Give Them an Inch, They Will Take a Mile
by Pharmboy - January 21st, 2013 8:09 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Well, well, well….it is good to know that there are others in the scientific arena who believed that YMI Bioscience's data (cough – Gilead) is a better drug than Incyte's Jakafi. Now, the definitive data are still unknown, but there was enough evidence from a Phase 2 trial to take a small risk for a huge reward. So, let's forget about Apple (AAPL), and do nothing but biotechs from now until Congress passes universal health care coverage for prescriptions….and drive the prices down so that research and development is no longer feasible to conduct in the US. Even Seattle Genetics (SGEN) has been on a tear as of late, and I expect more from it in the future. Its future may be short lived, as it is my premise that it will be bought out for its technology and pipeline.
At PSW we continue to sell premium against a position. We have been doing this for many months, especially against a basket of biotechs that we have been buying and holding (CRIS, PLX, EXEL, and others).
Let's take a look at a few other companies pipelines, and see if they are worthy of our funds.
Merrimack Pharmaceuticals (MACK) – the company was founded in 2000 and went IPO at the end of March 2012 for $7. The IPO, in which all outstanding shares of Merrimack's convertible preferred stock were converted into 66,255,529 shares of common stock and in which Merrimack issued 15,042,459 new shares of common stock, yields a market cap of $591M. Cash and equivalents on hand were about $80M, and a loan guarantee they note should get them into 2014, but raising money is something that Biotechs do on a regular basis. So, we will not hold our breath. In the last six months, insider ownership has increased by 2.8%, while institutional ownership has increased by a staggering 34% (here).
The company's lead drug is MM-398, which is a nanoliposomal encapsulation of the conventional chemotherapy Camptostar (irinotecan; Pfizer).
is put in 
to make it last longer in the body as well as potentially attain drug concentrations required for optimum therapeutic efficacy in the target site while minimizing adverse effects on healthy cells and tissues. …
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Monoclonal Antibodies (Part 2)
by Pharmboy - December 18th, 2012 9:43 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Monoclonal Antibodies (Part 2)
(See also: Monoclonal Antibodies Part 1)
Courtesy of Pharmboy
In Part 1 of Monoclonal Antibody Companies, I highlighted a leader in the field, Seattle Genetics (SGEN). It's technology incorporates monoclonal antibodies (mAb), and also allows for having a drug ‘tagged’ on the mAb, so that when the mAb attaches to a cell, it is ‘ingested’ into the cell, and the drug is released. The antibody-drug combination is called an antibody-drug conjugate (ADCs). ADCs are "empowered" antibodies. They are designed to use the targeting ability of the antibody to precisely deliver the toxic drug where it's needed, increasing its effectiveness and decreasing side effects.
Think of the technology as a bunker buster bomb, that is guided by a laser, hits its target, penetrates, and then destroys all from within. Seattle Genetics has licensed its technology to several companies. Other companies are involved in this kind of research as well.
Antibodies are used by the immune system to clear pathogens from the body. The antibody protein is in the shape of a Y, where the trunk is the effector region (similar in most antibodies) and the ends of the Y are the variable regions (paratope) that bind the pathogen (antigen).
Antibodies are produced by B-cells and used by the immune system to identify and neutralize foreign material such as bacteria and viruses. There are several types of antibodies made for the defense of the body. (More here)
ImmunoGen, Inc. (IMGN, $12.92) was a pick several years ago…
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Biotechs Galore – A Few For Consideration
by Pharmboy - December 2nd, 2012 6:32 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Biotech Corner: Monoclonal Antibody Companies (Part 1)
From The latest Market Shadows newsletter: A Failure to Communicate: Numbers, Rates & Lies
By Pharmboy
Biotech stocks are my passion. My alter-ego is a scientist, working in the field of biotech, and I love it.
The days of becoming the next Genentech or Amgen are over. Big Pharma will become the juggernauts that will sell and market the drugs, while smaller companies will fill the pipelines and keep the juggernauts running. Premiums being paid to buy phase 1 compounds are increasing. Phase 1 includes all preclinical testing. The larger companies are paying 100M for phase 1 compounds, whereas it only takes about 25M to get to phase 1. (Phase 1 compounds are those that have completed very early trials, but for which there is no efficacy data yet.)
Typically, biotechs are more efficient than Big Pharma companies. The return on investments for biotech companies, if they are efficient and successful, is north of 300%. That is not a bad return….but biotechs are high risk and often have many failures that eat into those potential gains.
