Aimmune: Contextualizing The ICER Statement

Summary

Aimmune published highly robust Phase 3 (RAMSES, ARTEMIS, and PALISADE) data for AR101. Therefore, the drug is positioned to gain FDA approval for treating peanut allergy by January 2020.

Nonetheless, ICER recently issued a report that questioned the utility of desensitization therapies for peanut allergy.

As opinions rather than facts, the ICER statement is a theory that is used to generate discussion. As such, they do not have any material impact on AR101's approval.

This idea was discussed in more depth with members of my private investing community, Integrated BioSci Investing. Get started today »

The stock market is designed to transfer money from the active to the patient. - Warren Buffet

In bioscience investment, it's crucial to filter out opinions from facts. Despite that you hold a fundamentally sound company, you will face streams of negative market opinions. To stay grounded, it's imperative for you to conduct research due diligence to know when the news is simply a "head fake." This phenomenon is best epitomized by the investment thesis on a food allergy innovator dubbed Aimmune Therapeutics (AIMT).

Though Aimmune delivered extremely robust clinical outcomes for the Phase 3 (RAMSES, ARTEMIS, and PALISADE) trials, its desensitization therapy has been the subject of market negativity. The latest discussion originated from the Institute for Clinical and Economic Review. Notwithstanding, the intelligent Aimmune shareholders are undeterred because such news is simply opinion rather than fact. In this research, I'll present a fundamental analysis of Aimmune while dissecting the negative arguments.

Figure 1: Aimmune chart (Source: StockCharts)

About The Company

As usual, I'll deliver a brief corporate overview for new investors. If you are familiar with the firm, I suggest that you skip to the subsequent section. Headquartered in Brisbane California, Aimmune Therapeutics is focused on the innovation and commercialization of medicines to serve the food allergy market. As the crown jewel of the pipeline, AR101 is an oral biologic for peanut allergy. Designed by the characterized oral desensitization immunotherapy (i.e. CODIT) platform, AR-101 is a powerful preventative (i.e. prophylactic) therapy. Asides from AR101, Aimmune is expanding its development to serve the unmet needs in other food allergies such as egg and walnut.

Figure 2: Therapeutic pipeline (Source: Aimmune)

Achillion: Shifted Gears For Success

Summary

Achillion Pharmaceuticals delivered extremely robust outcomes for the Phase 1 study of ACH-5228 and thereby galvanized the shares to trade multiple folds higher.

The second-generation Factor D inhibitor (ACH-5228) demonstrated over 95% inhibition of the alternative complement pathway.

With stellar data, Achillion advanced ACH-5228 into a Phase 2 study. An investigational new drug application for ACH-5228 is expected by year-end.

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You only have to do very few things right in your life so long as you don't do too many things wrong. - Warren Buffett

Though successful innovation entails mega-profits, the field is fraught with risks. Therefore, a bioscience theme that I like is when a company genuinely admits failure and thus abandons a former area of focus. In my view, it's prudent to shift gears when either the drug did not generate promising data or the market is overcrowded. The aforesaid phenomenon epitomizes the saga of unfolding events centering Achillion Pharmaceuticals (ACHN).

After years of tinkering with molecules for the hepatitis market, Achillion shares took a beating. Make no doubt, Achillion can make excellent medicine. It's just that hepatitis isn't a fertile investment field. With the prowess similar to Achilles, Achillion switched aim to shoot for the mega prospects of the complement-mediated disease market. As it rolled in uncanny data, the stock recently enjoyed a gargantuan rally. The elephant in the room is whether there is further upside. In this research, I'll present a fundamental analysis of Achillion and provide my expectation on this intriguing grower.

Figure 1: Achillion chart (Source: StockCharts)

About The Company

As usual, I'll deliver a brief corporate overview for new investors. If you are familiar with the firm, I suggest that you skip to the subsequent section. Based in Bluebell Pennsylvania, Achillion is focused on the development and commercialization of small molecule complement inhibitors. Poised in the delivery of hopes to patients, Achillion is striving to serve the strong unmet needs in neurology, nephrology, hematology, and ophthalmology.

Achillion initially targets markets without an approved medicine. Moreover, the company seeks to capture niches having a robust demand for better treatment options. Accordingly, the ongoing development includes paroxysmal nocturnal hemoglobinuria (PNH), C3 glomerulopathy (C3G), and immune complex membranoproliferative glomerulonephritis (IC-MPGN).

Figure 2: Therapeutic pipeline (Source: Achillion)

Atara: The Silver Bullet For Multiple Sclerosis

Summary

Atara recently published excellent tolerability data for ATA-188 at the 5th Congress of the European Academy of Neurology (EAN) in Oslo Norway.

