Five Amazing Biotech Picks with Futuristic Technology
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Michael King is looking for the monoclonal antibodies of tomorrow. When I first spoke to him 15 or more years ago, King was talking up Immunex, which would later be taken out by Amgen for $16 billion for its anti-tumor necrosis factor (anti-TNF) fusion protein Enbrel (etanercept) to treat rheumatoid arthritis. Today Amgen’s (via Immunex) Enbrel and the anti-TNF monoclonal antibodies that would follow-- Johnson & Johnson’s Remicade (infliximab) and Abbott Laboratories’ Humira (adalimumab)—are blockbusters that could approach $20 billion in sales in 2012.
King had just joined JMP Securities as managing director and senior biotechnology analyst when I spoke to him on Dec. 27 for an interview set to appear in The Life Sciences Report. His coverage list had not been formalized at the time, but we nevertheless talked about some truly great ideas that biotech investors need to hear about. It pays, in the truest sense, to know that Mike has been on everybody’s list of top biotech analysts over the past 17 years, and right now he’s making the case for the newer names that are going to be the blockbusters of the next decade.
Antisense is one of King’s favorite technologies right now. “I like to say we're in a ribonucleic acid (RNA) world these days,” he says, “And these oligonucleotide (very short strands of modified DNA and RNA) companies are perhaps the antibody companies of two decades ago.” The major names involved in this type of RNA-modifying technology are Alnylam Pharmaceuticals and Isis Pharmaceuticals, two names where significant resources have invested in research and development over the past 15 years without a lot of major successes, so far. But the technology is still very new compared to small molecules that have been in use for many thousands of years and the monoclonal antibodies that took medicine by storm over the last 15–20 years. Other companies have emerged in the antisense space, and they appear to be building on the lessons learned from the pioneer companies.
One name King’s very bullish on is Galena Biopharma (NASDAQ: GALE), with its immunizing adjuvant NeuVax (nelipepimut-S or E75) to prevent recurrence of breast cancer in patients expressing levels of human epidermal growth factor receptor 2 (HER2/neu) too low to be eligible for Herceptin (trastuzumab). This low-HER2 group represents about 50% of breast cancer patients. The vaccine is given following surgical resection and/or chemotherapy, which is a period in the life cycle of the disease when patients would otherwise be watched with no further treatment until and if a remission is manifest. I ask Mike if the product’s efficacy is real. “Oh yes,” he says. “One needn't look too hard to find plenty of evidence in the scientific literature that the drug works. Some of the data generated at the MD Anderson Cancer Center are quite intriguing. Now, it's up to Galena to do the registration trial that will be required for the U.S. Food and Drug Administration (FDA) filing. Experts have shown that the drug is active. Now we just have regulatory hurdle to get over, and Galena is doing a very nice job of executing on that.” One low-risk, near-term catalyst investors can keep their eyes on is the expected completion of enrollment in the company’s pivotal randomized phase 3 trial in node-positive early-stage breast cancer, which should be accomplished before mid-year and potentially earlier.
Ariad Pharmaceuticals (NASDAQ: ARIA) recently received approval for Iclusig (ponatinib) for treatment of resistant or intolerant chronic myelogenous leukemia (CML) and for Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ ALL) a full three months ahead of the product’s Prescription Drug User Fee Act (PDUFA) date. However, the Street was not happy that a black box warning was added by the FDA, and the stock sold. “I only wish the drug had been approved before the American Society of Hematology (ASH) meeting, which was in early December, and not after,” he says. “I think the Street freaked out unnecessarily when the FDA put the black box warning on the drug. King makes it crystal clear that he believes Iclusig’s efficacy will simply trump the worries. “Let's face it—look how long Gleevec (imatinib mesylate) has been around, and look at the relative lack of activity. Sprycel (dasatinib) and Tasigna (nilotinib) are better than Gleevec, and they still leave a lot to be desired,” he says. “I think Iclusig is going to make the older drugs look relatively tame in comparison.”
King also views epigenetic inhibitor technology as one of the very new frontiers in medicine. Astex Pharmaceuticals (NASDAQ: ASTX), formerly known as SuperGen, has an approved DNAMT inhibitor called Dacogen (decitabine), which is very similar to Celgene’s Vidaza (azacitidine), both of which are used in acute myeloid leukemia (AML) and very successfully in myelodysplastic syndromes (MDS). Dacogen is licensed to Eisai and Johnson & Johnson subsidiary Cilag GmbH International. “Astex owns more of a residual interest in Dacogen, rather than a real substantial economic interest,” he says. “However, I think that's about to change with recently generated data regarding Astex’s phase 2 hypomethylating agent SGI-110, which is being tested in MDS, AML, ovarian and liver cancers.” SGI-110, a second-generation DNAMT inhibitor now in phase 2, was developed by the company internally and is not partnered. “The data so far look very good,” says King. “If it can get SGI-110 to market, then you have a whole different calculus going on there because you then have a heck of a lot longer intellectual property life, and with differentiated activity,” he says. “In addition, you would some improved dosing convenience. Also, you have a biomarker being developed. There is a lot of good stuff that would go along with SGI-110, and it’s not just a reformulated version of decitabine.”
To read the entire interview with Michael King, visit www.thelifesciencesreport.com.
George S. Mack personally and/or his family own shares of the following companies mentioned in this interview: Isis Pharmaceuticals
Michael King: I personally and/or members of my immediate household own shares of the following companies mentioned in this interview: None. I personally and/or members of my immediate household am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview.
StreetWiseReporthas no position in any stocks mentioned.
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