There’s a clear winner in the “what readers are asking about” sweepstakes this morning, and it’s the latest pitch from Charles Mizrahi for his Park Avenue Investment Club (currently $99/yr) — so that ad must really be making the rounds, and we’ll fire up the Thinkolator to get you some answers today.
The pitch is clearly about cancer immunotherapy, broadly speaking — plenty of references are made to big immunotherapy drugs and advancements, and the somewhat generic quotes from lots of medical folks about the huge potential of immunotherapy. I’m no expert on medical matters (that’s why we have two other authors here who chime in often on the topic), but clearly there has been a huge push over the past decade to develop immunotherapies, and in many cases they are making a huge difference for patients…. and sometimes, to investors in the companies whose drugs have made good progress in clinical trials or, in the most advanced cases, been approved for sale.
So yes, cancer immunotherapy is big… we can just start with that as a “given” … though it doesn’t, of course, mean that every company pursuing therapies that use the body’s immune system to fight off cancer will make you gazillions of dollars — as with all new drugs and therapies, a lot of them will fail. That has started happening with some immunotherapy drugs as well, recently, despite the rush into the space (summed up pretty well here in a Medscape article, if you’d like some perspective).
And that’s about the extent of my understanding of this space, so let’s just jump in and ID the stock for you… ready?
Here are the clues:
“Recently, the FDA made what they called a historic decision.
“It agreed that the single-shot therapy developed by the $200 billion pharmaceutical giant Novartis should be approved for use outside of clinical trials.
“It became official on August 30, 2017.
“But everything is just getting started…
“‘This is a brand new way of treating cancer,’ says Dr. Stephan Grupp.
“‘No one ever thought it would be possible to commercialize a therapy like this,’ says Dr. Carl June.
“It’s expected that the $108 billion firm Gilead Sciences will receive approval in the coming months.
“And while there will be a number of ways to profit in the coming years, there will not be another opportunity like the one before you today.
“If you were to make only one biotech investment in the next decade, this small Boston-based company is it.
“I have never been more certain about anything in my entire life.”
First, we have to fight our brains a bit and set aside the hyperbole — pretty much every investment teaser ad includes a line like that last one… “I’ve never seen this kind of potential,” or “if I were to choose only one investment” or “this is the best opportunity of my career”… if you took them all seriously and went “all in” on each idea pitched with that kind of line, we’d all be broke by now.
But when it comes to fodder for the Thinkolator, “Boston-based” doesn’t really narrow it down so much when we’re talking biotech… what other clues do we get about this specific immunotherapy company?
“Dr. Kenneth Anderson of Dana-Farber Cancer Institute in Boston called the results of the treatment study ‘very remarkable.’
“And not just for how many patients responded but also for how well…
“As Dr. Carl June says, ‘it’s very rare’ to see everyone respond to a treatment….
“As JPMorgan says of this company in a recent report: ‘[It] is one of the more potentially transformative and disruptive companies we’ve come across in some time.’
“This tiny company’s revenue last year was only $26 million. But once its treatment hits the market, it could deliver a first-year revenue of $500 million.
“So, we’re talking about an incredible revenue jump of 1,823%.
“That would still represent just a fraction of the market for this cancer therapy, which is projected to reach $202 billion.
“So, from year two on, revenue could soar many multiples higher as the company gets a larger piece of the pie.”
So who is this? Thinkolator sez they’re teasing bluebird bio (BLUE), a pretty high-profile member of the immunotherapy gang, with a big partnership deal with Celgene (CELG) for their lead drug (bb2121, targeting multiple myeloma), and an $8 billion market cap. And yes, like many biotechs they’re headquartered in Cambridge, not quite Boston, but we’ll forgive Mizrahi his imprecision.
They have other products in development as well, including several CAR-T immunotherapies and a product called Lenti-D for cereral adrenoleukodystrophy (of “Lorenzo’s Oil” fame), but I suspect that bb2121 will drive their results and their news flow for the immediate future… and it certainly has in the recent past.
The general pitch for these kinds of stocks tends to be optimistic at the extreme, of course, and Mizrahi has some rose-colored glasses for us as well…
“The FDA approving the single-shot treatment for use outside of clinical trials could set everything in motion — rapidly.
“Very soon, the 14 million people who are diagnosed with cancer each year may be able to walk into their doctor’s office, receive a simple shot, and walk out with the peace of mind knowing that they’ve conquered the disease.”
OK, so yes, FDA approval for bb2121 would be a big deal for bluebird (and possibly for Celgene, as it tries to replace their aging fleet of multiple myeloma therapies and maintain dominance in that disease), but it’s not going to happen next week or next month… and it will start, if it comes, with fourth-line approval for use in patients who have exhausted a bunch of other options, and try to move up the ladder like other drugs… start with the most-dire cases, and try to prove that your drug is also better than the current “standard of care” treatments.
So you would probably need to have a pretty generous definition of “very soon” to take that statement seriously. It’s possible, but it won’t even be used for all multiple myeloma patients within the next five years, let alone all cancer patients. Their other programs are also very advanced in some cases, though like many biotechs it looks like bluebird has started out with relatively small “orphan” or rare diseases, where they can prove efficacy and get to market relatively quickly and cheaply before trying to break into what we might crassly call a “mass market” disease.
The big deal for bb2121 recently, and for bluebird’s stock price, was the release of fantastic response rates in their ongoing clinical trial and their presentation that cited the “Rapid and expanding clinical program with Celgene for this potentially groundbreaking therapy.” You can review the investor presentation here, and there’s a quick note from the Motley Fool analyst here about that bb2121 news from mid-December. They’ll also be presenting at the JP Morgan Healthcare conference tomorrow, so that might gin up some more interest — though I don’t have any idea what they’ll say, and it certainly might not be new.
And that’s about all I can tell you. Dr. KSS, who follows biotech for the Irregulars, has written about bluebird in the past, noting at times how popular and news-driven the stock can sometimes be despite the very small size of its clinical trials to date, and it has come up on his discussion threads a few times (though not much recently), and I certainly don’t know whether BLUE will end up a success or not… all I can tell you is that this is the stock Mizrahi is pitching as his “Single-Shot Cancer Blaster,” and I’ll leave you to go forth, researchify, and fill in the blanks to decide whether it’s a fit for your portfolio.
If you’ve ever looked into bluebird, please comment below to let us know what you thought… and if you’ve tried out Park Avenue Investment Club, please click here to let your fellow investors know what you think of Mizrahi’s service. Thanks for reading!