Seeking Alpha: AstraZeneca Sprinting To Fix Itself

British drug giant AstraZeneca (AZN) has recently been racing to fix the holes in its pipeline created by several high-profile clinical failures. The question for investors is whether the company is at risk of pulling a Wile E. Coyote and running right off the edge of the cliff. Although AstraZeneca has more work to do to fix the near-term outlook, long-term investors may have a brighter future now than just a few months ago.

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AstraZeneca Sprinting To Fix Itself

Seeking Alpha: Challenging Targets Could Pay Off For Ziopharm Oncology

Give the management at Ziopharm Oncology (ZIOP) credit - they're not looking to be a me-too player in easy drug categories. Although Ziopharm isn't initially targeting oncology markets with huge top-line sales potential, offering decidedly better mousetraps could nevertheless translate into very solid market shares and attractive partnership economics down the line.

Old School In A New Way
There's no question that there has been a lot of excitement around new targeted approaches to cancer. Whether it's monoclonal antibodies like Amgen's (AMGN) Vectibix or Roche's (RHHBY.PK) Avastin, antibody-drug conjugates, or cancer vaccines, dozens of experimental drugs have been advanced on the basis of the sometimes severe systemic toxicity that often goes with chemotherapy.

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Challenging Targets Could Pay Off For Ziopharm Oncology

Investopedia: Should Biotech Investors Go Where Institutions Won't?

Some investors find safety in numbers, while others dream of discovering the next big thing long before the big institutions. When it comes to biotech investing, though, investors may want to consider just how wise it is to invest where the big institutions fear to tread. While nobody has a fail-safe method of identifying the best biotech stocks, it seems like investing in biotechs with minimal institutional support is a gamble that just isn't worth taking. 

Framing the Problem 

The biggest problem with biotech, and the biggest reason why there can be such outsized gains for investors in the industry, is that nobody truly knows if a drug will work (or be approvable) until very late in the process. Pick the right stock, Alexion (Nasdaq:ALXN) in the late 1990s, and the rewards can be enormous. Pick the wrong stock, say Essential Therapeutics or Shaman Pharmaceuticals, and it can result in a big (if not total) loss of capital. 

A few biotechs manage to muddle along, posting just enough promising early trial data to keep accessing the capital markets, but for the most part investing in biotechs with no approved drugs is a binary outcome. With that sort of expected outcome tree, it clearly makes sense for investors to use all resources at their disposal to winnow the list of credible investment candidates, and institutional support may be one metric to consider.

To read the full piece, please click the link to Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/Should-Biotech-Investors-Go-Where-Institutions-Wont-ALXN-YMI-ZIOP-ONTY-MNKD-NEOP-MELA0707.aspx

Maybe It's Time To Abandon Amylin

Dear Amylin,

We've been together a long time and, hey, you were great. But I think it might be time for us to see other people. No, it's not me, it's you.

...

The Latest Problem...
Okay, today's stock reaction to the Duration-6 study is probably overblown, but clearly Amylin (Nasdaq: AMLN) has some serious issues. This latest study basically demonstrated that Amylin's weekly drug Bydureon is less effective in controlling diabetes than a rival daily drug from Novo Nordisk (NYSE: NVO) called Victoza.

Designed to show non-inferiority, the study instead showed that Victoza lowered HbA1c by 1.5%, while Bydureon lowered it by 1.3%. That's not a huge difference, but it is still significant and you can rest assured that Novo Nordisk will market the hell out of it if or when Bydureon is approved. On a somewhat more positive note, Bydureon did show half of the side-effects of Victoza (nausea, diarrhea, and vomiting are common side effects for this class of drugs).

Now that's good (and part of the point of the study was to show a better side effect profile for Bydureon), but there did not appear to be any meaningful difference in drop-out rates, so the side effects of Victoza weren't enough to make its users quit in greater numbers.

Unfortunately, this could have some long-tail effects for Amylin (as well as Lilly (NYSE: LLY) and Alkermes (Nasdaq: ALKS). The FDA is very focused on risk-benefit these days and if Bydureon shows any hint of safety issues (and one could argue there have already been more than hints), the FDA may continue to refuse approval on the basis of Victoza being safer *and* more efficacious (even if less convenient for patients).

What Now?
So, what do I do with Amylin shares? I think this study clips the total market potential for Byrdureon, probably by $300-$500M. So, it could still be a $1B+ drug, but probably not much more than that. Working that all through my model moves the target price down to about $12 - higher than where it's currently trading as I write, but not enough to excite me.

Making matters all the worse, I once had a big gain here. This stock was a big performer a while ago (in the $50s) and I wondered at the time whether I should haven't sold at least half my position and let the rest ride. But oh no, I had to get greedy ... and I paid for it.

Anyways, now I need to figure out what to do. I could hold on and hope for the best, but that's not really a "strategy". I'm also seriously considering selling it and doubling up on Lexicon (Nasdaq: LXRX), another biotech I own that is arguably much more promising at present. A third option is just to go buy another biotech (Ziopharm (Nasdaq: ZIOP)? Celldex (Nasdaq: CLDX))? Luckily, I don't own much and it was never a huge part of the portfolio, so this whole debate is more about a bruised ego than a bruised wallet.

I would probably SELL Amylin ... unless you're really, really patient

Disclosure: I own shares of Amylin and Lexicon

Seeking Alpha: Battered But Unbroken Biotechs

Disappointment is a fact of life with biotech investment. While clearly some companies do go on to become Amgen (AMGN) or Gilead (GILD), the roughly 85% failure rate for new experimental drugs means that most companies will eventually fail … or do little more than struggle along from disappointment to disappointment while using even the slightest glimmers of hope to shake down shareholders for more capital.

Despite that somewhat morbid lead-in, the reality is that some biotechs do recover after periods of disappointment and malaise. Current successes like Alexion (ALXN) and Celgene (CELG) had their trials by fire and came back to handsomely reward those who took a chance on them during the dark days. In fact, history has shown that sometimes the best time to buy is after the initial enthusiasm has been wrung out of a stock and management has earned some credit hours from the school of hard knocks.

To read the full piece at Seeking Alpha, please click here:
http://seekingalpha.com/article/255516-battered-but-unbroken-biotechs?source=mc_all

Please note: I mistakenly listed "Glaxo" as Nektar's partner on the inhaled pneumonia drug, when it should be (is) Bayer. That correction should get made promptly...

What ASCO Can Tell You About Biotechs (Pt 3 of 3)

Although this article shares the same two intro paragraphs as the other two ASCO pieces, it discussing a whole separate list of biotechs. I promise!
 
One of the major biotech events of the year is fast approaching. The annual meeting of the American Society of Clinical Oncology (ASCO) will take place in Chicago from June 4 to June 8. This event is like Woodstock for biotechnology - if Woodstock were clean, air-conditioned, and had plenty of restrooms. If you invest in biotechs or pharmaceuticals that want to play in the huge and well-reimbursed world of oncology, this is one of the major events of the year. 

Ahead of the meeting, ASCO releases a list of abstracts that scientists and companies will present. In some cases, these abstracts give away at least most of the story (efficacy, safety, etc.), while other abstracts are embargoed until the meeting itself. In any case, investors can still look forward to follow-up data (abstracts are submitted well ahead of the meeting) and often the amount of attention garnered by a presentation reflects overall interest in the compound.

Here we present some of the companies presenting abstracts at ASCO.

For the full article, please go to: 
http://stocks.investopedia.com/stock-analysis/2010/What-ASCO-Can-Tell-You-About-Biotechs-CELG-DCTH-RHHBY-ZIOP-ZGEN0528.aspx