Investing in biotech stocks - My experience so far

BrockStoker

csgohan4 said:

bowlhead99 said:

csgohan4 said:

the price is dipping ? is it due to their Q4 results? 

Buy the hope, sell the news

Why was there such as jump from 15th and 16th of september?

On 16th, good results were reported in their phase 2 trial for some people with wonky livers, which the market liked.

nice terminology BH Made me chuckle

I see their stock also increased when VTX had to withdraw a trial drug, interesting it is affected by their competitors failings

You have it the wrong way round there. VTX saw Arrowhead's data for their competing treatment for CF, and decided to pull the plug. Why continue with your (expensive) drug trials if you see that someone has a treatment that is 20 times better than your own?!

As I mentioned in the other thread, it's the first of many shock-waves that ARWR will be making!

BrockStoker

Cus said:

After a bit of brief reading, why would you choose Arrowhead over Alnylam, or some of the others?

Good question!

1. Ligands. Ligands are key to how well RNAi therapies work. They are the delivery part of the molecule, that is attached to the active part (that silences the gene) of the molecule that is introduced into the body - it's a 2-part molecule. This is how ARWR targets a specific cell type - the ligand is designed to have a high affinity for that specific tissue target eg. liver cells (hepatocytes), muscular tissue, lung tissue, etc. Without an effective ligand, the active part can get into the wrong tissue type, silencing a gene where it is not wanted, and this can cause unwanted side effects, in some cases very significant/harmful.

This is the hardest nut that ARWR had to crack in order for it's therapies to be effective/safe, and they have managed to without doubt as the great data (better than it's compeditors) so far shows. They are light years ahead of the competition in this respect, and because of it their treatments show better efficiacy and safety profiles (virtually zero off target side-effects).

That said, they will have to do a lot of work to design new ligands for other tissue types where they want to silence genes, but their experience in successfully targeting liver tissue should allow them to make great/fast progress with other tissue types, and they already working on/trialing these new ligands. The competition as far as I know is still stuck on liver! Because they are that far ahead, they will have "first mover advantage", even if the competition does crack that nut eventually. With their foot in the door, ARWR has the field all to themselves effectively.

2. Patents. Arrowhead is careful to patent every little thing, especially anything to do with the ligands, effectively cornering the market. Competitors will have to tread very carefully due to the patent "mine-field" ARWR has laid down - one step wrong, and BOOM!

3. Aggressive management combined with speed and great overall strategy. The competition looks positively anemic in comparison!

4. The main competitors, ALNY and DRNA, who were previously arch-rivals, not so long ago berried the hatchet and teamed up purely in order to take on ARWR. This tells me the competition is frightened, and effectively on the run! They are willing to divide up the spoils just to have a chance, but because of the above points, IMHO they are just clutching at straws, and ARWR will have all the spoils to itself!

It's also worth noting, that other types of gene therapy (companies like CRSP, EDIT, etc) are at a severe disadvantage due to ARWR's cut/paste modality. Once ARWR has an effective ligand for a particular tissue type, it can simply cut/paste to silence a different gene which relates to a specific condition/indication. So in this way, one ligand can effectively treat many different conditions related to a particular tissue type. At the moment for example, ARWR is picking off all the liver related conditions (of which there are many- see pipeline), but ARWR plans to have a new tissue type every 12-18 months, EACH of which could mean treatments for multiple multi-billion $ indications. It can literally just roll these off a "production line" (it's TRiM platform). In this way, the TRiM platform is much like the goose that lays golden eggs!

Our CEO is well know for his quotes, and this one, relating to the pipeline/TRiM platform sticks in my mind - he referred to it as "an embarrassment of riches". In this context, around this time last year when there was a rumor spreading (which pushed up the share price to the same level we just saw recently) that there might be a buy out, our CEO said "no one could write a check big enough"! Take from that what you will! If you understand the science basics here, then you can see that Dr Christopher Anzalone is not exaggerating in the least bit, and why Arrowhead IS destined to become Big Pharma!

dan20rhino

This probably explains why Arrowheads pricing has taken a nose dive recently
https://investors.alnylam.com/press-release?id=25261

BrockStoker

dan20rhino said:

This probably explains why Arrowheads pricing has taken a nose dive recently
https://investors.alnylam.com/press-release?id=25261

Not really. ARWR has no competing therapeutic for that indication. If it did, then it might explain the dip, but it does not. If anything it bolsters the case for RNAi (that it works), and anything that ALNY can do, ARWR can do better. While ALNY might score one or two indications with it's own RNAi platform, ARWR is much faster at progressing it's indications from pre-clinical into the clinic. Compare the pipelines for both companies - there isn't really any comparison. While ALNY is tied up on a couple of indications, ARWR is rapidly progressing on a massive pipeline.

Granted the market may not see it 100% that way (and perhaps a small part of the dip may be explained by the aproval), but these are the facts (above), and as it all plays out, it will become clearer to the market who really is the leader in RNAi. The charts certainly tell a different story.

