Cervello Capital

CNS/metabolic disease investor, biopharma lawyer, gambler and coach. Mostly wrong. Never investment advice.

[Cervello Capital @riskadjoptimist]

Been absolutely loading $TGTX. Went back and listened to the BofA call with MW. There are 40000 new patients starting on -CD20s each year. MW said capturing 10% “is probably high this year” so using 5% and 59k we get $120M sales for 23’ and this seems to be well on pace. 1/4

[Cervello Capital @riskadjoptimist]

After taking a break acting for pharma and being inspired after meeting another HF biotwit investor over weekend I’ve decided to write on a setup I like. In bios assymetric upside is everything bc you have almost no margin of safety (clinical risk, reg risk, financing risk, liquidity risk, commercial risk, capital markets risk, discount rate risk, risk tolerance risk etc. - somehow everything hits bios and its typically a bloodbath).
Brings me to $VYGR - trading near cash (runway to 28’), anti-tau tx through 2 different payloads but related shots on goal in 26’ (which seems to be where the AD treatment puck is going, $BIIB just advanced BIIB080 with similar MOA to P3 after 50% CSF tau reduction so some de-risking there too), V1706 also achieved similar or more Tau reduction in NHPs following 1 IV dose. Also a + $VYGR is led by Fred Sandrock ex $BIIB for 20+ years where he helped advance ADUHELM to mkt. He knows AD tx development from soup to nuts. VY1706 got IND cleared yesterday and dosing expected to start H2 26 in 3 groups across 18 patients.
AD is an absolutely monster TAM. Everyone is looking at GLPs because of the TAM and monster pk sales but there exists another mkt like it. It is difficult to comprehend- 32-55M globally and 7M in US alone this year. Death in 4-8 years after diagnosis and high unmet need (AA AD txs didn’t meet expectations). US now spending $385B on caring for AD patients. And this problem is getting worse, fast (15M US pp by 2050). V1706 is an interesting tx for this problem w/ 1 IV dose- assume 50k US patients/year at $500k plus $2 or 3B OUS and you arrive at pk sales of $15B, base case probably $5 to $8B at 15% PoS and $6B pk sales x 20% net margin and 10x sales and 40% discount factor= $700M rNPV. Mkt is basically pricing VY1706 at near-zero (probably bc anti-tau and/or AD txs always fail but $BIIB advancing theirs intrigues me…..) and I am starting to like the R/R here a lot

[Cervello Capital @riskadjoptimist]

We all do. I should have been more polite in my response. Apologies. High IO% is positive signal but they still serial dilute if needed. Insider sales is a poor signal IMO but insider buys is strong (directors sell for all sorts of reasons but only buy for one reason). I have never seen a bio return material amounts of cash to shareholders- they burn it gasping for air.

[Cervello Capital @riskadjoptimist]

@BCValueInvestor Generally speaking for BP to acquire they need to have drugs that work in late stage trials or reach commercial. BP moving away from earlier stage assets lately (as they should). They may score a partnership on the pipeline but M&A will come later IMO

[Cervello Capital @riskadjoptimist]

@BCValueInvestor This is an idiotic post. This exact business model is what nearly killed $ABCL. That is not margin of safety, that is a business model that did not work and that is why they pivoted to traditional drug discovery now (own 100% of the IP, take 100% of the risk).

[Cervello Capital @riskadjoptimist]

@JackPrescottX I’ll do an $ABCL write up and include my thoughts on this

[Cervello Capital @riskadjoptimist]

@JackPrescottX Not sure. Probably because it’s a larger number and they need to spin up the sales machine. We won’t know it’s peak sales with any level of accuracy until P2 IMO. To be clear I am long $ABCL but I don’t see this drug as much as a slam dunk as biotwit does

[Cervello Capital @riskadjoptimist]

@JackPrescottX Bc you will never capture 100% of the TAM. If the TAM is $6B, $2B in peak is arguably an aggressive claim. Small mols have better gross margins than biologics (usually 50% better) so they have more flexibility. If they show = in efficacy, they can drop $ to entice payers. $ABCL

[Cervello Capital @riskadjoptimist]

@Andre_AGTC Where did you get $3B for FOS? I don’t know if I agree on that

[Cervello Capital @riskadjoptimist]

@BiotechObserver Disgusting levels of mismanagement

[BiotechObserver @BiotechObserver]

Latest Quarterly NASH/MASH revenue for the thyroid hormone B agonist class:
$MDGL - 311m USD
$VKTX - 0 USD.

Can you imagine this being the outcome 7, 8 years ago? It's truly mindboggling.
When will VKTX create some real value?

[Peter Suzman @Biomaven]

As I commented before, they have Phase 2 PK data and they still took both 2 months and 3 months into Ph 3. The primary endpoint is purely a PK non-inferiority one (AUC through week 24). That means that 2 months should be a slam-dunk. The only competitor is every month.

[Cervello Capital @riskadjoptimist]

@Andre_AGTC @gunnarssonerik1 @Andre_AGTC looks like we were ahead of the curve. They shut down the biz model in 2024 and pivoted to more traditional biotech. Would value your thoughts on the newco. I’m finding its current position VERY interesting…

[Cervello Capital @riskadjoptimist]

@JBjeremybrandon @DammitJean @Lucy3370 there is some play in these things. I.e. how far along are they? at what point do discussions become material? Various firms have various levels of comfort with these things. In any event, in my opinion, in order to close CoC by Aug you’d want to be started and into DD by now.

[Cervello Capital @riskadjoptimist]

@JBjeremybrandon @DammitJean @Lucy3370 Yesterday. If you filed it with regulators via an LOI it would be fairly settled. I don’t see how that wouldn’t be considered material which would start the clock on material disclosure and thus would require the 8K.

[Cervello Capital @riskadjoptimist]

@DammitJean @Lucy3370 Takes not remains*

[Cervello Capital @riskadjoptimist]

@DammitJean @Lucy3370 I read that in paragraph 2 as well but the final paragraph refutes it because of the capital A in my opinion. I also agree that it remains multiple readings and the general rule is that if that is happening in negotiations it should be rewritten haha