. In April, the company announced that a subsidiary of BioReference Labs, called GeneDx, “…will begin testing for Covid-19 to further expand public access to testing”. In addition, they also announced that they would leverage its facility located in Melbourne, Florida to make testing even more accessible to the public, especially in the Florida region, which seems to be experiencing a rise in cases. These two facilities will have the same technologies to ensure that the same level of accessibility is offered to both regions and to ensure that diagnoses occur earlier in the progression of the disease. On a similar note, the company partnered with the City of Miami to make testing more accessible for residents by providing drive-through testing by appointment.
BioReference labs was selected by Rite Aid to help significantly expand Covid-19 testing efforts by adding 46 no-charge testing sights which will operate through the store’s drive-through windows. Testing would also be open to adults who aren’t currently exhibiting symptoms, which many testing sights don’t currently offer–and is a step in the right direction in an attempt to catch the virus at its earliest stages.
On May 7th, Mayor Bill De Blasio announced a partnership with Bioreference Labs in an effort to make antibody testing more accessible to the general public. The survey, which was set to be issued in all 5 boroughs, aimed to test 70,000 New Yorkers over a two week period, with testing facilities having the capacity to administer 5,000 tests daily. According to De Blasio, “…While antibody tests are not a fix-all solution, they will give our communities the knowledge they need to help defeat the virus together”. Cohen agreed, saying that “For New York, a city that has been seriously impacted by the COVID-19 pandemic, this type of information will be of great value in helping healthcare professionals to analyze the presence and progression of the disease in order to identify at risk populations for possible early intervention”. Furthermore, in mid May, BioReference partnered with employers in New York to launch the BioReference Employer Solution, a screening program that aims to assist employers as they make decisions about bringing their employees back into work.
The bottom line is, Opko is quite an interesting stock — according to the company’s Q1 earnings report, consolidated revenues for this quarter were $211.5 million compared to $222.5 million for the same period last year. Diagnostics revenue seemed to be the sector within the company that took the largest hit, with revenues from the first quarter of 2020 being $170.8 million compared to $178.9 million in 2019. Opko has consistently lost money for years. That being said, the company’s Q2 earnings report has yet to come out, meaning that these numbers could very well take a turn for the better–especially because Opko is beating out its fellow biotech giants as far as producing and delivering coronavirus diagnostic tests. Opko plans to announce second quarter earnings on August 5th. With the Market hoping for Opko’s first profitable quarter, the time to buy may well be now.
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July 27, 2020
MODERNA INC. VRS OXFORD UNIVERSITY: A COVID-19 RACE
As countries around the world gradually eased their lockdown regulations in May and early June, many dreamt that we could leave the virus behind us and enjoy summer 2020 carefree. Several people are living that dream (well, not quite). Cool drink in hand — check. Swimsuit — check. Beachside view — maybe not. Unfortunately, in countries such as the United States and Mexico, the virus is surging in numbers like never before. On July 16, daily coronavirus cases in the U.S. climbed to 77,225, a brand new record during a month when people thought that the warm weather would come to the rescue. The popular and openly debated question is, “Are these high case numbers due mainly to increased testing or the lifting of lockdowns”? The answer is… it doesn’t really matter. The reality is, this virus is not going away until we develop a vaccine. It seems as though there is a new company entering the COVID-19 vaccine race every day; however, today we are going to focus on two of the major players: Moderna Therapeutics and Oxford University . Moderna certainly gets most of the hype, but is it really in a winning position? Let’s find out.
By: Matthew Rojas, Biotech Financial Analyst
What’s the Difference?
Although both of these organizations are in the process of developing vaccines for COVID-19, their mechanisms of action to treat this highly infectious disease are quite different. On one hand, Moderna is using a traditional messenger RNA or mRNA vaccine while, on the other hand, Oxford is using a more unorthodox method for its vaccine candidate: a chimpanzee cold virus with the coronavirus spike protein on its surface. We’ll start with Oxford’s vaccine because, well, Moderna always gets the spotlight.
