Invest in the Next Biotech Frontier

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The last several months have been remarkably exciting in the biotech space. For patients, it appears that groundbreaking treatments for hepatitis C and cancer could be right around the corner.  For investors, this has manifest as an explosion in biotech stocks like Gilead, CelgeneOnyx, and Celldex, boosting the iShares NASDAQ Biotech ETF up 45% year to date.  How can investors continue to gain from biotech advancements?  What will be the next battleground illness that dominates headlines and sends the industry rolling higher?  After this month's European Society of Cardiologists Congress, I think it's a return to a focus on cardiovascular disease.

Unclogging the pipes
Hypercholesterolemia is a major public health concern, as it is a leading cause of heart disease -- the No. 1 killer in the U.S.  It can lead to arterial plaque formation, blocking blood flow and causing elevated blood pressure or worse. Many of the drugs used clinically to treat these secondary aliments have been generics for years, but Pfizer  (NYSE: PFE  ) hit the jackpot in 1996 with Food and Drug Administration approval of a drug to treat the cause. Lipitor, the greatest selling drug of all time, has brought in more than $100 billion over its lifetime, but those sales have been crushed recently by generic competition.

Lipitor sales demonstrate the remarkable size of the hypercholesterolemia market. The cholesterol wars are certainly heating up again, as multiple companies with innovative therapies are advancing through clinical trials.  

The big buzz
It's hard to mention cholesterol without mentioning PCSK9 inhibitors, which were part of the excitement at the ESC Congress. PCSK9 inhibitors mimic a naturally occurring mutation in individuals with remarkably low cholesterol.  Regeneron (NASDAQ: REGN  ) and Sanofi's alirocumab and Amgen's (NASDAQ: AMGN  ) AMG145 are two of the most advanced PCSK9 inhibitors. 

In a pooled analysis of four phase 2 trials, Amgen's AMG145 lowered cholesterol by 40%-59%, versus 0.1%-0.5% in placebo-treated patients after 12 weeks of treatment.  Alirocumab reduced LDL, or "bad" cholesterol, by 73% when combined with a statin, compared to a 17% reduction in patients receiving statin and placebo.  Phase 2 trials gave AMG145 a dosing advantage, though both drugs are currently in phase 3 trials with even more convenient dosing schedules. 

At this point, it's hard to say which drug will claim the spot as top dog, but with the growing demand for cholesterol-lowering drugs there might be some market for both. With a forward P/E of 42 versus Amgen's 13.8, the market may have already priced alirocumab into Regeneron's stock.

Antisense is making sense
Elevated cholesterol isn't the only risk factor for heart disease, though, and Isis Pharmaceuticals (NASDAQ: IONS  ) appears poised to profit from drugs that reduce harmful triglycerides.  Isis boasts a massive pipeline for a company waiting to be profitable, and seven of those drugs are cardiovascular therapies. One of them, ISIS-APOCIIIRx, garnered lots of attention at the ESC Congress.

ISIS-APOCIIIRx is an antisense drug that alters the function of the protein ApoCIII at the genetic level. Blocking the function of ApoCIII improves the liver's ability to clear triglycerides from the blood.  Interim data from an ongoing phase 2 study already showed statistically significant effects of ISIS-APOCIIIRx as a monotherapy treatment, reducing triglycerides by 75% at the highest dose, compared to a 5% increase in placebo.  The drug also had significant effects on both "good" HDL and "bad" VLDL cholesterol. 

While these data only represent interim data from 28 patients, the results are overwhelmingly positive.  With its robust pipeline, commitment to collaboration, and close partnership with Biogen, Isis makes a great play in the market for cardiovascular therapies.

Is this fish dead in the water?
Amarin  (NASDAQ: AMRN  )  may boast the most hotly contested drug, with its new fish oil formulation Vascepa breaking into the market earlier this year. Without delving into the scientific debate, let's just say that treatment of elevated cholesterol and triglycerides with fish oils has been a controversial approach among clinicians. Nonetheless, Amarin received FDA approval for Vascepa in July 2012 and has taken on the daunting task of independently marketing and commercializing the product. Sales only clocked in at $5.5 million in the most recent quarter, and investors are still hopeful that Amarin can convince cardiologists that Vascepa works.  Even with a demonstrable effect in clinical trials, this Fool prefers to stay away from a controversial company with as-yet sluggish sales to support its business model -- though there are plenty of valid arguments to the contrary.

The bottom line
After a recent period of explosive innovation in the biotech sector, investors can look to cardiovascular disease as the next frontier. Many opportunities exist to invest in this market, but be weary of those steeped in controversy.  The excitement over PCSK9 inhibitors may signal a paradigm shift in our thinking of heart disease, and the colossal markets for such drugs may be quite lucrative.

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Read/Post Comments (1) | Recommend This Article (5)

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  • Report this Comment On September 11, 2013, at 1:58 PM, BioBillion wrote:

    Hey Seth,

    Looks like your smart enough to figure this out with that phd thingy...

    WS would like to make Amarin "controversial", but it's pretty straight forward science. Fish oil doesn't work because high enough blood levels of EPA are not achieved. You don't even need to know about Eicosanoids, Resolivins, or EPA mechanism of action.

    Bottom line: Fish oils fail to prove beneficial because blood EPA levels are less than 10 mcg/ml after 1000 mg of OTC supplements. With 4 Grams of Vascepa blood levels are about 350 mcg/ml of EPA, 35 times higher than OTC supplements.

    If you take 1/35 of any dose of prescription drug, the therapeutic effect will be negated because of inferior levels of drug.

    I hope this is simple enough for the fools to understand.


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