Comments on: Morphosys – A Biotech Rule Breaker

By: Anthony

Anthony — Fri, 17 Apr 2009 19:22:22 +0000

Speaking of Foreign Bio-Tech stocks. Do you know how we can trade GenMab?

By: Ohad Hammer

Ohad Hammer — Thu, 16 Apr 2009 07:43:58 +0000

Hi Osmium

I agree that running such a modular business is challenging, but on the other hand, this is Morphosys’ only chance to reach substantial value creation events in the next 12 months. MOR103 should deserve more attention as the company has 100% of the upside. In the future, one can hope that Morphosys will have so many partnered drugs in the clinic that they would serve as a buffer against bad news related to any specific agent.

Ohad

By: osmium

osmium — Wed, 15 Apr 2009 20:44:38 +0000

Hi Ohad,

after reading the management outlook from January (press release 2009 01 29), I am a bit concerned that the increased focus on MOR103 may bind too much resources. The triple business model of “proprietary”, “partner” and “diagnostics” may prove difficult to manage simultaneously.
I am also concerned that investors may have an overemphasis on the glorious outlook of a potentially approved MOR103 and perceive the more stable partnering-part of the company less than appropriate. Such a bias may lead to heavy shakes if just minor rumours about MOR103 emerge. I fear that a too strong proprietary program leads to blurred perspective on the company. Therefore I am very pleased that you took your time for compiling this very thorough analysis on MorphoSys.

Ciao - Osmium

By: Ohad Hammer

Ohad Hammer — Wed, 15 Apr 2009 07:14:53 +0000

Jason

Very strange behavior, also in after hours. Doesn’t seem to be any new data from them.

Ohad

By: Ohad Hammer

Ohad Hammer — Wed, 15 Apr 2009 07:07:41 +0000

Hi Anthony

Congrats on DNDN, I certainly missed that one…
I hope actual numbers are good. If provenge gets approved it will be a historical event.
Would love to continue to exchange ideas in the future

Best,
Ohad

By: jason

jason — Tue, 14 Apr 2009 21:03:46 +0000

Was wondering your thoughts on the crazy day in MITI, maybe news pending.

By: Anthony

Anthony — Tue, 14 Apr 2009 19:06:14 +0000

Love your blog,
Tried to interest you on DNDN and wanted to share my DD with you awhile back.
Would love to continue exchanging ideas and thoughts about Bio-Tech in the future
Anthony

By: Ohad Hammer

Ohad Hammer — Sun, 12 Apr 2009 12:11:33 +0000

Sorry Sam, but I don’t follow DNDN closely enough to have a concrete opinion. All I can say is that company’s behavior is very unusual.

ohad

By: Ohad Hammer

Ohad Hammer — Sun, 12 Apr 2009 12:09:01 +0000

Hi Sameer
ARRY’s cash position is a major risk factor that makes ARRY more risky than EXEL, but in my opinion, at current valuation, it seems that all the risk is factored in and most of the upside potential is ignored. even if they don’t manage to get the $80 million they intend to, they can have a viable business model based solely on their discovery programs, but I honestly don’t think this scenario is likely. They can also draw another 40 mil from the loan facility with Deerfield, but I think they would rather keep it as a last option and try to monetize their proprietary pipeline prior to that. The most interesting partnering candidates are the glucokinase activator in diabetes, which could be a game changer for the company and the MEK inhibitor for RA. Personally, I also like the p38 programs.
Although there is no single drug in ARRY’s pipeline one can point at as the “next big thing”, it is similar to Morphosys in the sense that it is too diverse to fail. In terms of discovery capabilities, ARRY looks as prolific as EXEL in terms of speed and quality of compounds, so eventually several of its drugs will reach proof of concept in man, this year or next year. People also tend to forget the relationship they have with Genentech and Celgene, which should result in multiple IND’s starting from the 2nd half of the year.
Ohad

By: sam

sam — Sun, 12 Apr 2009 07:13:17 +0000

Some have said that provenge showed a reduction in cancer in 20 percent last fall, however, they must meet the minimum 22 percent to have the drug approved. Many are skeptical of DNDN…do you think DNDN will become another SNTA? I remember you reduced your position in SNTA before it tanked because you were skeptical of SNTA’s chances of getting their drug approved. Do you believe DNDN will become the next SNTA?