Oxford’s Vaccine
In April of 2020, Sarah Gilbert, a Professor of Vaccinology at the University of Oxford, decided to enter the COVID-19 vaccine race with a candidate of her own, which is formally called ChAdOx1 nCoV-19. She is developing her vaccine in partnership with British-Swedish biopharmaceutical giant, AstraZeneca. The duo’s unique approach is remarkable; essentially, a chimpanzee adenovirus (common cold virus) is combined with the coronavirus spike protein, SARS-CoV-2. Once this modified virus is injected into the human body via a vaccine, the body is tricked into producing COVID-19 antibodies and killer T-cells, white blood cells that help eradicate the infection. The fact that their vaccine uses a chimpanzee adenovirus and not a human adenovirus may be critical because of its foreign status in the human body. For example, CanSino Biologic’s COVID-19 vaccine used a human adenovirus, and some people that had pre-existing antibodies to the common cold neutralized the vaccine before the body could produce a strong immune response to the coronavirus spike protein.
On July 20, 2020, Oxford released the results from its Phase I/II clinical trial for its COVID-19 vaccine. Their study revealed that 90% of the people that received the vaccine developed the necessary neutralizing antibodies as indicated in a blood test. The 10 people that did not produce the coronavirus antibodies were given a second dose of the vaccine, and all of them produced the antibodies; these people actually produced the highest level of antibodies, so this may be an efficient strategy for future vaccination. Additionally, the most common side effects were mild to moderate pain, fatigue, and headache — the safety profile looks clean. These results are extremely promising; although, the United States Food and Drug Administration (FDA) warns, “a vaccine would need to be 50% more effective than a placebo to be approved and would need to show more evidence than blood tests indicating an immune response”.
Because their phase I/II trials did not show whether the vaccine prevents/mitigates the symptoms of COVID-19, Oxford has gradually started additional clinical trials. A Phase III trial that will include 30,000 U.S. patients will begin shortly, and Phase III trials in low to middle-income countries such as Brazil and South Africa are already underway. Oxford and AstraZeneca have already committed to supplying two billion doses of the vaccine to a broad range of countries including the U.S. and the U.K. Oxford has also secured £84 million from the U.K. government and $1.2 billion from the U.S. government to speed up the vaccine production process. The two entities are unsure of an exact time frame as to when the vaccine may be potentially approved, but it may be through human trials as early as September of 2020.
Moderna’s Vaccine
Moderna was one of the first-movers in the COVID-19 vaccine race with its first batch of mRNA-1237 vaccines shipped out for a phase I trial on February 24, 2020. I am going to provide a brief description of how mRNA vaccines work, but for a more comprehensive explanation on the subject, be sure to take a look at Lee Rivers’ article on mRNA. mRNA is a molecule in cells that carries codes from the DNA in the nucleus to the sites of protein synthesis in the cytoplasm. Once Moderna isolated the coronavirus spike protein, SARS-CoV-2, they interested it into an mRNA sequence and injected it into patients. After the patients were inoculated, coronavirus antigens were produced through the transcription/translation process, and the body learned how to prepare for the real virus by fighting those antigens and developing neutralizing antibodies. So, the development of neutralizing antibodies is common to both the vaccine from Moderna and Oxford; however, to reiterate, the mechanism of action (mRNA vs. chimpanzee cold virus) is the difference between the two.
On March 16, 2020, the first patient was dosed with Moderna’s vaccine, and from there, more patients of varying ages were added to the phase I clinical trial. The results of the phase I study were overwhelmingly positive; the interim analysis states that neutralizing antibody titers were observed in 100% of evaluated patients. The safety profile of the vaccine was relatively clean; however, at the 250μg dose level, three of the 14 patients reported one or more severe events. A phase II study was initiated on May 29, 2020, and enrollment was completed on July 8, 2020; we are still awaiting the results of this clinical trial. A phase III study with 30,000 participants is expected to begin on July 27, 2020. In terms of timeline, Moderna and Oxford appear to be neck and neck with Oxford a little bit ahead because it has phase III trials initiated in some lower-income countries.
Moderna was awarded up to $483 million from the U.S. government’s Biomedical Advanced Research and Development Authority (BARDA) to accelerate the development of their vaccine on April 16, 2020. In early May, they also announced a collaboration with Lonza to manufacture up to $1 billion of the vaccines per year. More recently, Moderna entered into a collaboration with Catalent Inc. for large-scale, commercial fill-finish of Moderna’s mRNA vaccine; the company will provide vial filling and packaging capacity for Moderna’s vaccine.