Compare the 6 month chars for ALNY and ARWR:

https://finance.yahoo.com/quote/ALNY?p=ALNY

https://finance.yahoo.com/quote/ARWR?p=ARWR

Even with ARWR's dip, ALNY is not really getting a look in, and has been loosing ground to ARWR as quickly as ARWR has gained.

dan20rhino

Hi Stockbroker
I am not doubting Arrowheads potential, however looking at product approval ALNY is ahead as it has 4 products already approved globally.
This is an interesting sector i recently invested into the AXA Framlington Biotech Z ACC for the long term as so much happening especially with the cell and gene therapy markets. I dont think they hold Arrowhead but certainly ALNY is in there.
Have you invested in UK biotech, cell and gene therapy companies as we have plenty of potential here. One to keep an eye on is Oxford Biomedica.

BrockStoker

Hi Dan,

Hi Stockbroker

It's actually BrockStoker, but I'm dyslexic, so that's close enough for me

I am not doubting Arrowheads potential

Fair point!

however looking at product approval ALNY is ahead as it has 4 products already approved globally.

True, but at the current pace ARWR is going at, it's going to easily overtake ALNY in just a few years. They aim to have 20-30 indications in the clinic by 2023-2024, and will likely have 4-5 approvals by then themselves. ARWR has been coming from behind so to speak, and that has caught many off guard. So while ALNY my look superficially like a better bet, that really is not the case, certainly if you take a medium-long term view.

This is an interesting sector i recently invested into the AXA Framlington Biotech Z ACC for the long term as so much happening especially with the cell and gene therapy markets. I dont think they hold Arrowhead but certainly ALNY is in there.

Yes, I do keep an eye on the UK biotech funds, and started off being invested in the AXA fund, then switched to BIOG, and now am invested in the Polar Capital biotech fund. I do think they are making a mistake ignoring ARWR and instead going for ALNY though! Having said that, it's still a great sector to be in right now, and I'm sure you'll do well with your investment, although I would suggest looking at switching from the AXA fund to either BIOG or the Polar Capital fund.

Have you invested in UK biotech, cell and gene therapy companies as we have plenty of potential here. One to keep an eye on is Oxford Biomedica.

I'm not invested in Oxford Biomedica, but I have a thousand Orchard Therapeutics shares. As far as individual stocks go, I only have eyes for ARWR right now though, and want to by more shares if I get the chance. However, at the moment I'm looking to buy a new house, so as much as I'd like to, I can't afford to buy anything else with new money.

dan20rhino

Ill see how i go with the AXA fund as only recently invested with them. I have heard good things about the Polar but i understand the charges are higher.
A lot of the cell and gene therapies are still in pre clinical or clinical trial phase, over the next couple of years I can see more approvals for these therapies filtering through.

Nice slide on page 3 of this that shows the landscape
https://www.ebe-biopharma.eu/wp-content/uploads/2018/07/3.EBE-ATMP-Conference_-ATD_P.-Ginty_4-December-2018.pdf

BrockStoker

Dan,

Ill see how i go with the AXA fund as only recently invested with them. I have heard good things about the Polar but i understand the charges are higher.

You get what you pay for in terms of performance when it comes to biotech funds IME. In the case of Polar Capital and BIOG, the extra performance more than pays for itself, and then some!

Compare over various time scales:

https://www.trustnet.com/Tools/Charting.aspx?typeCode=T_FAKR0,XT:BIO,O_FFRBIO,O_FJTYI,T_FITFWP

A lot of the cell and gene therapies are still in pre clinical or clinical trial phase, over the next couple of years I can see more approvals for these therapies filtering through.

I totally agree.

Nice slide on page 3 of this that shows the landscape
https://www.ebe-biopharma.eu/wp-content/uploads/2018/07/3.EBE-ATMP-Conference_-ATD_P.-Ginty_4-December-2018.pdf
Yes, it is looking good. We are entering a golden age in medicine, with RNAi and gene therapy leading the charge!

BrockStoker

Nice partial recovery today on good volume for ARWR - up 10.47%. Note that recent dip was on LOW volume.

Looks like the short fire-sale is now coming to an end!

BrockStoker

I missed it, but this little nugget from our CEO in Monday's CC, was highlighted by Fro (YF message board):

We believe this (TRiM platform) is a powerful and scalable concept that gives us confidence that a larger percentage of our candidates entering the clinic will ultimately become drugs compared to traditional small molecules..............at some point in time the market will need to rethink how they value products in the Arrowhead pipeline.... it will be shown/proven that a large percentage of pipeline products will reach the finish line/become commercialized

Also, I don't know if anyone here noticed, but in our pipeline there are three "undisclosed" indications in pre-clinical that are partnered with JnJ/Janssen. No one knows what indications these are for, and everyone is dying to find out! Expect some nice surprises in the near future IMHO!

Another thing I neglected to mention (but others here may have noticed if they read the CC transcript). The data coming out has been extraordinary, not just in terms of efficiacy/safety, but also in how long the effects of RNAi dosing last! One dose can be effective for as long as 4-6 months from what we have seen - so a patient might only need 4 doses (perhaps even as little as 2) every year. Amazing!

I hope it's becoming clearer why a small group of us are so excited about the prospects of this little company, and also why I have gone from having a 50% weighting of ARWR in my individual stock portfolio around a month ago, to around 95% today, having sold virtually all my other stocks! Between my wife's and my own portfolios, we hold 1575 ARWR shares, worth approximately £75K at current prices. I have always believed in diversification, but sometimes, if you see a good opportunity, I think you have to grab it with both hands, and that is what I have done