It seems that the global Takeda (TKPYY) has guessed well what it should pick in order to bring the most effective targeted treatments to cancer patients allover the globe. Cancer management has unreservedly changed. What seems now to have become the best treatment choices are those that would accommodate the new wave of extremely promising immunotherapy approaches.
To reach its ultimate success, immunotherapy drugs require to be combined with other oncology products, which comprise one or another of the oncology targeted small molecule or monoclonal antibody drugs; therapeutic vaccines; brush of chemotherapy, or, in some cases, radiation therapy.
For targeted drugs, we picked a few small firms a few years ago and vowed to hold them for a long-term in total disagreement with many bloggers who maintained advocating selling the same stocks. These firms are: Ariad (ARIA), Exelixis (EXEL), Array (ARRY), Incyte (INCY), Seattle Genetics (SGEN) and ImmunoGen (IMGN). All these firms exist in Prohost picked stocks portfolio and all except Immunogen, have multiplied several folds.
Incyte and Seattle genetics were the first to mature, to put effective products of unmet needs on the market and become Top-Tier biotechnology firms. Their stocks rallied in spite of the efforts by powerful sell-side lords to demean them.
Prohost picked INCY on March 18, 2011 at $44.29. The stock is trading now at $124.27
Prohost picked SGEN on March 18, 2011 at $14.28. The stock is trading now at $59.69
(see the Prohost portfolio in the Prohost Biotech Letters).
ARIAD
Lessons to Learn
Ariad – a firm we picked in March 18, 2011 at $6.40 has been a target for persistent attacks by sell-side analysts and investors since that date until it was recently acquired by Takeda at $24. Each and every time these short sellers caused a selloff, our counter action was to accumulate the stock.
Takeda saw in Ariad’s products tangible opportunities to save the lives of cancer patients who, otherwise, would simply die. Takeda appreciated the firm’s approved drug Iclusig (ponatinib) — a tyrosine kinase inhibitor (TKI) for chronic myeloid leukemia (CML) and Philadelphia chromosome-positive acute lymphoblastic leukemia while the negative bloggers were still fabricating bad news about the firm and its drugs. These critics tried to mislead investors into paying attention to the drug’s adverse effects while ignoring its therapeutic and life-saving potentials.
Takeda is also impressed by Ariad’s investigational anaplastic lymphoma kinase drug Brigatinib, which demonstrated promising results in clinical trials as a treatment of non-small cell lung cancer. We believe that, in addition to using these drugs as monotherapy, Takeda will try them in combination with immunotherapy products in order to reach the ultimate efficacy of both drugs, while lessening their adverse effects.
Investors who believed in Prohost’s plans and acted upon them enjoyed the results of accumulating the stock on weaknesses, which helped them generate huge profit on ARIA.
EXELIXIS
In The NEWS
Exelixis (EXEL) and Takeda Pharmaceutical Company Limited (TKPYY) announced an exclusive licensing agreement for the commercialization and further clinical development in Japan of cabozantinib, Exelixis’ small molecule cancer drug.
Under the Terms of the Agreement
EXELIXIS
– Will receive a $50 million upfront payment.
– Will be eligible to receive development, regulatory, and first-sales milestones of $95 million for the first three planned indications.
– Will be eligible to receive royalties on sales by Takeda.
TAKEDA
– Will gain exclusive commercial rights for all potential future cabozantinib indications in Japan, including advanced renal cell carcinoma (RCC), for which cabozantinib is marketed in the United States and European Union as Cabometyx™ tablets.
EXELIXIS AND TAKEDA
– Will partner on cabozantinib’s clinical development in Japan and on translating existing and forthcoming clinical data for potential regulatory filings in the country.
– Will collaborate on the future clinical development of cabozantinib in Japan
Takeda’s Opinion and Intentions
Takeda believes that the agreement with Exelixis brings a well-studied solid-tumor therapy to its pipeline, which may help RCC suffering patients in Japan. The firm also believes that Cabometix will also help Japanese who are suffering from other devastating cancers, in addition to RCC.
Takeda intends to pursue regulatory approval for RCC indications as soon as possible, looking forward to commence the local clinical trial program to further strengthen the clinical profile of cabozantinib.
Prohost Observations
Prohost appreciates Cabozantinib’s Phase 3 METEOR pivotal trial results. The trial evaluated the effect of CabometyxTM (cabozantinib) tablets compared with everolimus in patients with advanced renal cell carcinoma (RCC) whose disease has progressed after at least one prior anti-angiogenic therapy. The results, which demonstrated statistically significant improvements in overall survival, progression-free survival and objective response rate have, indeed, differentiated Cabozantinib from other conventional treatments used following prior therapy of advanced renal cell carcinoma.
Future Cabometix’ indications are expected to include advanced hepatocellular cancer (HCC), the subject of the CELESTIAL global pivotal trial for which results are anticipated in 2017.
