"Hey Ernie.....good to see you here...Have you taken a position?"
Just a tentative 100 shares, but I'm interested. We'll see what happens. The priority review for PBC is an important signal. The cholesterol situation is the only thing that bothers me, but it did not stop the FDA from awarding BT status. Even if some patients the cholesterol require statin treatment, I don't see that as a significant barrier to approval. Taking a concomitant statin is just not a big deal, nearly everyone over the age of 65 meets current guidelines to be on a statin.
"The NCI sponsored P2 refractory ThyCa study with Cabo has suspended recruitment since May for interim monitoring, and it's intended enrollment is posted as a mere 25. The limitations of inadequate trial powering may not be at issue especially if - as you suggest - the actual trial goal is signal searching. "
Interim monitoring on an open label trial is not comparable to an interim analysis on a randomized trial. Granted, Alliance's aims are different than those of a commercial company, but the protocol would still have a Statistical Action Plan which would include the powering assumptions for each scheduled analysis, ie powered at 80% to show an HR of ,65 at p=.05. The powering for an interim on a 150 patient trial would read powered at 80% to show an HR of .2 at p=.005. Scheduling an interim on an already underpowered trial only jeopardizes the already iffy likelihood of a statsig result at the final. The sponsor gets only so much alpha (assignable p value) to split between the scheduled analyses.
"It could provide the basis for some serious discussion, if anyone here is interested in debate..."
I am still getting spooled up on ICPT, OCA, NASH, and PBC. I took an initial small position in ICPT, so I while I try to be objective, my own self interest will get in the way. Let's start with a question. I've looked at the company presentations and done some reading on both ICPT and Genfit. My first question is on the Golden biopsy results. Has that data been released and if not, when will it happen?
" - A second reprocessing away unbalanced small centers (with no patient in each arm) which is also a statistical standard that will be used to create a subset of the criteria of near future phase 3. "
I can understand the basis for wanting to set aside and ignore the data on NAS=3 patients in the Golden trial. At least that treatment of the data has a scientific basis. However, the rationale for ignoring the data from centers that did not recruit to all three arms is completely bogus. The ICH and FDA references given as a rationale dealt with clinical trial design, not clinical trial analyses. No amount of discussion or contemplation before the unblinding event can confer ad hoc vs post hoc status on an analysis, A formal protocol change can do that, but that is not what occurred. Any Genfit analysis that does not conform to the protocol as it existed at the time of the unblinding is exploratory and none of those results can be said to have achieved a pre-defined statistical significance.
"Risk-adjusting OCA for PBC plus PSC suggests to me that peak sales could reach or exceed 8000 patients X $200,000 per patient per year, or $1.6 B revenues per year."
Just looking at PBC and ignoring PSC for the moment, at present there are worldwide 60,000 diagnosed patients receiving treatment for PBC. Initial Intercept estimate is that half of these, 30,000, are having an inadequate response to present treatment. In addition, there is a much larger population of undiagnosed patients with the condition. and its prevalence is increasing. I think your peak sales figure is about right, but with more patients and a lower per patient cost. PDUFA date is Feb 29, 2016. PBC all by itself nearly justifies the hefty market cap of ICPT.
"In the event that the trial design includes a planned interim analysis - and is positive -"
It would be most unusual for a trial this size to include an interim. To include an interim, the sponsor takes a penalty on the final analysis. The sample size at the interim would be very small and hitting the requisite p value would require an enormous HR improvement. This trial is a signal seeking or proof of concept trial and the sponsor realizes that the data itself is as important or more important than achieving the primary endpoint p value.
Not having an interim does not eliminate the possibility of a statsig result at the single final analysis. If that were to happen, EXEL could amend the NDA to include an additional indication. This would mean a PDUFA date extension if one is already set. The trial was not set up as a pivotal trial, but FDA has in the past used a non-pivotal trial to approve a drug---Avastin in breast cancer comes to mind. And they have approved multiple indications off a single filing. It could mean an ODAC consult, which is not a bad thing. Ideally, it would be nice to have this result before the NDA filing, but I suspect that is unlikely.
