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September28,2020BARRON’S 25
creditmarketstha tyieldseven2%?
AbbViehasaspectacularimmunology
businessandanexcellentoncology
business,andwhat willpeopleuse
whenlife startsreturningtonormal?
Botox! [AbbViebought Allergan,the
makerofBotox,thisyear.] Theseare
threeterrificfranchises.Othergood
companiesinthebiopharmasectorare
tradingfor10to15timesearnings.The
stocks outperformedfromlateMarch
until aboutJune.Sincethen,therehas
beenarotationoutofthegroupand
intotechstocks andrecovering
consumerstocks.Healthcarehas
underperformedinthepastfew
months.Thereis alotofelection-
relatedanxietyamonginvestors.But
therearealotofopportunitiesinthe
sector,notjus tamonglarge-capsbutin
relati vely smallcompaniesengagedin
accelerateddrugdevelopmentort hat
couldgetacceleratedregulatory
approvalfortheirproducts.
Whatotherstocksdoyoulike?
Porges: AbbVieistradingaround$
andprobablyhas20 %to2 5% upside
asin vestorsgetcomfortablewiththe
Allerganacqu isition.Iama lsopositive
on FibroGen [FGEN].Thestock
tradesfor$44andcoulddoubleinthe
nextsixto12monthsonceinvestors
priceinthefullvalu eoft hecompany’s
anemiadrug,roxadustat,andstartto
getcomfortablewithitsIPF[idiopathic
pulmonaryfibrosis]treatment.The
treatmentoff ibroticdiseasesisstillin
anear ly stag eofd evelopment.
Celniker: That’s correct. Pliant
Therapeutics [PLRX],adevelopment-
stag ebiotechcompan ylaunched by
ThirdRock, has fourclinical-stage
programs.That gives them anumber
of shots on goal. Understanding the
under lying mechanisms of fibrosis
gives you an opportunity to treat
many different diseases, including
pulmonary and liver diseases.Even
skin diseases can be treated easily
with an antifibrosisstrateg y. Many
diseases causedby inflammation can
result in fibrosis. I’m excitedabout
Pliant, which came public inJune. The
company expectsmultiple data
readouts from some ofits clinical
trials In 2021. Pliant is well
capitalized, with more than $
million in cashat the end of the
secondquarter. It also has a
partnership with Novartis [NVS] to
develop and commercialize a
treatment for liver fibrosis associated
with NASH [nonalcoholic
steatohepatitis], one ofits clinical-
stag e programs.
Whatelsedoyoulike,Abbie?
Celniker:RevolutionMedicines
[RVMD]isa notherexcitingThirdRock
company. Itsstatedmissionis
“translatingoncologytargetsto
outsmartcancer.”Thecompan yhasa
programintheclinicrig ht now
targetingSHP2—akeytar getinac ell-
growthandsurvivalpath wayknown
astheRAS[reticularactivatingsystem]
path way. It alsohasadevelopmentdeal
worthup to$500millionwithSanofi,
andabout$325millionofcashoni ts
balancesheet,whichgivesit lotsof
runway.Therehasbeenalotof hype
abouttheRASpathwayino ncology.
Revolutionhasaninterestingapproach
tomodulatingRASandunderstanding
differentmutationsthatcouldbe
drivingthispathway. Thiscouldbe
game-changingintreatingabout30%
ofallcancers.
Investorsshouldalsokeeptheireyes
opentoprivatecompaniescoming
downtheline.Wea reexcitedabout
GoldfinchBio,whichwel aunchedin
- [C elnikeristhechairwomanof
GoldfinchBio.]Elilikesit,too.[Casdin
CapitalisaninvestorinGoldfinch.]It is
oneofthefewcompaniesfocusedon
thediscoveryanddevelopmentofd rugs
forkidneydisease.CKD[chronic
kidneydisease]isad riverofm ortality
acrossage, race ,andstag eofd isease
progression,affectingmorethanonein
ninepeopleworldw ide. Treatingkidney
diseasecostsMedicarehundredsof
billionsofdollarsayear,butlessthan
1% ofalldrugdevelopmentisf ocused
onit.That’ sjustwrong.
Goldfinchhasbeenabletoidentify
someofthekeypathwaysthatdrive
kidneydisease,andhasidentified
multiple ways tomodulatethem.They
have maintainedagoodworking
relationshipwiththeFDA,whichhas
evolvedthewayitl ooksate ndpoints
[drug-trialoutcomesthatrepresent
clinicalbenefits]fortrialsinkidney
disease.Asar esult, youcanusea
uniqueapproach thatcanaccelerate
drug development.Goldfinchwillha ve
somekeytrialrea doutsin2021and
- Thecompan yjustclosedona
$100millionSeriesBroundof
funding,andalsohasagood
developmentdealwithGilead.