Additional earlier-stage studies are under way through Exelixis’ collaboration with the National Cancer Institute’s Cancer Therapy Evaluation Program, and its ongoing Investigator-Sponsored Trial program. Through these two programs, there are more than 45 ongoing or planned studies including trials in advanced RCC, bladder cancer, colorectal cancer, non-small cell lung cancer, and endometrial cancer.
Exelixis Opinion and Rights
Exelixis Opinion: Exelixis believes Takeda is the ideal partner to advance cabozantinib in Japan and deliver this important treatment option to Japanese cancer patients. It believes the agreement further propels the global progress for cabozantinib development and commercialization.
Exelixis Rights: Maintaining its exclusive rights to develop and commercialize cabozantinib in the United States, while its partner Ipsen maintains its exclusive commercialization rights for current and potential future cabozantinib indications outside of the United States and Japan. On February 29, 2016, Exelixis and Ipsen jointly announced an exclusive licensing agreement for the commercialization and further development of cabozantinib indications outside of the United States, Canada and Japan.
On December 21, 2016, Exelixis and Ipsen jointly announced an amendment to their exclusive licensing agreement for the commercialization and development of cabozantinib to include Canada.
Cabometyx™ Tablets
Cabometyx is the tablet formulation of cabozantinib, which targets MET, AXL, and VEGFR-1, -2 and -3. These receptors, which are involved in normal cellular function are also involved in pathologic processes such as tumor angiogenesis, invasiveness, metastasis, and drug resistance. Inhibiting these receptors leads to inhibiting their pathologic processes.
On April 25, 2016, the FDA approved Cabometyx tablets for advanced renal cell carcinoma patients who have received prior anti-angiogenic therapy.
On September 9, 2016, the European Commission approved Cabometyx tablets for advanced renal cell carcinoma in adults who have received prior vascular endothelial growth factor (VEGF)-targeted therapy in the European Union, Norway and Iceland.
Read Exelixis press release about the collaboration agreement and Cabometix’ adverse effects.
EXPECTATIONS
We believe that Incyte, Seattle Genetics, Exelixis and Array are, indeed, targets for acquisitions. It is obvious that oncology now is a very hot topic, especially after the marketing of innovative immunotherapy checkpoint inhibitors and the promise of the investigational Chimeric antigen receptors (CARs) – genetically engineered T cell therapeutics. These approaches are expected to reach their ultimate efficacy through their use in combination with other cancer products, or vaccines.
All the above firms have pipelines of promising oncology products ready to contribute to the revolution taking place in cancer management.
What About IMMUNOGEN
This firm has great science, scientists and proprietary technology. On the other hand, though, its managements kept erring over the years since its inception, letting down its shareholders who lost faith in it. The firm’s proprietary technology, antibody-drug conjugate (ADC) is almost the same as that of Seattle Genetics. Yet, while Seattle Genetics’ stock price has multiplied several folds, ImmunoGen’s stock bottomed.
The approval of Immunogen’s drug Kadcyla® (ado-trastuzumab emtansine) through its collaboration with Genentech (Roche) for HER2 positive breast cancer offered a reliable proof of concept for its ADC technology.
Its pipeline product candidates, which includes Mirvetuximab soravtansine, an ADC targeting folate-receptor alpha for the treatment of platinum-resistant ovarian cancer; IMGN529 and coltuximab ravtansine — in Phase 2 clinical trials for non-Hodgkin lymphoma; IMGN779 — in Phase 1 clinical trials for acute myeloid leukemia (AML); and IMGN632, a preclinical CD123-targeting ADC for AML and others represent a tremendous value and;
Its numerous collaborations, including Roche, Amgen Inc.; Bayer HealthCare; Biotest AG; Eli Lilly and Company; Novartis Institutes for BioMedical Research, Inc.; Sanofi; Merck; and Takeda, as well as CytomX Therapeutics, Inc., all testify to the firm’s capability.
With all of what’s written above, the stock is still bottoming and IMGN market cap is ridiculously low around only $104 million, which is almost equal to its current cash.
What do we expect?
In spite of investors’ skepticism towards this firm, we believe that any good news that would emerge from any of Immunogen’s investigational products’ clinical trials, or from its alliances would easily double the stock price. Yet, investors’ skepticism could play a big role in the amount of profit-taking that would immediately occur following the rallying of IMGN. In such a situation, investors should sell and buy back at a lower price.
This scenario could repeat several times until the firm’s management stop burning unnecessary cash and stop signing bad agreements with collaborators. In case these wishes materialize, Immunogen’s pipeline’s true value would be reflected in the company’s stock price. This would be great for those who kept the stock.
Prohost Letter #404 Part 2 will be posted soon.
