Biotech Tweet of the Week: Love Being Private

Investors often ignore private biotechs because they can't buy shares, but investors in companies such as InterMune and the obesity drug makers -- Arena Pharmaceuticals, VIVUS, and Orexigen -- need to follow their privately-held competitors.

Brian Orelli
Brian Orelli
Apr 14, 2014 at 4:54PM
Health Care

This week's tweet of the week comes from Luke Timmerman, with a quote from Moderna Therapeutics' President and CEO Stephane Bancel, who says he loves being a private company because he has more control over what information gets released. Public companies are required to release information that's material to their stock price.

While it's easy to ignore this nuance since most investors can't invest in private companies, that's not a wise move. As Fool contributor Brian Orelli and health-care bureau chief Max Macaluso point out in the video below, private companies can have drugs that compete with the public companies you're invested in.

Privately held Boehringer Ingelheim, for instance, has an idiopathic pulmonary fibrosis drug that will compete with InterMune's (UNKNOWN:ITMN.DL) Esbriet if it's approved. Investors will have to wait for the full data at American Thoracic Society in May to see how much of a threat Boehringer Ingelheim's nintedanib will be to InterMune.

And the three public obesity drug makers Arena Pharmaceuticals (NASDAQ:ARNA), VIVUS (NASDAQ:VVUS), and Orexigen (NASDAQ:OREX) might be most focused on each other, but investors should keep an eye on Zafgen, which has a drug called beloranib in phase 2 trials. Zafgen is testing beloranib in patients with a severe form of genetic obesity called Prader-Willi syndrome, but if it works well there, it could be a competitor to Arena's Belviq, VIVUS' Qsymia, and Orexigen's Contrave.

Watch the video below for more information about the competition and how big pharma, such as Pfizer (NYSE:PFE), can use its large size to hold back data as well.