NKTR was given its multi billion dollar deal one year ago. The share price rose w exuberance. It has since collapsed from that point in time.
Any lessons? One don’t invest in biotech unless you can spend years with nothing happening and also not care about the share price.
Two, don’t believe that big corporations have all the answers. Like us they invest in risk/reward circumstances.
Third, the biotech life cycle is exuberance, followed by collapse an despair and finally, long after any hope has been lost and you cannot stand to hear the name, if successful…boom! Or complete bust.
I’ve made some very good money in biotech in the past but then got cocky that I knew more than I did. This board did very well w KITE, but that was a fluke. Even Kite’s acquirer is having a difficult time w KITE now. Take advantage of such circumstances but don’t think they will lead to long term glory and wealth. Biotech sucks!
I just like looking back a year sometimes. So long and yet seems like just yesterday.
Nice post tinker.
I would add the following:
Seek out & embrace the skeptics, especially for topics you are not clear on. Early stage biotech is very different than following a companies sales growth. It’s downright comical that for ABMD we refer to HeartMD, but the published decorated PhD immunologist gets rabid emails running them off the boards when it came to NKTR. (I managed to get a few of these as well!)
Beware the “stories” aka- don’t believe the hype. You see variations on this across all of the stock market (marijuana stocks, Bitcoin, etc ). You saw this with CAR-T and Gene editing … It was great if you were in early and out early (KITE), terrible if you were in and out late (NKTR).
You can be successful in clinical stage/premarket biotech with:
-an ability to read through the bs (odd trial endpoints, etc)
-willingness to take early risks on potential hype
-trustworthy management that has brought drugs to market/navigated buyouts before
-experience/living through it before helps ALOT
You need at least two, preferably 3 of more- and it’s still can be a bit of a crapshoot.
I agree. I’ve added biotech to the list of industries I want to avoid.
I was thinking about “why” a few weeks back. Biotech seems to have too much potential to go wrong, and when it does, it’s too hard (impossible?) to “fix”.
In the software world, the larger the project, the more likely it is to be late. But you can continue to march along, and get it done.
A new drug, if it doesn’t meet it’s lofty goals, can’t be fixed with more time - it’s done, it failed. It’s not repairable, upgradable. Things that people didn’t like in version one of a drug can’t be repaired with a patch like it can with software. You’re essential back to square one.
Biotech can be pretty bad if you are impatient and aren’t willing to play the odds. I have to disagree with you on the KITE fluke bit. That was risky, but the odds of passing the Phase 3 study and purchase prior to the approval were in our favor. I also pointed out that there were manufacturing concerns and it was a much riskier deal later on, and I wasn’t planning on holding after the sale. And yes, I thought there were significant chances that the acquirer, Gilead, made a poor purchase. As a rule, a biotech will sell for 8X peak sales projection.
One of the great things about this board is the dispassionate look at stocks. I think you tend to look at most stocks that way most of the time, but with a blanket statement that biotech sucks, you seem to be overgeneralizing a bit.
For example, ARNA has a major drug, an S1P inhibitor with a better safety profile than S1P inhibitors on the market. S1P inhibitors treat Crohn’s disease and MS - major markets. Is there a question that S1P inhibitors work? No. Not in the slightest. Is ARNA’s drug superior? Highly likely that it is because it does not have two receptors associated with nasty side effects - side effects that the drugs on the market currently have.
Is it worth it buy 3 - 5%, put it aside, wait 2.5 years, and make 5X your money. I think so, and I think it will stack up nicely to the hyper-growth companies we look at here too.
I have to admit that I find ARNA frustratingly boring, and I do enjoy a little bit of sport in investing. I am a competitor at heart. I think we share this trait, at times to our detriment.
PS Long ARNA 3.5%
PPS I was long KITE calls - it was good sport ;o)
Joe Edelman at Perceptive Advisors has turned a $6 million dollar hedge fund into a $4.1 billion hedge fund. 30% annual returns since 1999. 130-bagger.
And he invests almost entirely in biotech.
You can read about him here and here:
If you want to go shopping, you can find his holdings here:
I agree biotech is way harder. Take NVAX. The RSV vaccine Ph III result should be out any day. If it is positive the stock can rise 2-3x but if it fails it can drop 50%+. The result is so binary unlike most of the stocks we follow here.
Fuma and Bulkwnkl - I would like to hear your thoughts on NVAX.
I found a pretty interesting board at Investor Village for NVAX.
? RSV is a significant annual cause of lower respiratory tract illness globally.
? Pediatric and elderly populations are most vulnerable, but no vaccine exists.
? The current state of RSV vaccine research and development is summarized.
? 60 RSV vaccine candidates in development, of which 16 are in Phase 1-3 trials.
Didn’t dig into the article, but I was surprised by the number of RSV vaccine candidates.
Page 11 of report has a nice table of current status of each vaccine trial. NVAX is the only candidate in phase 3 trials, but only for the elderly and pregnant. Given the history with RSV vaccine - The history of RSV vaccine development is notable for the vaccine-enhanced illness that occurred after a formalin-inactivated RSV (FI-RSV) vaccine was administered to seronegative infants in the 1960s.[11- 14] - it certainly feels reasonable to be slower and more cautious with the pediatric population. Thus is also an area where pediatric specific trials are needed and days won’t be extrapolated from adult studies.
The pediatric trial is in phase 1 trials. Nearly all kids will have contracted RSV by age of 2 and this population is where the majority of use case will be found.
You might get a pop in stock price with approval for the elderly and pregnant. Actual vaccine use won’t significantly take off until but pediatric trials are also FDA approved. Also note that on chart that Medimmune had a phase 2 pediatric vaccine trial.