Love or hate it, here’s to the first post of 2013. Given that the site fee was just renewed, I thought that I should post something and get some sort of return…

…or so I thought.  The plan was to post this past Monday…Marathon Monday. Unfortunately, I was glued to the media, both social and traditional all week. Any musings about biotech seemed a bit out of place. And now we are dab smack in 1Q earnings season.

I’m amazed that in a blink of an eye, we kicked off the year at JPM and have already reached BIO (is it still snowing in Chicago?!).

There is no particular agenda for this posting, so here’s five events I found interesting in March: 1) we had the hot venture capital team at ThirdRock raise $515 MM for their third fund; 2) a biotech ($ZIOP) blow-up; 3) a stem cell company’s ($ASTM) possible last hurrah; 4) a big pharma’s ($AZN) restructuring (again); and 5) an FDA approval for $BIIB BG-12 (yea!).

Since I’ve mentioned $ZIOP (updated here) and $ASTM (mentioned here) in the distant past, let’s start there.

$ZIOP, Simply Nasty. This 3-mo chart from Yahoo!Finance for $ZIOP (as of 4/10/13 close) shows the agony of defeat in biotech. A failed pivotal trial.While I’m sure there are some who confidently “predicted” palifosfamide’s (pali) failure and more who were convinced of its success, it does remind us that drug development is a risky game, where drugs have a 1 in 10 chance of success. As an aside, is that why there are so many baseball lovers in science? Wouldn’t you rather take a .300 average into drug development? I would. Better yet, I could go to bat with systemic enzyme replacement therapies, where the odds are likely better than Ted Williams’ astonishing .406 batting average. OK, back to the story.

When the trial data were announced, the price per share dropped 65% (from $5.13/share, 3/25/13, to $1.82/share, the next day). Hefty, but not complete.  According to Yahoo!Finance, $ZIOP had 82.5 MM shares outstanding, which means that  they took a loss of $272 MM in market cap ($423 MM, pre-data to $151 MM, post-data). Why not lower?

$ZIOP reported $73.3MM cash YE12, and had been burning roughly $20 MM cash per quarter, with 1Q13E cash to be $53 MM. Assuming outstanding options and warrants are under water, and no long term debt, EV is roughly $100 MM. What’s behind the $100 MM curtain?

Ta-Da, we see two Phase II trials with a yet to be proven gene delivery/therapy approach…uh-oh. Shifting from small molecule drug development into the molecular medicines business seems to be a pretty significant change for the company. Will they have the necessary know-how to be successful?

From ClinicalTrials.gov, we can quickly review the two ongoing studies, without much regard to the science. The first, is an open-label Phase I/II in 30 patients for the treatment of advanced melanoma (primary data completion expected January 2014) with safety and tolerability as the primary endpoints. The second trial is a randomized, open-label Phase II trial in combination with pali for the treatment of non-resectable recurrent or metastatic breast cancer in 68 patients (primary data completion expected December 2015) with safety/tolerability and 16-wk PFS as the primary endpoints.

My guess is that investors would want to see signs of efficacy, which points to the second trial as the primary driver, with data likely to be announced 1Q16. Even if they can reduce their burn rate to $25 MM per year and make it to data, the math suggests that the company will need to raise additional capital in the next 9-12 months – let’s hope the data will be stronger than $GNVC’s and $INGN’s Ad-based technologies. Without much digging into an unproven technology, they do most certainly feel rich at present.

Next, $ASTM. Looking at the three-month chart below, they too left investors with little confidence (dropping 38% from $1.15/share to $0.71/share, 3/27/13) after announcing a strategic change in R&D. They terminated an ongoing Phase III in critical limb ischemia due to slow enrollment to focus on dilated cardiomyopathy, and enrolled the first patient in early August. In this case, $ASTM took a completely different approach to $ZIOP, by focusing on a single Phase III trial…of course, their significantly weaker financial position might have contributed to that decision.Briefly, the trial is expected to enroll 108 patients, who will be followed for one-year; primary data completion expected August 2015. With $13.6 MM cash reported at the end of 2012, even if they cut the 2012 $29.5 MM cash burn in half, there “‘ain’t no way” they will make it to data.

For a company with a $32 MM market cap (45.66 MM shares outstanding x $0.70/share), there aren’t many options for survival, which is why I’m sure their new CEO was brought in to right the ship.

Now, some good news. I’ve “heard” that healthcare VCs are in panic mode, unless you are Third Rock, which has had pretty solid outcomes with Alnara and Lotus Tissue Repair. In retrospect, given that they have received plenty of press, lots of credit has been bestowed upon them, so here’s their website (here) for you to check them out. I suppose, it is not too surprising that investors are liking what they see.

And some news that make you go “hmm”. $AZN had a busy March 21st, with four announcements on their Investor Day, which was held to highlight their new strategy and showcase their scientific prowess. Focus on core areas, sell Brilinta and Onglyza – nothing earth shattering. The press releases discussed: 1) a fourth strategic reorganization, with more staff reductions and site consolidations; 2) a new appointment to the leadership team to head a new group; 3), a new academic collaboration, focused on translational outcomes ; and 4) they made a big splash with a high value preclinical research agreement. Pretty interesting times for their new CEO, who took the the Captain’s chair back in October. At present, it is unclear what the plans are to plug the near term revenue gap, but they are certainly looking towards a productive future, with several preclinical deals announced in April – Bind, Horizon, Alchemia.

Lastly, three cheers for an approval for $BIIB, which is now toying with the $50B market cap mark. BG-12 (Tecfidera) has led the way with approval in US as first-line treatment for MS, on the heel of favorable IP news (dosing schedule). Looks good for MS patients, who now have the option of a twice daily oral medication instead of a needle. Terrific story, with a twist – possible PML case in EU with a dimethyl fumarate-compound. Time will tell, if this will be a barrier to further uptake and growth.

A much longer post, than expected – thanks for making it this far!

If you just skipped to the end, thanks to you too! Lots of ideas to jot down, but not quite enough time to flesh out some of those ideas. Happy earnings season.

No position in any companies listed.