TangoTherapeutics,acancer
companywel aunchedin2017, hastwo
greatdealswithGilead.Suchdealsare
animportantpartofhowweb uildand
financecompanies.We likevalidating
supportfromlargerbiopharma
partners.Tangoworks onsynt hetic
lethality[whichoccurswhena
combinationofdeficienciesintwoor
moregenesleadstocelldeath] .Ins uch
cases,acombinationofdrugscanwork
betterthanasingledrug.Tangojust
raisedaSeriesBroundoffunding,in
additiontostrikingitsdealswith
Gilead. It isusinganovelscreening
technologytof indne wdrugtargets.
Eli,whatexcitesyouinthismarket?
Casdin: Thediagnosticsareais
startingtoleverage technologyand
recentscientificadva ncestochangethe
paradigmofhowpatientsare
diagnosed,andat whatstag e. Thrive
EarlierDetectionisaprivatelyheld
companylookingtodiagnosecancerat
itsearlies tstage with apan-cancer
blood-basedbiopsy. Uniquetothis
solution,Thrive recognizesthatthetest
needstobeintegratedintothehealth-
careinfrastructurethatEddie
described,andthesolutionneedsto
helppatientsdealwiththeinformation
andguidethemthroughthejourney
thatfollows.Thrive isas much about
thedatacapturedasthetest.As with
mostearly-sta ge life-science
companies,Thrive isstillpre-revenue,
buthasraisedsubstantialcapitalto
pushforwardR&D.Thetimehascome
forearlierandmoreeffective cancer
screening,andwe thinkThrive canbe
areallea derint hespace.
Significantproductswillbe
developedinChinainthenextdecade,
andsomewillmakeittot heU.S. We
like BurningRockBiotech [BNR],a
China-baseddiagnosticscompany,
whosere venuegrew83% lastyear.
BurningRock willha ve closeto$
million-plusinrevenuethisyear.
BurningRock isusingnext-generation
sequencingtodevelopmolecular
profilesofdiseases,similartowhat
FoundationMedicine[acquiredby
RocheHolding (RHHBY)]and
Guardant [GH]do.Butthesizeofthe
totaladdressablemarketinC hinaisa
multiplelargerthanwhat itisinthe
U.S. As thelar gest providerof
moleculartestsinChina,andwitha
marketthatiso nly6%p enetrated,the
growthpotentialisenormous.The
companywentpublicin June,andthe
stockist radingaround$22.Shares
have comedown[fromahighof
$32.40 ]ast heU.S.-Chinanarrative has
grownmoretense.
Whatelseappealstoyou?
Casdin:AllogeneTherapeutics
[ALLO] developsallogeneicCAR-T
[chimericantigenreceptor]therapies
fortreatmentofc ancers.Thisis
effectivelyanoff-the-shelfsolution,as
opposedtoanautologoussolution
whereincellsaretakenfromthepatient,
engineeredinalab, andreinfusedinto
thepatient—amoreexpensive and
cumbersomeprocess.Allogeneisrun
byaproventeamwithahistor yof
creatingandmonetizingvalu e. It isthe
samegroupofe ntrepreneursthatsold
Kite PharmatoGileadin2 017. Allogene
hasover$1b illonofcash,andan
impressive technologyshowingearly
signsofefficacy.Ift hedatahold,we can
seethecompanyexpandingintoother
indicationsandbecomingasignificant
cell-therapyleader.
Abbietouchedonprecision
medicine.Forthefirst30y earsofthe
biotechindustr y, ifyoumarkthe
GenentechIPOin1980ast hestart,
drug developmentwaslik ethecartoon
thatshows aguy under astreetlamp
lookingforhiscarkeys.Apoliceman
asks,didyoudropyourkeys here?
Andtheguyanswers,no ,butthisis
wherethelight is.Well,fundamental
adva ncesintechnologiesforanalyzing
andmanipulatingmolecularbiology
have turnedonallthelightsandfueled
anexplosionintheunderstandingof
biologyandthedriversofdisease.The
bestcompaniescombinegenetic
understandingwithpowerful
technologyplatformstocreatea
pipelineofprecisionmedicines.We like
companiessuch as Relay
Therapeutics [RLAY],Revolution
Medicines,and BlueprintMedicines
[BPMC].Theyare applying genetic
“Treating kidney disease costs Medicare hun-
dreds of billions of dollars a year, but less
than 1% of all drug development is focused
on it. That’s just wrong.” Abbie Celniker
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