Cabosun has both survival and PFS listed as primary endpoints. A plausible result is a statsig PFS improvement and numeric OS advantage that fails on significance. I think the best that could be hoped for with this outcome is an NCCN listing for first line. If first line SOC later becomes a NIvo based combination or Len/Ever, then an NCCN listing giving Cabo equal consideration to Sutent as a 2nd or 3rd line option is a distinct possibility.
"There is no downside to trying, is there? It's not like the FDA will announce that they have denied them the BT designation. It's never too late for a better mouse trap."
I agree, no downside to the application and FDA does not disclose drugs that are turned down or even ones that are awarded the designation, they do periodically publish overall statistics. Oddly, last time I checked there were a handful more awards than companies which had disclosed the designation. I suspect a few large pharmas saw some competitive advantage to keeping it secret. I hope BMY with Nivo in RCC doesn't fit that category. Probably not, as they have acknowledged the designation in other indications. so still just counting the days until 9/26.
"Do you know if they ever have to make an offer public even if declined with no negotiation?
There I no requirement to disclose that circumstance publicly.
"The NCCN NSCLC guidelines panel convened on 7/31/15. If application was made by EXEL, it may be under consideration for compendium listing as I write. If not, I consider the BT status filing as highly likely. It would be extremely foolish to pass up that opportunity."
NCCN listing- Certainly worth a try, but my view is highly unlikely. The politics of the NCCN compendium are such that they try not to infringe on FDA authority or create disincentives to the normal clinical trial process for drug approval. Despite lots of recent advances in NSCLC the NCCN compendium is limited to the use of drugs for relatively rare and recently discovered genetic abnormalities treated with specific drugs that have shown activity.
B/T- Again certainly worth a try, but I give it less than 50/50. The FDA is spoiled with a an embarrassment of riches when it comes to new drug candidates in NSCLC. There are the various PD1 and PDL1 antibodjes and the second generation EGFR inhibitors which will replace the current SOC, Tarceva. More work needs to be done defining where in the treatment paradigm and in what combination Cabo will be used before FDA gives serious consideration to BT. I'd love to be wrong on this, but I don't think I am.
FDA Grants Priority Review for Intercept's Obeticholic Acid for the Treatment of Primary Biliary Cirrhosis
Good indicator that FDA's opinion of OCA hat led to the breakthrough designation has not changed. FDUFA date is Feb 29, 2016.
"Buyout is really bad news."
Remember, this is accompany without an R&D department. If you think they can burn cash now, you should see what they can do with a 100 more scientists and technicians on staff.
"I remember your instincts when the bone scan phenomenon first surfaced and you thought about selling around 12."
I remember when an informed source leaked that EXEL had contracted with Goldman to provide M&A consulting. I thought for sure it would happen then at around $15 so I didn't pull the trigger at $12. Live and learn.
"Are you still thinking that you want to sell by the end of the year?"
I want to see what they have to say on 9/26 and how this J/V thing plays out. Then I will be in a better position to come up with a longer term strategy. I have about double the shares I had back when it hit $12 and at a lower basis, so it isn't all bad assuming I don't screw it up again. I agree that the plan is to sell the company, I just hope the economy hangs together long enough for them to get it done before we roll back into another bear market.
"My biggest mistake of all was selling REGN at $24.... I wouldn't have left so much money on the table."
I sold it at $20. At the time they seemed rudderless, but they definitely got their act together. I don't let it bother me. Making mistakes is just learning the hard way.
"Hello - please clarify: $15-16 for EXEL? ... Or your best guess for ARIA? Thanks"
15-16 for Ariad. Right now I would value EXEL at 11-12. If Cabo is equivalent or better than NIvo in RCC, then 13. If it hits on the Celestial 2nd interim, then 17. I know those numbers are a bit less than what is normally being touted here, but it's my 2 cents.
