In this clip from "The Pharma & Biotech Show" on Motley Fool Live, recorded on Feb. 2, Motley Fool contributor Brian Orelli discusses the current drug developments of biotech companies and assesses the strengths and weaknesses of each company as a stock pick.


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Brian Orelli: This is a slide from Kymera (KYMR 3.33%), which is one of the three companies we'll talk about, but all three companies have exactly the same mechanism of action. It's just these pink things are the drug and these pink things are the things that are different. The green thing is the thing that we want to start with one. The green thing is the protein that we want to degrade. Then, what they do is they design a drug that can bind to the protein we want to degrade. Then, they also bind to this E3 ubiquitin ligase, and E3 ubiquitin ligase connects to E2 ubiquitin ligase, and then it's got a little ubiquitin, which is a very small protein that will come up in Slide 2. Then, in Slide 2, it's showing that it binds, the drug helps bring the E2 and E3 and ubiquitin next to the protein and then it just starts creating these ubiquitin chains. Then, once you have these ubiquitin chains, that signals to the cell to send it to the proteasome, which then degrades the protein. This is a natural way without this drug, normally an E3 would bind to a protein that doesn't look right, it's been misfolded. It would bind to a protein that was misfolded, start throwing on ubiquitins and then it would go to the proteasome. What these protein degraders are doing is they're adding this step here so we can cause this E3 to bind to whatever protein we want, not just proteins that have been misfolded and, therefore, definitely should be degraded.

We're going from largest to smallest. The first one is Arvinas (ARVN 1.05%). They have two drugs, AR-V471, which targets the estrogen receptor, and AR-V110, which targets the androgen receptor. They've already read out phase I data for the estrogen receptor one, which was in breast cancer. It didn't really have that great of a response rate, but it was in heavily pre-treated patients, so that's not all that unexpected. They should have phase II data from a study expected this year and they could potentially even start phase III this year. The androgen receptor, which is for prostate cancer, the data is expected in February of 2022, so coming up this month. Then, this must be 2023 because they can't have interim phase II data. Maybe they have interim phase II data or maybe they do. Maybe they have interim phase II data this year as well. Then, they have a third drug which is another androgen receptor degrader. They're working on a phase I dose escalation and they could potentially get enough data to start phase II clinical trial this year. They have quite a few pre-clinical programs. They only have one partnership with Pfizer (PFE 0.76%) on the estrogen receptor breast cancer drug. Then, Kymera Therapeutics. They have one drug in phase I development right now that targets IRAK4, which is part of the inflammation machinery. They have been able to knock that down in healthy volunteers and now they are testing it in patients with inflammatory diseases and they expect to have data this year. They also have an IRAK4 and IMID, it attacks that pathway. Rather than going after inflammatory diseases, they're going after immune cancers, specifically diffuse large B-cell lymphoma. They expect to start a phase I this year and potentially have initial data this year as well. Then, they have STAT3, that's another potential cancer target. STAT3 has been really hard to target with other modes of inhibitors, but it seems like it does work, it works pretty well. You get a lot of off targets because there's a lot of different STAT proteins. They're hoping that they can be specific to STAT3. They're expecting phase I data in peripheral T-cell lymphoma, a couple of different blood cancers as well as solid tumors. They're expecting initial phase I data in 2022 and then they are expecting to get IND for another drug in the second half of this year, so that data would be in 2023 at the earliest. They have two partnerships for the IRAK lead drug as well as any backups that they have for that. They are partnered with Sanofi (SNY 2.03%). Right now, it's set up so Kymera runs the phase 1 and then Sanofi runs everything else after that. Kymera has the option to participate in the U.S. with a 50-50 split if they want. They're also partnered with Vertex (VRTX 0.78%) 6 targets five disease areas that are outside of immunology, inflammation, and oncology. Potential to increase their pipeline substantially.

The last one is C4 Therapeutics (CCCC 2.16%) that has the awesome ticker of CCCC. They have phase I data for this cancer target degrader for multiple myeloma, which is type of blood cancer, and lymphoma and they are expecting data in the first half of 2022. Then, they're hoping to start studies for two other drugs in 2022. These are both cancer targets. One is supposed in the first half of the year and once is supposed to start in the second half of the year. They have IND enabling studies for another drug that are expected to wrap up at the end of this year. This one's a little bit earlier stage than the other two, but they have maybe more endorsements from large pharmaceutical companies. They've done a deal with Roche (RHHBY 1.45%) for four cancer targets. They've done a deal with Biogen (BIIB 0.38%) for five targets in the neurological space, and then they have one with Calico for aging, which includes cancer. Calico is Alphabet's (GOOG -0.02%) biotech, a small biotech but large backing. Then, just comparing the three, I think that Arvinas is the largest with a $3.7 billion market cap. The strengths are that the estrogen receptor and androgen receptor are proven targets. We've been able to show that antibodies that bind those work very well. There is really no risk that if the drug does what it says it's going to do, it's definitely going to help breast cancer and prostate cancer. The weakness is we don't have very much efficacy data and they have limited partnerships. I think probably I didn't list it here, but they're probably going to have more competition because there are so many estrogen receptor and androgen receptor targeting drugs. But for Kymera, it's the middle size of the two. It's got a decent clinical pipeline and it's got two partners. The weakness is we don't have any efficacy data, although we do have some proof of concept data showing that their lead drug can knock down the protein in healthy volunteers. But I think their lead target is a little unproven at this point, so there's no guarantees that even knocking down the drug is going to translate into actually treating disease, but we should know that fairly soon. Then C4, I think the strength is they have quite a bit of pharmaceutical partners, as I mentioned. Then, their lead drug is unpartnered. That potentially could bring in some additional upfront cash if they need it. They don't have any efficacy data, so that's a big weakness. Then, they only have one drug in the clinic with limited 2022 data, so it makes sense that this is the smallest of the three. I am a shareholder of Kymera. I'm not really super excited about Arvinas, and I'm considering C4, but you could really buy a basket of all three of them because even though they're going after the same mechanism of action for the way their treatments, it'd be like buying three different antibody companies. You can have antibodies that target whatever you want to target, and so I think that they can potentially treat all three of them and they wouldn't necessarily be competing with each other.