Biotechs come and go. It's rare to see a biotech as old as Amgen, which is celebrating its 35th anniversary this year. Most biotechs get acquired, or fall short and go bankrupt long before then. We asked our team of biotech experts to find a company they think won't be around in five years. Read on to see why Sean, George, and Brian think Isis Pharmaceuticals (NASDAQ:IONS), Inovio Pharmaceuticals (NASDAQ:INO), and Exelixis (NASDAQ:EXEL) may not live to see the end of the decade.
Sean Williams: Biotech stocks could disappear for a number of reasons, including bankruptcy or a buyout. If my arm were twisted, I'd suggest Isis Pharmaceuticals is going to disappear because it stands a good chance of finding a buyer long before 2020 hits.
Isis Pharmaceuticals' antisense drug development platform has historically churned out clinical candidates faster and at a cheaper cost than traditional drug development processes, making Isis' experimental pipeline arguably the most sought-after in all of biotech. Currently sporting close to three dozen clinical and preclinical candidates and about a dozen high-profile collaborative partners, Isis has had no issues monetizing its clinical products or antisense drug platform.
As a stand-alone company, Isis has billions of dollars in possible development, regulatory, and sales milestone revenue it could earn. Currently, it has just one approved therapy, Kynamro, for a rare genetic high-cholesterol disorder. I'd suggest Isis' nearly three dozen drug hopefuls are the perfect dangling carrot for one of its one dozen partners that's struggling with the patent cliff.
I'd opine that some possible buyers here could include GlaxoSmithKline, which is facing the loss of billions in revenue from a generic competition to Advair, and AstraZeneca, which is struggling from the patent loss of Nexium and soon-to-be exclusivity loss of Crestor. Glaxo's partnership with Isis on ISIS-TTRrx for patients with TTR amyloidosis, and AstraZeneca's oncology partnerships with Isis could be driving factors that cause these two to potentially pursue Isis.
George Budwell: The DNA-based vaccine maker Inovio Pharmaceuticals is my pick to fall off the biotech map by 2020. In a nutshell, I think the company's DNA-based vaccine platform will either bear fruit in a late-stage trial (most likely for its lead candidate VGX-3100 indicated for cervical dysplasia) by 2017, triggering a buyout, or it will prove to be an intellectual dead end, leading to the company's demise.
The main impetus behind my reasoning is that DNA-based vaccines haven't been able to outperform their protein-based predecessors in really any clinical studies to date. And while Inovio's VGX-3100 reportedly led to a significant regression in cervical lesions to low grade (CIN 1) or no disease, compared to placebo in a mid-stage study, investors should be aware that this was a per protocol analysis and not an intent-to-treat analysis -- which is the gold standard in clinical trials.
To be fair, the company did state that the intent-to-treat analysis was also significant, but they haven't disclosed much in the way of details on this pivotal statistical treatment.
Moreover, the placebo group in this trial exhibited a notably low natural regression compared to historical background levels (30.6% vs. 35%). In fact, some large natural history studies have even reported regression rates as high as 49% without any form of medical intervention whatsoever. So, the jury is definitely still out on whether Inovio has finally made a significant breakthrough with this novel approval to vaccine development.
On the flip side, if Inovio is indeed onto something with this approach, I think its biggest research partner, Roche -- or any of the other major vaccine players for that matter -- will end up gobbling the tiny biotech up in a buyout. After all, this has been the typical fate of almost every small- to mid-cap vaccine company over the last decade or so.
Brian Orelli: Like George, I'm going to pick a company that's on a boom-or-bust path to an acquisition or bankruptcy: Exelixis. We'll know this year which trail the biotech is headed down.
This quarter, Exelixis expects results from the Meteor clinical trial testing Cometriq against Novartis' Afinitor in patients with kidney cancer who have failed at least one other treatment. If it's successful, Exelixis should be able to generate decent sales of Cometriq, which is currently approved to treat fairly rare thyroid cancer but is hardly putting a dent in the company's cash burn.
In the latter half of the year -- on or before Aug. 11 -- Exelixis will find out if its second drug, cobimetinib, which is licensed by Roche, will be approved by the Food and Drug Administration. The duo wants to market the drug as a treatment for advanced melanoma patients with tumors that contain a BRAF V600 mutation.
An approval of cobimetinib, which seems likely, would make Exelixis a takeover target for Roche because an acquisition would allow the pharma to avoid sharing profits from cobimetinib with Exelixis. A successful Meteor trial would result in a higher takeover price, but Cometriq would fit into Roche's stable of oncology drugs, so it might even make a takeout more likely.
In the unfortunate situation where the Meteor trial failed and cobimetinib wasn't approved, Exelixis would be left in a precarious situation, where bankruptcy or a fire sale to an opportunistic acquirer would be the most likely outcome.
Brian Orelli has no position in any stocks mentioned. George Budwell owns shares of Isis Pharmaceuticals. Sean Williams owns shares of Exelixis. The Motley Fool recommends Exelixis and Isis Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.