By: Sameer

Sameer — Sun, 12 Apr 2009 05:34:35 +0000

Thanks for replying.
My concern about ARRY is same as other readers have pointed out: their cash position. Company ended December quarter with $100m which may guide it through 2009. CEO is saying they may grab $ 80m in partnership deals, but talks are still at primary stage. ARRY may turn into another RIGL. what are other financing options available with ARRY? Array would be in the same situation where EXEL was in december. I don’t think secondary public offering is a solution in this environment.
Please share your views, you may have talked with management…what they are saying?

By: Ohad Hammer

Ohad Hammer — Sat, 11 Apr 2009 20:15:04 +0000

Hi Sameer

AACR posters typically don’t involve important clinical data, and going over the Array presentations, there is only one clinical trial among the impressive list of posters: A phase I of Her1/2 inhibitor with some sort of a response, according to the abstract.
ARRY will have plenty of clinical data from June onwards.

ohad

By: Sameer

Sameer — Sat, 11 Apr 2009 15:16:34 +0000

Hi Ohad
I am thinking of taking some ARRY shares, should I wait till AACR meeting or buy it right now. What do you think about the abstract papers, would they revial any important data?
Sameer

By: Ohad Hammer

Ohad Hammer — Mon, 06 Apr 2009 14:43:03 +0000

Hi Sachin

ARRY really looks like a mini version of EXEL, but it is a couple of years behind in terms of clinical data. ARRY’s financial position is not as sound as EXEL’s but with the right cost containment measures and $80M in licensing revs the CEO has been promising, I think they’ll be ok. In addition, it has so much going on with so many data readouts expected 2009, that would hopefully create more value.

Both ISIS and ALNY have strong cash positions, but they also operate in a highly risky segment. If you examine stocks exclusively based on cash position, the “cheapest” stock is probably CRGN, but it is also a very risky one trick pony for now.

ohad

By: Sachin

Sachin — Sun, 05 Apr 2009 19:32:35 +0000

Dear Ohad
Regarding ARRY, i was kind of concerned about their cash position and ever widening pipeline. This looks just like EXEL. What do you think of their cash position in 2009?
Any other company you would like to pointout with strong cash positions like Morphosys?

Warm regards
Sachin

By: Ohad Hammer

Ohad Hammer — Sat, 04 Apr 2009 22:11:02 +0000

Agree, but it’s dead money for the coming 3 months. Published a couple of articles about RIGL, see below:
http://www.hammerstockblog.com/tag/rigl/

By: Anthony

Anthony — Fri, 03 Apr 2009 18:00:07 +0000

Thoughts about RIGL, oral Rheumatoid Arthritis compound in Phase IIb. Results are expected in July/August, and their Phase IIa results looked very impressive compared to their injectable counterparts such as Enbrel and Remicade.

By: Ohad Hammer

Ohad Hammer — Fri, 03 Apr 2009 06:29:24 +0000

Nothing happened. The only reason was the fact that IMGN accounted for ~15% of the portfolio, which is not a desirable situation. In addition, you have to remember that T-DM1 is looking great, but the rest of IMGN’s pipleine is disappointing so far. Of course, with the number of candidates recently entered the clinic, this could change this year.

ohad

By: Greg

Greg — Thu, 02 Apr 2009 12:03:19 +0000

Hi Ohad

Is there a particular reason for why you decided to sell IMGN? In the previous post you sounded pretty excited about T-DM1.

Thank you
Greg

By: Ohad Hammer

Ohad Hammer — Wed, 01 Apr 2009 13:21:12 +0000

I think that most of the pressure stems from the fact that there no specific agent with clinical proof of concept. The market likes to put a price tag on a specific product rather than relying on statistics for the entire portfolio. The good news is that with every project that moves into the clinic, chances are higher for clinical validation for one of Morphosys’ projects.

ohad