Prohost Forward-Looking: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
News & Comments
February 2, 2017
Companies Targeted for Takeover Yet Can Thrive on their Own
It seems that the global Takeda (TKPYY) has guessed well what it should pick in order to bring the most effective targeted treatments to cancer patients allover the globe. Cancer management has unreservedly changed. What seems now to have become the best treatment choices are those that would accommodate the new wave of extremely promising immunotherapy approaches.
To reach its ultimate success, immunotherapy drugs require to be combined with other oncology products, which comprise one or another of the oncology targeted small molecule or monoclonal antibody drugs; therapeutic vaccines; brush of chemotherapy, or, in some cases, radiation therapy.
For targeted drugs, we picked a few small firms a few years ago and vowed to hold them for a long-term in total disagreement with many bloggers who maintained advocating selling the same stocks. These firms are: Ariad (ARIA), Exelixis (EXEL), Array (ARRY), Incyte (INCY), Seattle Genetics (SGEN) and ImmunoGen (IMGN). All these firms exist in Prohost picked stocks portfolio and all except Immunogen, have multiplied several folds.
Incyte and Seattle genetics were the first to mature, to put effective products of unmet needs on the market and become Top-Tier biotechnology firms. Their stocks rallied in spite of the efforts by powerful sell-side lords to demean them.
Prohost picked INCY on March 18, 2011 at $44.29. The stock is trading now at $124.27
Prohost picked SGEN on March 18, 2011 at $14.28. The stock is trading now at $59.69
(see the Prohost portfolio in the Prohost Biotech Letters).
ARIAD
Lessons to Learn
Ariad – a firm we picked in March 18, 2011 at $6.40 has been a target for persistent attacks by sell-side analysts and investors since that date until it was recently acquired by Takeda at $24. Each and every time these short sellers caused a selloff, our counter action was to accumulate the stock.
Takeda saw in Ariad’s products tangible opportunities to save the lives of cancer patients who, otherwise, would simply die. Takeda appreciated the firm’s approved drug Iclusig (ponatinib) — a tyrosine kinase inhibitor (TKI) for chronic myeloid leukemia (CML) and Philadelphia chromosome-positive acute lymphoblastic leukemia while the negative bloggers were still fabricating bad news about the firm and its drugs. These critics tried to mislead investors into paying attention to the drug’s adverse effects while ignoring its therapeutic and life-saving potentials.
Takeda is also impressed by Ariad’s investigational anaplastic lymphoma kinase drug Brigatinib, which demonstrated promising results in clinical trials as a treatment of non-small cell lung cancer. We believe that, in addition to using these drugs as monotherapy, Takeda will try them in combination with immunotherapy products in order to reach the ultimate efficacy of both drugs, while lessening their adverse effects.
Investors who believed in Prohost’s plans and acted upon them enjoyed the results of accumulating the stock on weaknesses, which helped them generate huge profit on ARIA.
EXELIXIS
In The NEWS
Exelixis (EXEL) and Takeda Pharmaceutical Company Limited (TKPYY) announced an exclusive licensing agreement for the commercialization and further clinical development in Japan of cabozantinib, Exelixis’ small molecule cancer drug.
Under the Terms of the Agreement
EXELIXIS
– Will receive a $50 million upfront payment.
– Will be eligible to receive development, regulatory, and first-sales milestones of $95 million for the first three planned indications.
– Will be eligible to receive royalties on sales by Takeda.
TAKEDA
– Will gain exclusive commercial rights for all potential future cabozantinib indications in Japan, including advanced renal cell carcinoma (RCC), for which cabozantinib is marketed in the United States and European Union as Cabometyx™ tablets.
EXELIXIS AND TAKEDA
– Will partner on cabozantinib’s clinical development in Japan and on translating existing and forthcoming clinical data for potential regulatory filings in the country.
– Will collaborate on the future clinical development of cabozantinib in Japan
Takeda’s Opinion and Intentions
Takeda believes that the agreement with Exelixis brings a well-studied solid-tumor therapy to its pipeline, which may help RCC suffering patients in Japan. The firm also believes that Cabometix will also help Japanese who are suffering from other devastating cancers, in addition to RCC.
Takeda intends to pursue regulatory approval for RCC indications as soon as possible, looking forward to commence the local clinical trial program to further strengthen the clinical profile of cabozantinib.
Prohost Observations
Prohost appreciates Cabozantinib’s Phase 3 METEOR pivotal trial results. The trial evaluated the effect of CabometyxTM (cabozantinib) tablets compared with everolimus in patients with advanced renal cell carcinoma (RCC) whose disease has progressed after at least one prior anti-angiogenic therapy. The results, which demonstrated statistically significant improvements in overall survival, progression-free survival and objective response rate have, indeed, differentiated Cabozantinib from other conventional treatments used following prior therapy of advanced renal cell carcinoma.