Who Will Win?
Both of these organizations have strong vaccine candidates for COVID-19, but in the end, only one will win. There are pros and cons that I see with each vaccine — we will start with Oxford’s candidate. The chimpanzee cold virus approach is less traditional than mRNA, for example; therefore, there is less evidence to support that it can treat infections like COVID-19. However, their phase I/II trials have been successful thus far, so it may very well be that their phase III trial will also be successful. Some pros are that Oxford’s vaccine has a stellar safety profile and has received a significant amount of funding from governments all over the world. Additionally, Oxford has already begun phase III testing in some countries.
On the other hand, Moderna’s vaccine is more traditional, using mRNA as the mechanism of action. mRNA vaccines are faster and cheaper to produce and may be safer because they are not produced using infectious elements. Additionally, the company is using well-established manufacturers, Lonza and Catalent. Moderna also has a strong safety profile, but a few patients have had severe reactions at the high dose level. They have received a significant amount of funding from the governments but not quite as much as Oxford. It is important to note that Moderna is a clinical-stage biotechnology company, so this will be their first experience in successfully launching a drug. On the other hand, Oxford has the powerhouse of AstraZeneca backing them, a pharmaceutical giant with significant launch and marketing experience. Lastly, their phase III clinical trial is slightly behind Oxford, scheduled to start on July 27, 2020.
Only time will tell which vaccine will win the race; however, if I had to put my money on one of these organizations, I would have to bet on Oxford and AstraZeneca’s candidate. Moderna was one of the first-movers in the vaccine race, so people tend to pay attention to it more, which is why the entire market tends to swing as it did on July 14, 2020, when the company released positive phase I results. However, the reality is that its clinical trials are behind Oxford’s candidate, its safety profile is slightly worse than Oxford’s vaccine, it has received less funding than Oxford, and it does not have any experience launching a drug. For those reasons, I believe Oxford will win the COVID-19 vaccine race. Regardless of who will come out on top, multiple vaccines will be needed to help inoculate people all over the world; both of these companies have stellar candidates, so I would recommend investing in both Moderna (NASDAQ: MRNA) and AstraZeneca (NYSE: AZN).
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July 22, 2020
A SAFE-HAVEN STOCK EVERYONE SHOULD HAVE IN THEIR BIOTECH PORTFOLIO?
By: Matthew Rojas, Biotech Financial Analyst
Biohaven:
What better name for a safe-haven stock than Biohaven? Biohaven is a clinical-stage biopharmaceutical company that has a portfolio of innovative, late-stage product candidates targeting neurological and neuropsychiatric diseases, including rare disorders. When I say that this company has a diverse clinical pipeline, I really mean it; Biohaven has product candidates ranging from small molecules to treat migraine headaches to inhibitors designed to treat amyotrophic lateral sclerosis or ALS. While many companies have struggled over the past few months, Biohaven has seen its stock price (NYSE: BHVN) increase by over 170% since mid-March from around $27.50 to almost $75.00. Let’s investigate this substantial increase and if we can expect even more share price growth in the future.
Rimegepant:
On February 27, 2020, Biohaven received its first-ever U.S. approval for its small molecule, Nurtec ODT or rimegepant, for the acute treatment of migraine headaches. According to Biohaven, rimegepant “provides fast pain relief, returns patients to normal function within one hour and delivers sustained efficacy that lasts up to 48 hours for many patients”. Rimegepant works by blocking the calcitonin gene-related peptide or CGRP receptor, a principal cause of migraine headaches. Their small molecule is one of the first CGRP receptor antagonists available in oral form; therefore it is easier and more comfortable for patients than traditional injectables. Nearly 40 million people in the United States suffer from migraines, so being a first mover in this space may give Biohaven a competitive advantage and, consequently, access to profits; however, some other companies are trying to infiltrate this market.
