Written by Dan Cohen and Scott Matusow
Currently, we are in the midst of a dramatic shift in the field of biotechnology and the Stock Market is beginning to take notice, as evidenced by the recent surge in the iShares Nasdaq Biotechnology (IBB ) and SPDR S&P Biotech ETF’s (XBI).
Significant improvements in computational and genomic tools have enabled a deeper understanding of the underlying bio-markering of new drugs to treat and potentially cure a wide-array of disease. Under the leadership of Dr. Scott Gottlieb, the U.S. Food and Drug Administration (FDA) has been setting a tone which better accommodates the technological and drug development shifts that are occurring across the sector. This builds upon the precedent set by the 21st Century Cures act which provides the FDA the tools necessary to accomplish this transformation.
Also, the FDA has been guiding for a more expedited and beneficial pathway for therapeutics which molecularly target the underlying root of disease, using a risk/reward based assessment model that should benefit patients, doctors, and investors now and in the future.
The primary focus for Gottlieb will be in assisting and reforming developmental pathways for new personalized therapeutic modalities which target specific genetic variations. Within six months, Gottlieb plans to issue guidance to help expedite possible break-through therapies to market.
At a recent senate hearing Gottlieb stated;
“this new policy will address the issue of targeted drugs, and how we simplify the development of drugs targeted to rare disorders that are driven by genetic variations, and where diseases all have a similar genetic fingerprint, even if they have a slightly different clinical expressions.”
In a more recent blog post entitled “How FDA Plans to Help Consumers Capitalize on Advances in Science,” Gottlieb adds additional commentary on how he intends to achieve this goal. He particularly focuses on the idea of ‘in-silico’ drug development, which means the use of advanced modeling software to generate and evaluate potential drug and device candidates. In the post, he guides that additional guidance will be issued in order to better inform how aspects of these tools can be incorporated into the various aspects of biotechnology development.
Given this context, our first instinct is to look at novel approaches arising in targeted oncology therapy that should significantly benefit as the FDA modernizes and adjusts to this new drug development paradigm. Many of the latest tools are being put to use in this field of development by top-notch management teams in well-financed developmental biotech companies, while others are quickly becoming “me-toos” in an increasingly crowded space.
At Stockmatusow, we constantly scan for companies that are taking the correct approach in the clinic which possess highly differentiated and novel platforms; companies we believe have the potential to be ‘multi baggers’, generating significant alpha in both the near and long term.
Late last year, we began a 3 part write-up series on Calithera Biosciences (Nasdaq: CALA), and more recently a feature article on GlycoMimetics, Inc. (Nasdaq: GLYC). Both of these companies to date have seen success in early data, with platform confirmation in part via big pharma partnerships and significant collaborations. Additionally, both of these companies have seen their stock prices increase 3 to 7 times from when we began to write on them. These developmental companies are particularly focused on defining bio-markers and other prognostic indicators to better define patient populations. We believe both of these companies will ultimately prove successful which we think will result in even larger stock price gains in the future.
Our new feature pick that meets our criteria pivots away from Oncology to a much less covered but arguably equally as an important therapeutic target, cardiomyopathy. Myokardia (Nasdaq: MYOK) is a relatively young company which is taking advantage of the computational tools we have referenced here to achieve a deeper understanding of the structural variations in heart tissue. The company’s lead asset MYK-461 is designed to target symptomatic hypertrophic cardiomyopathy (HCM), a disease marked by hyperdynamic contractility of the heart.
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