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Fearless Fantasy Football, Uh, I Mean Biotech, Predictions for the Season Ahead

Xconomy National — 

Football season is getting started this week, and I’m pumped. This is the time millions of people test their wits against friends (and strangers) in fantasy football. For fellow biotech nerds who aren’t familiar, this is a little bit like the stock market—you try to pick a diversified portfolio of pro football players who you think are going to have great seasons. And you try to avoid the losers.

Since I just finished drafting my fantasy team, I thought it would be fun this week to evaluate biotech a bit like I analyze football players. So here goes, with a somewhat tongue-in-cheek set of awards and predictions about the ups and downs to watch this season among the companies, players, and drugs that make biotech so darn interesting.

Reggie Bush don’t-believe-the-hype award: Brisbane, CA-based Intermune (NASDAQ: ITMN). The former Heisman Trophy winner from USC had a dazzling college career, but has been a dud in the pros. Intermune, too, saw a monster wave of enthusiasm earlier this year, and its stock briefly topped $50 in April. The company has already dropped back into the mid-$20s, but it still has a market valuation of about $1.5 billion. All of this excitement has been for one new drug that was rejected by the FDA, and then approved in the European Union for patients with idiopathic pulmonary fibrosis. It all looks to me like investors have gotten carried away. This disease is a rare condition, Intermune is blazing a new trail on its own with physicians and patients, and quite a few European countries are basically broke.

LaDainian Tomlinson fading superstar award: Amgen’s erythropoietin anemia drug franchise. The future Hall of Famer did amazing things for the San Diego Chargers, but now he’s 32, near the end of his career. He’s given up the starting tailback job with the New York Jets to Shonn Greene, which means LT won’t have to carry the load all by himself, which could lengthen his career. Thousand Oaks, CA-based Amgen (NASDAQ: AMGN) had a similarly spectacular run with its erythropoietin anemia drug franchise, but after battling years of safety controversies, this product’s best years are behind it. Fortunately for Amgen, it has the equivalent of Greene’s fresh legs with its new antibody drug denosumab, which it is marketing as Prolia for osteoporosis and Xgeva for cancer-related bone loss. But just like Shonn Greene is no LT, d-mab is no EPO.

Packers-Bears best rivalry: Vertex-Merck. The Green Bay Packers and Chicago Bears have the oldest and one of the most intense rivalries in football, and there are few things I enjoy more than watching my World Champion Packers beat the Bears. I don’t have a rooting interest in the battle between Vertex Pharmaceuticals and Merck in the hepatitis C field, but this has the elements of a great rivalry. Vertex has superior data for its drug from clinical trials, but Merck’s drug is also a big step up over the old hepatitis C regimen, and it has money, manpower, and sales history with doctors that can’t be dismissed. To add another layer of intrigue, Vertex founder Josh Boger and CEO Matt Emmens both worked earlier in their careers at Merck, so these are familiar enemies.

Tom Brady sleeper pick of the year: Richmond, CA-based Sangamo Biosciences (NASDAQ: SGMO). The legendary 3-time Super Bowl-winning quarterback was the ultimate sleeper pick coming out of college, and the New England Patriots were able to grab him in the sixth round of the 2000 draft. Sangamo has been around for a long time with a technology for specifically silencing genes, which investors aren’t giving much value. But Sangamo is expecting some clinical trial results this fall from a mid-stage clinical trial of its new drug for patients with diabetic neuropathy. If the data are positive, it could propel this company from the bench to stardom.

Tedy Bruschi comeback player of the year: South San Francisco-based Exelixis (NASDAQ: EXEL). The former Patriots linebacker and 3-time Super Bowl champion suffered a rare heart condition that caused a stroke, which looked like it would send him into retirement in 2005. But he beat the odds, coming back to play some more great football. Exelixis, too, looked like it was in big trouble just a year ago after it made some big layoffs, one of its partners (Bristol-Myers Squibb) threw in the towel on its lead drug candidate, and its CEO left for a new job. But Exelixis’ lead drug, cabozantinib, has shown an impressive ability to treat the debilitating bone pain that strikes men with advanced prostate cancer. Investors have heard researchers rave about this drug, and have pumped new life into the stock, which enabled Exelixis to raise a lot more money. Now Exelixis needs to prove the results in more rigorous studies, but it is certainly back in the game.