I've been saying "not yet" for a while now, but it's like a Texas Hold'em hand and we are almost at the point where enough cards are showing that the players may be getting close committing some serious cash. We don't have the Meteor results yet, but I suspect EXEL is shopping them around with the JV discussions. After Sep 26, they will be common knowledge and revenue projections will be less uncertain. At $12-13 bucks a share, an EXEL acquisition would pay for itself in 6 to 7 years and that leaves any new indications as extra frosting on the cake with the heavy lifting on HCC mostly done. With all the options already in managements hands, anything over $10 will make most of them multimillionaires. It's a bit of a game now for MMM and the BoD to try to pick the point in the ongoing news cycle that will maximize the value. It may be later this year or perhaps as Celestial nears readout or perhaps it will spin out of their control as it seems to be happening with Ariad. Sorry about all the tortured analogies.
If the potential acquirer were Amgen or BMY I would pull the trigger on it Monday, but Baxalta is the subject of a semi-hostile takeover themselves. The situation is a bit unstable and it could easily fall apart with no outcome. Even so, $10 pps is not an unreasonable valuation for ARIA. I'll think about it some more but for the time being I'll probably just watch. If a deal gets done, my best guess is $15-$16.
The PBC NDA submission was announced on June 29. FDA will notify the sponsor within 2 months of the acceptance of the submission and whether it merits a standard or priority review. Good chance something will be announced on Monday. Look at PBC as a preview for NASH.
"How does this compare to other Biotechs-including EXEL ?"
Lots of interesting similarities between EXEL and ARIA. Both in that 1-2 b market cap range. Both with 1 approval, a second likely approvable drug, and lots of room to grow, but issues. ARIA has a better cash and debt situation, both have large short positions, both are in the TKI business at similar stages of development. I can see ARIA going for 3b, my guess is that 4 is a stretch, but we'll see. I wonder who leaked and why. It could be ARIA trying to put itself into play, or maybe not.
"Does Aria have any reporting requirements if an offer was made???"
You would think there should be a requirement, but there isn't. I recall Medarex negotiated with Bristol for nine months in complete secrecy. When the deal was finally announced it was a done deal with a big poison pill and lockouts that prevented any competitive offers. Best case for you guys is if ARIA's BoD leaked the story to Bloomberg to put the company in play and encourage a bidding war.
I looked at it about a year ago and passed. I think one has to look at them as a one product company. I know they have ambitions on developing other diagnostics, but it is a competitive landscape and there are various approaches to detecting malignancy via blood testing. I think EXAS is a long shot in that regard, so I think the safest approach is to attach minimal value to their pipeline and decide if Cologuard justifies a 2+ billion market cap. I've had colonoscopies and I agree that as unpleasant as the Cologuard test is, it is still much preferable to the alternative. The problem is that even after a year, it isn't gaining traction. If last q's sales increased tenfold, it would have been a profit of $40m or 160m per year which would be a P/E multiple of about 14. So will sales increase tenfold? I think there is a good chance they will, but that just gets you to a reasonable multiple.
"The "issue" is the convertible. EOS
When it is resolved the pps will move."
If that were true then EXEL is dead money until 2019 because the early call feature depends on a stock price over $6.90 for a defined period and that doesn't come into play until 2016. Despite the converts, the pps will move as the fundamental picture develops. The hedges are already in place, they can't short another 50 million shares to cap a steady event driven rise in price. Cobi approval, Meteor data, JV, Celestial full enrolment, Cabo approval, are all going to contribute positively. In addition there are a number of other, less certain, variable events that have the potential to move the share price. My best guess is that by this time next year the convert situation will be resolved. It will mean another 40+ million shares in circulation, but the hangover from the overhang will finally be over. We'll see.