I am going to focus on a few companies that have a communal relationship to a technology – the monoclonal antibody (mAb) technology. Monoclonal antibody technology had its first success in 1986, when muromonab was approved for transplant rejection. mAb’s are specific to a particular target. When a mAb binds to its target, it stimulates an immune response. The immune system then attacks the target and ‘kills’ the target.
Monoclonal Ab technology has exploded, with ‘tags’ now being attached to the mAb. Those tags can be radionucleotides, anti-neoplastic agents, other antibody-drug conjugates (ADC), and other proteins. All of these tags are released when the mAb binds to its target, the conjugates then perform their actions. There is a very good review here.
There are several companies that have employed the technology of attaching a drug (ADC) to their specific mAb. One company that has both in-house and licensed-out technology is Seattle Genetics (SGEN, $25.31). SGEN is poised for growth – IF a few of its mAb’s prove to be effective in treading various blood cancers. The company licenses out its technology to Roche (Genentech), Celldex (CDLX), Progenics (PGNX), Abbott (ABT), Astellas and many other companies for various types of cancer.…
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Phil’s Stock World – Vegas Style
by Pharmboy - November 25th, 2012 12:27 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Greetings members….and welcome back from a fabulous time in Vegas, and then a little time for a Thanksgiving filled with friends and family.
PSW in Vegas had a great turn out, and lots of questions were asked and answered by Phil, Craigzooka, Ron and Pharm. A very big thanks to Savi and LVModa for making the time spent efficient and productive! Now, on to a summary of the presentations.
As always, for any new members, things started off with how to manage a portfolio. The amount that the portfolio has in it is not important, it is how those funds are deployed. When first joining PSW, many think that they should jump right in and start trading with Phil and the like, as every trade appears like a winner. But, that is not what the board is about….it is about sustaining our funds, and letting it grow through time.
With that in mind, The Man Who Planted Trees is where to start the PSW experience.
Instead of writing a summary about the video, take the time to watch it. Think about its message, and how it relates to your investing style.
Being in Vegas, Phil pointed out that the city was built on "being the house." The stock market is nothing more than gambling. One 'invests' in companies 'betting' that the value of that investment will grow with time. If one invests in a stock, why not collect rent on that investment – selling calls and puts against the position. If the company pays a dividend, then that is an added bonus. By selling 'premium,' one is being the house. When selling the puts, though, it is important to remember that one better 'damn' well want to own the stock at that price, or have a counter move to buffer any potential moves in the stock price. Hence, the buy-write method, where one can own the stock for a 20% discount.
This is a simple way to invest (gamble), and it is good to re-evaluate every month or so if the positions are long term buy-writes – meaning out 3 mo or more.
A side note: Apple (AAPL) was a mainstay of many conversations, and it is my personal belief that investors (gamblers) should stay away from this stock. …
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Still Here, Just Waiting…..Biotechs Are In a Holding Pattern
by Pharmboy - October 8th, 2012 10:28 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
A few months have passed since my last post, as there has been things happening in the biotech world, but nothing 'new' enough to jump on board and get behind. Drug development is a long, arduous process, and clinical trials are the worst. The smaller the diseases are in a population, the longer it takes to enroll, test and then post results.
At PSW, we have been patient investors in MITI (bought by Amgen), CRIS, EXEL, SGEN and many others, and waiting in the wings are CLDX, YMI, and now PGNX. I noted several years ago, that cancer and neuroscience are the final frontiers to conquer, and they remain today where they were then…so time does not change things that fast! Diabetes and cardiovascular diseases are pretty well served with existing therapies, and yes, there will be a few that creep into the space, but overall these diseases needs are met. The hottest areas in pharma today remain small, elusive, and lucrative diseases that demand a premium – cancer and fibrosis.
Fibrosis is another topic, and in the next few months, an article or two will go over some new therapies for fibrosis, which can manifest itself in several different disease types (IPF, kidney, scleroderma, etc). For now, this article will focus on cancer treatments, and more specifically, monoclonal antibodies (mAbs) that have attached to them a chemotherapeutic.
First, a short summary on mAbs and how they work.
Antibodies are used by the immune system to clear pathogens from the body. The antibody protein is in the shape of a Y, where the trunk is the effector region (similar in most antibodies) an the ends of the Y are the variable regions (paratope) that bind the pathogen (antigen).
Antibodies are produced by B-cells that is used by the immune system to identify and neutralize foreign objects such as bacteria and viruses. There are several types of antibodies made for the defense of the body, and they can be read about here.