Competitors:
Biohaven faces fierce competition from two major players, Allergan and Eli Lilly, that have acute treatments for migraines of their own. Allergan’s Ubrelvy was the first-to-market oral CGRP antagonist to receive FDA approval in December of 2019. Additionally, Eli Lilly received FDA approval for REYVOW in October of 2019, an oral serotonin (5-HT)1F receptor antagonist that treats migraine headaches. Allergan, which merged with Abbvie in May of 2020, has a market cap of over $170 billion, and Eli Lilly has a market cap of over $155 billion. On the other hand, Biohaven is substantially smaller than both of these companies with a market cap of around $4 billion. However, some predict that sales for rimegepant will be $897 million by 2024, versus only $302 million for Ubrelvy and under $500 million for REYVOW in the same time frame. Biohaven CEO Vlad Coric, M.D., stated the company “will strive to outpace [their competitors] with a more efficient and innovative commercial launch, using modern-day strategies”. Although Biohaven may lose some ground to these companies, the total addressable market for migraines in the United States is extremely large, so they should be able to steal some of the market share. Nevertheless, I am skeptical that they will be able to beat out giants like Abbvie and Eli Lilly as some predict. Something that rimegepant does have going for it, however, is that it is currently in the process of a phase three registrational study for preventing, rather than treating, migraines. This additional indication could lead to more profit down the road for the small molecule.
Other Notable Product Candidates:
Beyond rimegepant, another one of Biohaven’s leading product candidates is troriluzole, a prodrug designed to control glutamate, the most abundant neurotransmitter in the human body. The prodrug works by increasing glutamate uptake, which solves the glutamate dysfunction associated with a variety of conditions. In early February of 2020, troriluzole failed in the phase III clinical trial to treat generalized anxiety; nevertheless, the company is currently testing the drug in phase II/III studies for a variety of other indications including Alzheimer’s disease, obsessive-compulsive disorder, and spinocerebellar ataxia. Many are worried that troriluzole will follow suit and fail in treating these other indications as it did in generalized anxiety, but so far, the clinical trials have had positive results.
The last notable product candidate in Biohaven’s clinical pipeline is verdeperstat, a myeloperoxidase enzyme inhibitor (MPO). Verdeperstat is currently in a phase III clinical trial for multiple system atrophy (MSA) and a phase II/III trial will be initiated shortly for amyotrophic lateral sclerosis (ALS). Biohaven has several candidates beyond rimegepant in the late stages of clinical trials, indicating that they are not far off from potential FDA approval and additional profit.
Financial Statements (all numbers in 000s):
Not surprisingly, Biohaven has solid financials that have allowed them to progress regardless of the COVID-19 pandemic. The company ended the fourth quarter of 2019 with $328,281 in current assets and $66,173 in current liabilities, giving them a solid current ratio of 4.69; therefore, the company was in a strong position to pay off its short-term debt obligations. Additionally, the company had $316,727 in cash and cash equivalents, which was a significant amount of liquidity heading into the first quarter of 2020 when the market would crash. For the quarter ended March 31, 2020, Biohaven increased its current assets by nearly 45% to $474,446, and its current liabilities increased by about 85% to $122,098. Not to worry, though, the company still maintained a high current ratio of 3.88. Lastly, Biohaven increased its cash and cash equivalents by 35% to $428,239, so it gained a significant amount of liquidity during the crisis when other companies were struggling to do so.
Taking a look at the income statement, Biohaven earned $0 in revenue for the quarter ended December 31, 2019 because they had no approved product candidates. The company was also operating at a net loss of $149,264. For the first quarter of 2020, Biohaven’s revenue increased marginally to $1,151. Also, the company indicated that it was operating at a loss of $172,937. Biohaven has multiple ongoing clinical trials, so its research and development expenses are extremely high, $66,019 and $56,070 for the fourth quarter of 2019 and the first quarter of 2020, respectively. However, it is slightly concerning that in the previous quarter, they were barely able to generate any revenue.
The Stock:
As stated above, Biohaven’s stock has increased substantially in recent months; however, after analyzing the company’s financial statements, is this increase justified or overly optimistic?. The company is hardly generating any revenue as of the first quarter of 2020 and has consistently been operating at a loss — these are two red flags. They have accumulated around $150 million in debt; however, with the recent approval of rimegepant, I do expect that their revenue increased substantially during the second quarter of 2020. We will just have to wait until the company releases its 10-Q report to confirm this. Additionally, if more of their product candidates pan out in the near future, their revenue may increase even more.