Baltimore Ravens defensive team of the year: The FDA’s division that reviews obesity and diabetes gets this award in a landslide. Like the NFL’s notoriously violent defender, Ravens linebacker Ray Lewis and his teammates, the FDA has hammered a number of companies with new drug applications to the turf. San Diego-based Arena Pharmaceuticals (NASDAQ: ARNA), San Diego’s Orexigen Therapeutics (NASDAQ: OREX), and Mountain View, CA-based Vivus (NASDAQ: VVUS) have all been dealing with post-concussion syndrome after run-ins with an FDA that appears hell-bent on stopping any new weight loss drug with side effects from reaching the market.

JaMarcus Russell bust of the year: Seattle-based Dendreon (NASDAQ: DNDN). The former No. 1 draft pick for the Oakland Raiders is a classic case of a young player with loads of talent who failed to live up to his potential on the biggest stage. Dendreon entered the marketplace last year with lofty expectations that it had a multi-billion dollar product on its hands, with the first treatment of its kind to stimulate the immune system against prostate cancer. Then the company fumbled the ball on the 1-yard line (a football metaphor I used here a couple weeks ago), as it set the drug’s price too high, which helped create some serious headaches for doctors trying to get reimbursed. There’s still time for Dendreon to make a comeback, but the company will now have to overwhelm people with excellence to win over its doubters.

Wes Welker overachiever of the year: Berkeley, CA-based Plexxikon. No one in the NFL seriously thought Welker would amount to much in the league, much less become Tom Brady’s favorite target. Similarly, there were certainly plenty of reasons to doubt Plexxikon when it set out to develop a new drug for patients with a genetically distinct form of metastatic melanoma. This is a graveyard for drug development, where drugs historically work for about 10-15 percent of patients. But Plexxikon went on to secure a big partnership with Roche’s Genentech unit, and when it showed some very impressive clinical results, it got acquired by Japan-based Daiichi Sankyo in a deal that provided its VCs with a more than 13-fold return on investment. Now Daiichi/Plexxikon has made it into the major leagues, with a promising new melanoma drug on the market.

Sam Bradford rookie of the year: Seattle Genetics (NASDAQ: SGEN). The company spent 14 years on its mission to become a prime time player, and it finally reached the end zone last month when it got its first drug approved by the FDA. Most young quarterbacks struggle in their rookie year, like most new drugs struggle to gain a foothold in their early days on the market, but Bradford excelled, and there’s a good chance Seattle Genetics will, too. SeaGen’s drug has compelling evidence of efficacy, no real competition, and a small but well-defined group of patients in dire need. Seattle Genetics is going to take a while to learn the ropes of this market, as with all rookies, but there’s reason to think bigger things are ahead.

Peyton Manning most valuable player: Vertex. The Colts’ quarterback, a 4-time NFL MVP, has set the standard for excellence at the position the past decade (and let’s all hope he recovers fast from his neck surgery). Genentech long ago set the standard for excellence in biotech with its great run in the 2000s with cancer drugs, and it doesn’t appear to be fading away yet as part of Roche, with new drugs like the melanoma product and a supercharged version of trastuzumab (Herceptin) on the way. But Vertex Pharmaceuticals (NASDAQ: VRTX) has been the industry’s MVP over the past year, by nailing clinical trials with its hepatitis C drug, beating early sales expectations, and by delivering a groundbreaking drug for cystic fibrosis patients. The challenge for Vertex will be to prove it didn’t just have one career year, and that it can deliver excellence over the long haul, like Mr. Manning.

Bill Belichick coach of the year: George Scangos, CEO, Biogen Idec (NASDAQ: BIIB). Some wise man once said it’s better to be lucky than good, but Scangos has been both in a little more than a year at Biogen Idec. He cut through some of the organizational atherosclerosis, recruited some talented new executives, and got lucky when Biogen’s oral multiple sclerosis drug BG-12 nailed its pivotal clinical trial—kind of like how Belichick got lucky with the infamous “tuck” play in the 2002 playoffs. In Scangos’ case, the coach has kept ownership happy—with the most visible example being Carl Icahn, who made a small fortune this year selling his Biogen shares. That’s the kind of performance that will usually get the coach a contract extension.

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3 responses to “Fearless Fantasy Football, Uh, I Mean Biotech, Predictions for the Season Ahead”

  1. Jerry Jeff says:

    Love it. Are cellulosic and algae are the backup QBs? One holds the clip-board and the other gets sent back to the practice squad.

  2. Jerry—not a bad analogy. I might even go further and say cellulosic and algae are in Pop Warner football, a long long way from finding out if they are big and fast enough to play in the NFL.