You guys did a great job! Anticancer Ph III "Shakeout" Preamble As surgery works so well, my feeling is that this isn't a market with desperate need for a drug. Especially another testosterone-lowering drug if Amgen's candidate gets through the FDA and adds to the ones already on the market. I have Amgen's Plenaxis pegged for around $300-400 million peak sales, if approved. This won't do much to grow their sales, but if one of the smaller biotechs in the group could pull that it would be substantial.
Anticancer Ph III "Shakeout" Candidate
Anticancer Ph III "Shakeout" Addenda
As far as cancer types, I would be tempted to stay away from the prostate cancer and NHL markets and I'll discuss each of those below.
Here is a link to the American Cancer Society page discussing treatment options for prostate cancer.
Surgery and radiation therapy are very effective treatments with very high survival rates. The drugs tend to work on the hormonal system to decrease testosterone levels as testosterone stimulates growth of these tumors. Note that hormonal therapy is not curative, but a supportive therapy prior to surgery.
Now with that being said, I'm not too familiar with most of the other companies you listed or their drug candidates. So personally, I would want to check up on their mechanisms before ruling them out.
Rituxan, Rituxan, Rituxan. That's the whole story. Genentech (&IDEC) had some data come out with Rituxan in combination with CHOP and that went over really well. Q1 sales this year really took off for them. I think last time they looked they had something like 50% market share and were on pace for $800 million this year.
IDEC has explicitly stated that they will not cannibalize their Rituxan revenues with Zevalin. They went into great detail during a webcast this spring about how they want to position Zevalin as a supportive therapy to Rituxan. I mean they even talked dosing schedules with Rituxan.
This makes it really hard for me to believe that: 1) Zevalin will be a blockbuster. I think it would be really tough for Zevalin to pull $500 million in sales. 2) Given the established standard of care, another drug's pivotal trials would really have to be outstanding to break into this market as a blockbuster. That would require clear clinical benefits over Rituxan and taking its market share.
Companies I like on your list:
Disclaimer: Personal opinion. I am not familiar with every company listed and can only list the ones I'm comfortable with. Omission is not necessarily a negative for this reason.
In no particular order:
1) Isis: Solid pipeline with 5 drugs in phase 2 or 3. Very low market valuation of $460 million given their pipeline and status as the antisense leader. I guess having the first antisense drug, Vitravene, only pull $100K or so in sales makes investors gun shy. Myself included. At this price, I think they have pretty good odds of being a 10-bagger or better.
2) ImClone: C225 has solid clinical trial data in colorectal cancer, pancreatic cancer, and head and neck cancer. We're talking survival benefits and clear therapeutic advantages over existing chemotherapy. And in really aggressive, highly fatal cancers. It is also in clinical trials for other cancers. I've estimated C225 revenues by 2005 of $800 million to $1 billion. This isn't a peak value, as sales will be growing in some markets. IMCL has a current market cap of $3.1 billion. Most companies with $1 billion in sales have caps near $10 billion so I think there is a significant upside with minimal risk on this stock.
3) Genentech: I will barely mention their in-house research except to say that they have a top-notch oncology program. I think their real strength lies in their attractiveness as a partner to co-develop drugs with smaller biotechs. Rituxan anyone? And they beat out all potential suitors to strike the deal with OSI for OSI-774. Their renowned pipeline is built on their ability to make the deals happen. Sustainable productivity and growth based on in house development supplemented with strategic alliances. A beautiful model biotech. At a market cap of $30 billion, there is still plenty of room for growth at relatively little risk.
So those are my top 3 and I'll stop there. Many other good opportunities but I'll give other people a chance to go over their favorites.
Those I would stay away from:
Again, this isn't meant to be comprehensive. Just a listing of ones I'm familiar enough with to make a judgment on. Omission from this list in not an endorsement. Just my opinions, I'm not handing this down from the top of the mountain or anything. If you disagree, present some info and we'll discuss. Maybe you'll just change my mind if you have a good argument.
1) Amgen: Huge revenue growth expected over the next four years, though I'm not convinced it will move the share price much. Too much of a valuation risk for me. And the pipeline after the four drugs in the regulatory process isn't all that hot.
2) Corixa: I'm not optimistic of Bexxar's chances vs. Rituxan and Zevalin. Also having a rocky road through approval. Been a while since I looked, but I don't remember their pipeline being much to write home about.
3) IDEC: They're profitable and developed Rituxan so people like them. What I don't like is their $10 billion market cap, limited revenue prospects from Zevalin, and an upcoming slowdown in Rituxan growth. Their pipeline after Zevalin doesn't impress me and I think they're too much of a valuation risk for a decent return.
4) Biogen, Immunex, MedImmune: Profitable biotechs with blockbuster drugs, high market caps, and shoddy pipelines. Aren't even as focused on cancer as the rest so I don't think they're a good fit. Next, please.
I think you did a great job on your screening process and I really look forward to seeing your portfolio selections.
Are you at all open to picking an anti-cancer company that doesn't yet have a phase 3 candidate? Kind of like the 5% of funds in an "alternative investment" that many/most of the pension funds and endowments follow. Of these earlier stage companies I think ImmunoGen and Cell Therapeutics have a lot of promise as a home-run type investment. Just a thought.
You guys did a great job!
Anticancer Ph III "Shakeout" Preamble
As surgery works so well, my feeling is that this isn't a market with desperate need for a drug. Especially another testosterone-lowering drug if Amgen's candidate gets through the FDA and adds to the ones already on the market. I have Amgen's Plenaxis pegged for around $300-400 million peak sales, if approved. This won't do much to grow their sales, but if one of the smaller biotechs in the group could pull that it would be substantial.