Buy, Sell, or Hold?:
You’re probably noticing a lot of hypotheticals throughout this article because as a new company, yes, Biohaven still has a lot to prove. However, because of the wide range of product candidates in its clinical pipeline, it is a revolutionary biopharmaceutical company. Rimegepant is likely their first success of many, and I do expect that their revenue streams will increase in the second half of 2020. They have a sufficient amount of liquidity to weather another spike of COVID-19 infections and continue to innovate despite the current turmoil. I would recommend investing in Biohaven’s stock because of the recent approval of rimegepant and the fact that they have multiple late-stage product candidates. Overall, Biohaven is a perfect example of a safe-haven stock, so now is the perfect time to invest so that you can have peace of mind knowing that the company is very likely to continue its upward trend despite inevitable market volatility in the coming months.
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July 21, 2020
3 BIOTECH STOCKS LEADING THE CHARGE AGAINST BREAST CANCER
By Juliette Duguid, Biotechnology Strategist
Pfizer
Pfizer is a well known giant in the biotech industry–the American multinational pharmaceutical corporation is focused on developing and producing innovative medicines and vaccines. Recently, the FDA approved their drug Talzenna, a PARP inhibitor for patients with a germline BRCA mutated, HER2-negative breast cancer. The 431 person, randomized trial used patients that were previously treated with anthracycline and/or some taxane. They were able to get this drug by acquiring biotech company Medivation in 2017.
That being said, Pfizer has had its fair share of difficulties. In late May, the stock dropped 8.2% after the company concluded that continuing with phase III of their trial for palbocilib, a drug that was supposed to be used in conjunction with their largely successful drug Ibrance and endocrine therapy. In a statement, Pfizer CEO indicated that palbocilib was “…unlikely to show a statistically significant improvement”. While Pfizer isn’t the type of company that will struggle significantly as a result of a single drug setback, it was still viewed as a disappointment because there were high expectations for this drug collaboration.
Despite these recent harships, nothing can really permanently faze the biotech giant. According to a company factsheet, they are “…uniquely positioned to deliver advances for various tumor subtypes to women living with breast cancer around the world through our R&D strength, innovative approaches to clinical trials, strategic partnerships, and continuous support of numerous research-focused grants on a global scale”. Although past performance is not always an indicator of future success, with Pfizer, that certainly seems to be the case. Their R&D expenditures as of March 31st, 2020 for the year were $8.671 billion, which is a 8.85% increase year over year. This, coupled with the fact that they have several other mergers on the horizon, means that they continue to profit off of not only the breast cancer market, but all types of cancers and diseases.
Seattle Genetics
Although only recently introduced into the world of breast cancer treatment, Seattle Genetics is already making very big strides. They recently received FDA approval on their drug Tukysa, when taken in conjunction with the Roche drug Herceptin and another chemotherapy drug called capecitabine for patients with metastatic, HER-2 positive breast cancer. The prerequisite for being able to take the drug is having undergone one or more anti-HER 2 therapies, which is “a much broader studied indication than the studied population” according to Andrew Berens, an analyst at Leerink Partners. The study involved using patients who had previously undergone at least two courses of anti-HER 2 therapies. Results indicated that patients who used TUKYSA in combination with trastuzumab and capecitabine had, on average, a 46% reduction in the risk of progression of their cancer or death, compared to people who just received trastuzumab and capecitabine on their own.
Chief of the Division of Breast Oncology Eric P. Winer said, “With highly significant and clinically important results for overall and progression-free survival, the addition of TUKYSA to trastuzumab and capecitabine has the potential to become a standard of care for people with HER2-positive metastatic breast cancer…TUKYSA is well tolerated by patients and is a valuable addition to the agents…” The drug’s FDA approval came approximately 4 months early, and will thus allow the drug to reach more patients faster.
According to CEO Clay Siegall, the drug will be priced at $18,500 for a supply lasting 30 days, with the average course of treatment totalling around $111,000 per patient. All in all, revenues for this drug are expected to be around $1.6 billion.
Oncolytics Biotech
Oncolytics Biotech is a Canadian company founded in 1998 and based in Calgary, Alberta. The penny stock is currently worth just under $2.00 and trades on NASDAQ. It is currently developing an immuno-oncolytic virus delivered intravenously called pelareorep, aimed at the treatment of solid tumors and hematological malignancies. This treatment is unlike any on the market–the virus enters select cancer cells and replicates, causing the cell to die. In late June, the company announced the first dosing of a patient in a three arm phase II BRACELET-1 study aimed at supporting a previous successful phase II study that showed a survival rate of almost double with pelareorep, as a result of priming of an adaptive immune response. They are set to go into phase III trials in early 2020.