Scientists figured out how to manufacture antibodies to a specific antigen in the late 1970s, but it was not until the '80s that the use became more feasible. Mouse hybrids were the first antibodies used (called chimeric…
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2012 Vegas Information for PSW Members
by Pharmboy - July 10th, 2012 8:57 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Last year, members gathered around a few tables and enjoyed meeting each other and listening to all our recent disasters on investing. Phil talked about managing portfolios, and rambled here and there about how great Pharmboy was ( 
). No, really, the time was well spent, LVModa put on a good venue for us to eat, drink, chat, and most importantly, learn.
This year we hope to have more members show up and give their take on trading, investing, as well as just meet who is whom behind the mask. Details are noted below on who, where, and when.
Who: PSW memebers – open to anyone who want wants to pay Savi
Where: Las Vegas – many stayed at the Vdara, but the meetings took place at Cafe Moda LV, 3400 South Jones Blvd, Las Vegas, NV 89146
When: November 10-12
- Saturday Night ~7 meet for dinner (dutch payment, probably Nobu) also poker for those interested.
- Sunday 11 am – lunch at Cafe Moda, Meeting until about 4
- Opening Remarks – Phil
- BBBW – Ron
- TA & Pharma Investing – Pharmboy
- Open Mike!
- Monday 6 am – breakfast and be there before the market opens until market closing (about 1 pm)
Costs: $200 deposit, minimum of 25 members, maximum 50 members. Money pays for Cafe Moda venue, internet access, lunch (Nov 11) and breakfast (Nov 12).
Pay Savi S. via Paypal. Contact info is savi_ted at hotmail dot com
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Big Pharma Review Part 2
by Pharmboy - June 24th, 2012 9:43 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Throughout the global pharmaceutical industry, 47% of respondents are ‘more optimistic’ about revenue growth for their company over the next 12 months relative to the previous 12 months. A further 28% of respondents are ‘neutral’ about revenue growth as compared with 23% who are ‘less optimistic’ about their company’s revenue prospects (InfoGrok). China is expected to continue to be a large part of the industry's growth, where the EU (obviously) is expected to slow down. Overall, though, the pharma industry is still working through its patent cliff, with the final last call for a few blockbusters (The Calm Before the Storm).
This is the second installment of the Big Pharma Review where the pipelines of GlaxoSmithKline, Novartis, Eli Lilly, Sanofi, and AstraZeneca will be updated/discussed (Part 1 is here).
GlaxoSmithKline (GSK) has been in the headlines recently for its desire to acquire Human Genome Sciences for $13/share ($2.6B). The company has plenty of cash, and it is not like it cannot afford HGSI, as GKS has a market capitalization of $114B. The company generates revenue of $43B and has a net income of $8.6B. GSK has also increasing its stake in Theravance (THRX – article on THRX here), and bought a German company, Cellzome, which uses a proteomics technology to analyze the efficiency of a drug and for safety profiling research.
The company's flagship products are in respiratory (Seretide/Advair (named Beyond Advair) and Avodart). In recent news, two experimental melanoma medicines (dabrafenib and trametinib) slowed the progress of cancer with few skin complications in an early study. Dabrafenib works by inhibiting BRAF, a mutant gene that spurs cancer cell growth in about half of melanoma patients, while trametinib is designed to thwart a related protein called MEK, which helps tumors resist an assault on BRAF. The drug combination had a lower incidence of rash and skin lesions than had been previously reported with Roche’s Zelboraf, according to a study of 77 patients with advanced melanoma, the most-severe form of skin cancer.
Vaccines, cardiovascular and dermatology (with its Stifel acquisition from a few years ago) will continue to drive growth. David Redfern of JPM has a very good slide deck from its 2011 Conference on GSK's revenue and pipeline here (PDF of GSK's pipeline…
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Big Pharma – Where Are We Now?
by Pharmboy - April 28th, 2012 8:49 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big rewards, because these biotechs are possible acquisition candidates by the big pharma companies that need to fill their coffers with new, multi-billion dollar drugs - the so called "blockbusters."
Forbes has an informative article that projects three different revenue scenarios in in the pharmaceutical industry. Forbes's last figure (below) shows what companies will best weather the storm by combining "total company revenues."
