Today's news that the CHMP in Europe had slapped down an application from Genzyme and Isis to market their second-generation antisense drug Kynamro underscored many of the lingering concerns that have plagued this research field for years. But at Cowen, all the doubts about antisense drugs make this sector ripe for a potential surprise breakout that could significantly readjust some long-standing industry attitudes.
That's just one of the possible surprises that Cowen analysts put together on their annual list of top 10 possible blindsides for biotech, all culled from the prospects of public U.S. biotech companies: $ALXN, $BIIB, $BMRN, $GILD, $DNDN, $ISIS, $MDVN, $MNTA, $ONXX, $UTHR or $VPHM.
At the top of the list, with a 35% chance of being right: Stock valuations start to matter again. Growth funds piled into biotech in 2012 with little attention to stock valuations, says Cowen. But if the economy recovers and opens up new opportunities, or investors reach a common conclusion that there was a fundamental change occurring in healthcare, or the stock market headed south, then watch out below.
Among the other potential surprises: United Therapeutics and Sandoz could settle their wrangle over Remodulin (25% chance of it happening), setting up a clear schedule for a generic that would clear the air about United's prospects. In with a 20% chance of probability is Cowen's projection that 2013 could be the year that antisense drugs finally make their mark and overcome doubts about their future. Also, the FDA could approve generic copaxone (17%).
"There is little reason to believe that Nexavar's adjuvant STORM trial in hepatocellular cancer could succeed," adds Cowen. "Results from STORM are likely years away in any case, and so won't come during 2013." But Cowen analysts noted a 15% chance of early interim results coming in positive before the end of the year, making this one of the big odds-off catalysts of the year.
Then there are the bottom 5 projections: Gilead ($GILD) could become the most profitable biotech in the industry, besting Amgen ($AMGN) (10%); the indolent nature of prostate cancer could finally persuade physicians to restrict the use of new therapeutics--Zytiga and Xtandi, both moving into the prechemo zone--to metastatic patients, severely curtailing their potential peak sales (8%). Alexion's asfotase, an enzyme replacement therapy, could be approved early under new FDA rules (5%). In at 2%: Major flooding could knock out a biologics manufacturing facility, with Cambridge, MA, offering the most likely targets.
At the bottom of the list at one-in-100: Art Levinson, the former CEO at Genentech, will be named to run HHS. Sure, Cowen doesn't actually know who's likely to be the next HHS secretary, but Levinson's role at pioneering Genentech, his ties to the Democratic party and prominent position in U.S. business make him a logical dark-horse contender.
Of course, with these kinds of percentages, Cowen doesn't expect to be right often. Looking back over the years, though, its analysts were spot-on with a big delay for vancocin generics. Furthest off the mark: A slight chance that Alexion's Soliris could suffer from safety worries (never happened). Judged "most sarcastic": A Drug Launches And The Stock Outperforms.
- here's the list for 2013
- take a look at their best (and worst) projections