Oncolytics Biotech has recently entered into a partnership with Pfizer and Merck, where they are looking to develop IP via new studies. They are exploring combining pelareorep with BAVENCIO to treat patients with HR+/HER2- metastatic breast cancer, and have entered into a BRACELET-1 study. In a conference call, Oncolytics CEO Matt Coffey said “…the BRACELET-1 study is strategically important for a number of reasons…it allows us to collaborate with two of the world’s leading pharma companies…it also provides Oncolytics with the opportunity to confirm the highly encouraging survival data from our phase 2 IND 213 study…” The high-profile nature of this partnership will undoubtedly bring Oncolytics to the public eye, which will help fule future products and partnerships.
The specific segment of the biotech industry that Oncolytics Biotech is entering into is checkpoint blockade immunotherapy. Essentially, an immune checkpoint inhibitor is a type of drug that blocks checkpoints that are made by certain types of immune system cells. These checkpoints can often prevent T-cells from killing cancer cells. Thus, when these checkpoints are blocked, the body can fight cancer more effectively by allowing for easier killing of cancer cells. This sector is actually the fastest growing in the immuno-oncology, with a CAGR of 20.1%, and is projected to reach a value of $56.5 billion by 2025.
The bottom line is that capitalizing on the breast cancer drug market with cheap stocks, like Oncolytics Biotech, is a smart move. They seem to be priming themselves to become giants in the industry by entering into a sector where there is much money to be made, and doing so with unique and innovative technologies.
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July 20, 2020
WHAT IS mRNA, AND WHY DOES IT MATTER TO BIOTECH INVESTORS?
Biotech Analyst Lee Rivers investigates…..
Messenger ribonucleic acid (mRNA) is currently a popular topic in the biotech space. mRNA is a single strand molecule that delivers messages from our DNA to create necessary proteins. mRNA is the step in gene expression between DNA and the protein production centers of the cells. Scientists believe they can manufacture missing proteins that cause conditions such as cancer, cystic fibrosis, and a host of others. Such mRNA therapeutics, however, are relatively untested with no currently approved vaccines. Scientists contend that mRNA based vaccines have the advantage of being produced rapidly compared to other types of vaccines, such as weakened viruses and proteins. This advantage is particularly essential for times of emergency, such as the ongoing pandemic. Clinical batches of the mRNA vaccines can be produced after the availability of a sequence encoding the immunogen. mRNA dedicated production facilities are also expected to have the potential to produce vaccines with multiple targets, requiring minimal adaptation to processes and formulation.
mRNA molecules are simple chains of nucleotides that encode proteins when delivered to the cell. The mRNA molecule sets up a temporary protein manufacturing center outside a cell’s nucleus then attaches to ribosomes. The manufacturing center translates its sequence into a protein and degrades. Thus the patients’ cells effectively become drug manufacturers, as the translational apparatus of the host cell creates a sufficient amount of the encoded immunogen. mRNA vaccines are only one approach of using RNA that biotech companies are beginning to use to combat diseases. Other potential RNA therapies include RNAi, in which mRNA is interfered with to stop a targeted genetic expression, and saRNA, in which gene expression becomes increased rather than decreased, as it is in RNAi.
Why is mRNA important?
There are numerous potential treatments using mRNA for various conditions, but the technology is currently being used as one of the many types of vaccine technology intended to halt the Covid-19 pandemic. This is partially a consequence of mRNA’s advantage of being able to be produced quickly. The two most advanced Covid-19 mRNA-based vaccine programs are those of U.S. mRNA giant Moderna (MRNA) and China’s CanSino. Moderna completed enrollment for its Phase II trials in mid-June for the mRNA Covid-19 vaccine. The firm expects to begin Phase III studies on July 27, and CanSino’s viral vector therapy is also in the process of preparing for Phase III trials to begin by the fall. CanSino’s vaccine is being developed in a partnership with Precision NanoSystems, with Precision NanoSystems having designed the vaccine and CanSino being responsible for preclinical and clinical development, in addition to regulatory activities and commercialization. CanSino was the first firm to publish the results for its full human study of the Covid-19 mRNA vaccine, and Moderna recently released data regarding previous trials, portraying that the vaccines can effectively produce antibodies in patients.
