I am in the process of reacquainting myself with my investments. I have a bad habit of neglecting stocks that have done well. As I am a pretty good contrary indicator, I thought I would share my thoughts on why I am considering lightening up on my CAT investment.
CAT has a $550 implied technology value. D2e7 is a huge part of that value, even at 3% royalty. The most I could assign to it is $300m, assuming $600m sales. Drug looks great, if we have seen the truth. It isn't going to be fast tracked, and FDA has become increasingly worried about new biologics' safety profiles.
After D2e7, I give negative value to glaucoma and practically nothing to anti-IL-12. The eotaxin is a great target, but who is going to seek infusion with a Mab for allergic rhinitis? CAT says there are other indications ("hypereosinophilic syndromes") for it, but I am not clever enough to know what they are talking about.
The BlyS program could be bigger than D2e7. Multi-faceted, powerful target, leading position....first indication will be SLE with HGSI. With P1 underway and a 3% royalty, today I give it a $50m value. BlyS has many different, subtle forms--could be too complicated for first drug to succeed, lucky we have made a Mab.
Finally, the TGFb1 program, co-owned with genezyme, I do like. Very good preclinical work by academics. I give a robust $75m value to it. Only in PI/II, you know.
So the bottom line is this is a well functioning BT, with sound prospects, but it is overvalued at the moment. After d2e7 there is a long way to another valuable program, what with TGFb1 having just started proof of principle in man--only 36pts. In other words, the prospects for outsized appreciation over the next few years is not as great as I look for. Thus "considering lightening." Action depends on replacement candidates.
Wilder
Is that snickering I hear? |