In the 'Storm' article, it is noted that pharma growth rates should be growing less or starting to stall into 2014 due to the patent cliffs (see Table 1). A few examples of slow growing revenue streams are (2010 -2011): Pfizer $67.1B to $67.4B; Merck $46B to $48B, JNJ $62B to $62B, and AMGN $15.1 to $15.5. The industry is still ripe for consolidation based upon forward earnings, and the numbers of blockbusters will be dwindling. The industry is taking on more risk in therapy areas that are unmet medical needs, but have fewer patients to treat – thus higher prices will ensue. Monoclonal antibodies (mAb) for cancer and other 'biologics' fit this pricey niche area.
| Company | Drug | Indication | Sales in $B (2009) | Patent Expiration |
| Pfizer/Eisai | Aricept | Alzheimer’s | 1 | 2010 |
| Merck | Cozaar | Hypertension | 3.6 | 2010 |
| Pfizer | Lipitor | Cholesterol | 12.5 | 2011 |
| JnJ | Levaquin | Antibiotic | 1.5 | 2011 |
| Sanofi/BMS | Plavix | Anticoagulant | 9.3 | 2011 |
| AstraZeneca | Seroquel | Antipsychotic | 4.9 | 2011 |
| Lilly | Zyprexa | Antipsychotic | 4.9 | 2011 |
| Merck | Singulair | Asthma | 4.7 |
…
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Pharmboy in Technically Speaking
by Pharmboy - April 24th, 2012 3:28 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Excerpt from Stock World Weekly, Technically Speaking, April 22, 2012.
Courtesy of Pharmboy
That was a nice selloff – one that we have been waiting for, and there may be more to come! This gives us an opportunity to start easing into a few more positions that are already in our virtual portfolio. The virtual portfolio had a few options that we sold and that expired worthless this month: the PLX $5 April 2012 puts, and the INFI $5 April 2012 puts.
Protalix BioTherapeutics, Inc. (PLX, $6.78) has an FDA decision coming up, and we have several positions in it still open. I’m waiting for the decision. For those that like to gamble on risky events, the May $7.5 calls make a good risk/reward for $0.80 cents. I like selling the $10 calls for $0.25 cents, which limits the upside, but also reduces the cost to $0.55 cents for the spread.
OPKO Health, Inc. (OPK, $4.99) is another biotech I like at current prices. Scott Brown at Sabrient has also featured OPK as an insider buying play in Stock World Weekly’s April 1 issue:
“Scott sent in two long trade ideas for this week’s newsletter. First, Scott likes OPKO Health Inc. (OPK, $4.73) because of the repeated insider buying of the stock. “55 buys this year … almost daily.” Scott shared an interview with Dr. Phillip Frost, OPKO’s Chairman and CEO, on Seeking Alpha, by John Eastman. Here’s the introduction:
“‘OPKO Health Inc. Is a pharmaceutical and diagnostics company headquartered in Miami, FL that develops and commercializes novel and proprietary technologies that include molecular diagnostics tests, vaccines to diagnose, treat, and prevent neurological disorders, infectious diseases, oncology, and ophthalmologic diseases. The company works in the United States, Chile, and Mexico and is headed by Phillip Frost, M.D…’ Continue reading the interview with Dr. Frost here.”
OPK’s CEO continues to accumulate shares, and the stock is trading at around $5. I think selling the September $5 call and put for $1.20 combined, coupled with the purchase of shares, has a good risk/reward profile.
As for other new trades:
Vertex Pharmaceuticals (VRTX, $36.58) was already a winner once, and I think the time is ripe to start scaling in for owning shares of this company longer term. I like selling one…
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VVUS and ARNA
by Pharmboy - April 11th, 2012 4:04 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
By Pharmboy at Phil's Stock World
Excerpt from Stock World Weekly, Tightening the Screws
I expect the market to continue pulling back. But biotechs should mostly hold their ground. There are a few catalysts coming up, including with the companies Vivus and Arena. Both companies have been focusing on the obesity market. VVUS has Qnexa (a combination pill of phentermine and topiramate) and ARNA has Lorqess (a novel 5-HT2c receptor agonist).
Catalyst 1 – Vivus's stock (VVUS, $22.53) rocketed up on the PDUFA thumbs up (PDUFA = Prescription Drug User Fee Act – a group of doctors and experts meet to express their opinion about a drug). The FDA usually follows the experts’ recommendation, but not always. The FDA has yet to rule. A ruling should happen on or before April 17, 2012.
For VVUS, I like playing for a failure, as the risks to me outweigh any benefits. A very conservative GAMBLE is buying an April 2012 $20/$19 bull put spread for $0.30 or less.
Catalyst 2 – Arena (ARNA, $3.07) had a strong run from the $1.20 range, and now trades at $3.
ARNA has a PDUFA date set for June 27, 2012. If VVUS gets approval, ARNA should fair well. If VVUS is rejected, ARNA still has a chance to do well due to its drug having a different mechanism, as well as due to the patent life on its molecule.
For ARNA, I like playing a July 2012 $2.50/$3.50 bull call spread for $0.35 or less.
Trades on these companies are all- or- none scenarios – i.e., RISKY.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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