Another competitor, BioNTech, along with its partner Pfizer, may have been able to get ahead of Moderna, as Moderna was required to oblige the government in making changes to its protocol for the final stage development. Furthermore, the FDA granted two of the partners’ four vaccines the fast track label after initial U.S. clinical trial results showed patients who received 10 and 30 micrograms of the mRNA vaccine candidate generated antibodies that were 1.8 and 2.8 times higher than an average group of patients with confirmed infections. The partners announced that phase II(b) and III trial could begin as soon as this month.
Lastly, AstraZeneca, in a licensing partnership with Oxford University, is also performing ongoing clinical trials with its mRNA Covid-19 vaccine, currently in phase II/III trials. Trials from phase I have shown that AstraZeneca’s vaccine successfully produced both antibodies and killer T cells in healthy patients, with T-cells having the ability to remain active for years, where antibodies may wane after some months.
mRNA molecules, according to the CEO of Ziphius Therapeutics, Chris Cardon, are more effective at activating the immune system compared to DNA molecules used in gene therapies. Moreover, Time Weist, the spokesperson for eTheRNA, contends that mRNA vaccines can be better at accessing cells compared to DNA, which makes it potentially safer than delivering foreign DNA to the patient. Consequently, mRNA vaccines may be able to treat various conditions that DNA is unable to, as DNA integrates unpredictably. While DNA vaccines are also being developed to alleviate the Covid-19 pandemic by firms like Inovio Pharmaceuticals, mRNA is expected to be more effective at getting the body to formulate antibodies and inducing potent immunity.
Moderna and other companies, such as the substantially smaller Translate Bio (TBIO) are also in the process of developing mRNA therapies for other conditions in addition to the Covid-19 vaccine. Moderna is currently developing mRNA treatments for cardiovascular complications and cancer, in addition to various rare diseases. Moderna has placed a great deal of focus on mRNA since its inception, which was based solely on the potential of mRNA treatments. Translate Bio has a concentration on treating cystic fibrosis. On the other hand, firms like Alnylam Pharmaceuticals and Ionis Pharmaceuticals are producing treatments that utilize the ability to interfere with mRNA, or RNAi, to constrain gene expressions, rather than commencing or altering it.
The pandemic has provided a significant opportunity for mRNA therapies to portray their potential to be successful despite never being produced before the pandemic. The therapies have the benefit of streamlined approval processes and extensive interest by investors and the biotech industry as a whole.
The Future of mRNA and Potential Risks
Despite the interest, opportunity, and limited regulations in the development of mRNA therapies, there will still be difficulties in successfully developing vaccines. The average vaccine has about a 6% chance of entering the market beginning from the preclinical stage. Each of the coronavirus vaccines mentioned expects to perform Phase III trials soon, giving them an approximately 58.1% chance of entering the market, based on overall clinical treatment data from 2006-2015. However, the current circumstances are unusual, and the likelihood of an mRNA treatment for Covid-19 reaching the market is indefinite. Moderna’s CEO believes that the firm’s vaccine has an 80 to 90% chance of FDA approval. Yet even if approved, the vaccine must be effective at combatting several coronavirus strains that cause Covid-19.
The U.S. government is aiding in enhancing the manufacturing capabilities of vaccine programs by providing billions of dollars to multiple programs through Operation Warp Speed. Large-scale production of a vaccine could begin by summer’s end. Even Tesla, the car and battery manufacturer, plans to build a mobile RNA micro-factory for CureVac’s Covid-19 vaccine, portraying the interest and urgency in producing vaccines in abundance.
The numerous developers of the vaccines will be faced with considerable competition as they begin to enter the market. Ultimately, this competition will pose the risk of significant losses for any investor in firms that are denied FDA approval or lack effective commercialization. Still, the current circumstances pose outstanding potential for future mRNA therapies if a successful Covid-19 mRNA vaccine reaches the market. The success of the mRNA vaccine will result in the success of rising mRNA therapy producers like Moderna.
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