In 2H2019, the company will deliver initial efficacy results for the first cohort taking ATA-188.

That aside, the firm will report Phase 3 results for its lead franchise tab-cell this year. The positive outcomes will erase doubt and fear regarding the departure of senior management.

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We always live in an uncertain world. What is certain is that the United States will go forward over time. - Warren Buffett

In my view, a copycat drug usually procures meager sales. By the time a biosimilar comes to the market, a legion of "me too" therapeutics already decimated the profit margin. On the contrary, the largest investment profits typically arise from a molecule with a novel mechanism of action. Essentially, investors reward for innovation rather than duplication. Despite my affinity for tab-cel, I believe that Atara Biotherapeutics (ATRA) has two wildcards with a disruptive mechanism of action that can galvanize the company's prospects.

Specifically, ATA-188 and ATA-190 are designed as silver bullets for the dread condition (multiple sclerosis). They attack multiple sclerosis as if the disease is of viral origin rather than autoimmune. This is in stark contrast to the conventional paradigm that multiple sclerosis is strictly autoimmune. As such, I believe that any positive news on this front will induce a vigorous rally. In this research, I'll present a fundamental analysis of Atara while focusing on the multiple sclerosis franchise.

Figure 1: Atara chart (Source: StockCharts)

About The Company

As usual, I'll deliver a brief corporate overview for new investors. If you are familiar with the firm, I suggest that you skip to the subsequent section. Headquartered in San Francisco California, Atara is focused on the innovation and commercialization of allogeneic T-cell immunotherapies (“A-TCI”) to serve the strong unmet needs in cancer and autoimmune diseases. Since A-TCI functions similar to a CAR-T, it activates the most important cells of the immune system (i.e. T-cells). I noted in the prior research,

Instead of engaging CD4 (helper T-cells), A-TCI primes CD8 (killer) T-cells with intelligence to improve these cells’ adeptness at detecting and destroying cancers and virus. Powering by A-TCI, Atara is growing a robust pipeline of immunotherapies. The partnership with Memorial-Sloan Kettering (MSK) also enabled Atara to deliver the next-generation mesothelin-targeted CAR-T (i.e. MT-CART).

Figure 2: Therapeutic pipeline (Source: Atara)

ArQule: Profiting From Tyrosine Kinase Inhibition

Summary

Though not exhilarating, value and growth investing usually garner outsized returns. Nonetheless, it takes time for the value of growth equity like ArQule to be unlocked.

After years of dormancy, Arqule bulls rallied to the strong clinical reporting of ARQ-531 for various blood cancers. And, I forecast that advanced trials will deliver positive results.

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Time is the friend of the wonderful company, the enemy of the mediocre. - Warren Buffett

Author's Note: In honoring my father, I'm offering a 50% membership discount to new subscribers. Message me if you'd like to receive your Father's Day gift.

Aside from his prowess for numbers, Warren Buffett has the excellent temperament for investment. In my view, Buffett's mega success is the cumulation of his hard work and rigorous learning. With a voracious appetite for knowledge, Buffett read financial report daily in his office. The man is a learning machine. That aside, the fact that Buffett lives in the golden land of opportunity also helps him grow Berkshire Hathaway (BRK) to become a multibillion-dollars franchise. In following the footsteps on the giant Buffett, I made it a habit to exercise my due diligence by researching every day and periodically reviewing my investment thesis. This learning process reinforces my growth and value investing approach that is adapted specifically for the life science industry. Over the years, I'm convinced that the Buffett wisdom - time being on your side when you hold a fundamentally sound stock - is true. As such, my pick on the oncology innovator ArQule (ARQL) exemplifies the Oracle's teaching.

Figure 1: Arqule stock chart. (Source: StockCharts)

From 2016 to early 2018, the shares were trading at a depressed level, around $1.5 per share. During the time, I realized that there is much room for growth ahead due to the quality of its molecules. And, I was even more excited because ArQule was undergoing a period of market unpopularity. Consequently, it enabled the stock to trade at a deep bargain to its true worth or intrinsic value as Buffett calls it. In just over a year, ArQule has appreciated over 37%. Despite the modest gains, the best is yet to come. In this article, I'll present a fundamental analysis of ArQule and provide my expectation on this young grower.

About The Company

As usual, I'll deliver a brief corporate overview for new investors. If you are familiar with the firm, I suggest that you skip to the subsequent section. Headquartered in Burlington Massachusetts, Arqule is focused on the innovation and commercialization of precision medicine to serve the unmet needs in oncology. Harnessing the power of various tyrosine kinase medicines, Arqule is brewing a robust pipeline of three molecules (ARQ-531, miransertib, and ARQ-751) for various cancers.

Figure 2: Therapeutic pipeline. (Source: Arqule)