Future Cabometix’ indications are expected to include advanced hepatocellular cancer (HCC), the subject of the CELESTIAL global pivotal trial for which results are anticipated in 2017.
Additional earlier-stage studies are under way through Exelixis’ collaboration with the National Cancer Institute’s Cancer Therapy Evaluation Program, and its ongoing Investigator-Sponsored Trial program. Through these two programs, there are more than 45 ongoing or planned studies including trials in advanced RCC, bladder cancer, colorectal cancer, non-small cell lung cancer, and endometrial cancer.
Exelixis Opinion and Rights
Exelixis Opinion: Exelixis believes Takeda is the ideal partner to advance cabozantinib in Japan and deliver this important treatment option to Japanese cancer patients. It believes the agreement further propels the global progress for cabozantinib development and commercialization.
Exelixis Rights: Maintaining its exclusive rights to develop and commercialize cabozantinib in the United States, while its partner Ipsen maintains its exclusive commercialization rights for current and potential future cabozantinib indications outside of the United States and Japan. On February 29, 2016, Exelixis and Ipsen jointly announced an exclusive licensing agreement for the commercialization and further development of cabozantinib indications outside of the United States, Canada and Japan.
On December 21, 2016, Exelixis and Ipsen jointly announced an amendment to their exclusive licensing agreement for the commercialization and development of cabozantinib to include Canada.
Cabometyx™ Tablets
Cabometyx is the tablet formulation of cabozantinib, which targets MET, AXL, and VEGFR-1, -2 and -3. These receptors, which are involved in normal cellular function are also involved in pathologic processes such as tumor angiogenesis, invasiveness, metastasis, and drug resistance. Inhibiting these receptors leads to inhibiting their pathologic processes.
On April 25, 2016, the FDA approved Cabometyx tablets for advanced renal cell carcinoma patients who have received prior anti-angiogenic therapy.
On September 9, 2016, the European Commission approved Cabometyx tablets for advanced renal cell carcinoma in adults who have received prior vascular endothelial growth factor (VEGF)-targeted therapy in the European Union, Norway and Iceland.
Read Exelixis press release about the collaboration agreement and Cabometix’ adverse effects.
EXPECTATIONS
We believe that Incyte, Seattle Genetics, Exelixis and Array are, indeed, targets for acquisitions. It is obvious that oncology now is a very hot topic, especially after the marketing of innovative immunotherapy checkpoint inhibitors and the promise of the investigational Chimeric antigen receptors (CARs) – genetically engineered T cell therapeutics. These approaches are expected to reach their ultimate efficacy through their use in combination with other cancer products, or vaccines.
All the above firms have pipelines of promising oncology products ready to contribute to the revolution taking place in cancer management.
What About IMMUNOGEN
This firm has great science, scientists and proprietary technology. On the other hand, though, its managements kept erring over the years since its inception, letting down its shareholders who lost faith in it. The firm’s proprietary technology, antibody-drug conjugate (ADC) is almost the same as that of Seattle Genetics. Yet, while Seattle Genetics’ stock price has multiplied several folds, ImmunoGen’s stock bottomed.
The approval of Immunogen’s drug Kadcyla® (ado-trastuzumab emtansine) through its collaboration with Genentech (Roche) for HER2 positive breast cancer offered a reliable proof of concept for its ADC technology.
Its pipeline product candidates, which includes Mirvetuximab soravtansine, an ADC targeting folate-receptor alpha for the treatment of platinum-resistant ovarian cancer; IMGN529 and coltuximab ravtansine — in Phase 2 clinical trials for non-Hodgkin lymphoma; IMGN779 — in Phase 1 clinical trials for acute myeloid leukemia (AML); and IMGN632, a preclinical CD123-targeting ADC for AML and others represent a tremendous value and;
Its numerous collaborations, including Roche, Amgen Inc.; Bayer HealthCare; Biotest AG; Eli Lilly and Company; Novartis Institutes for BioMedical Research, Inc.; Sanofi; Merck; and Takeda, as well as CytomX Therapeutics, Inc., all testify to the firm’s capability.
With all of what’s written above, the stock is still bottoming and IMGN market cap is ridiculously low around only $104 million, which is almost equal to its current cash.
What do we expect?
In spite of investors’ skepticism towards this firm, we believe that any good news that would emerge from any of Immunogen’s investigational products’ clinical trials, or from its alliances would easily double the stock price. Yet, investors’ skepticism could play a big role in the amount of profit-taking that would immediately occur following the rallying of IMGN. In such a situation, investors should sell and buy back at a lower price.
This scenario could repeat several times until the firm’s management stop burning unnecessary cash and stop signing bad agreements with collaborators. In case these wishes materialize, Immunogen’s pipeline’s true value would be reflected in the company’s stock price. This would be great for those who kept the stock.
Prohost Letter #404 Part 2 will be posted soon.
Prohost Forward-Looking: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Other Articles