j. birchenough - - detailed large cap BT pipeline review for celg, genz, amgen, biib, gild and dna/roche. since there is a lot of graphics, pm me for the pdf.
May 26, 2009
Biotechnology
Industry Overview
Large Cap Pipeline Review-Emerging Value
Sector View:
New: 1-Positive
Old: 1-Positive
Investment Conclusion
We are maintaining our Positive rating on the US Biotechnology sector following an indepth review of large-cap pipeline opportunities and
data flow expected over the next six to12 months. While primary focus remains on AMGN's denosumab in breast cancer, CELG's
Revlimid in frontline and maintenance Myeloma, GENZ's Lumizyme for Pompe's disease, BIIB's PEG-Avonex as a follow to Avonex in
MS and GILD's "quad-pill" strategy in HIV, pipeline develop behind these lead opportunities has progressed and suggests sustainable
value creation for the next three to five years. In reviewing large-cap pipelines, we believe that AMGN has greatest depth, GENZ has
greatest breadth and CELG has best follow-on opportunities for current commercial stage products. Our top large-cap picks remain
CELG, GENZ and AMGN and this is reinforced by our pipeline review.
Summary
?? We recently upgraded our Sector rating on the US Biotechnology group to Positive from Neutral in part driven by ongoing pipeline
productivity and an unprecedented number of upcoming potentially transformational events for large cap biotech companies. In looking
ahead to 2H09, we expect AMGN's denosumab to demonstrate superior trends vs Zometa in reducing skeletal related events (SREs) in
patients with metastatic breast cancer (mBC); CELG's Revlimid to demonstrate a significant benefit when added to MP as frontline
Myeloma induction therapy. and as chronic maintenance therapy following stem cell transplant; and for approval of GENZ's Lumizyme at
2000L scale to support acceleration of Pompe disease sales globally.
?? In assessing pipeline strength behind current lead opportunities, we believe AMGN stands out as having the deepest pipeline with GILD
having the least depth, although both could benefit from increasing breadth with AMGN overexposed to oncology and immunology and
with GILD overexposed to anti-virals and HIV specifically. Not surprisingly GENZ stands out as having the most diverse pipeline with
disruptive technology focused on high-value candidates in development for MS, severe hyperlipidemia, Muscular Dystrophy, multinodular
goiter and graft-versus-host disease (GvHD). In our analysis, BIIB and CELG both have intermediate breadth and depth with
most focus for each on follow-on opportunities in immunology and hematology respectively, although we are more optimistic regarding
prospects for Revlimid in CLL and NHL and pomalidomide in refractory Myeloma and Myelofibrosis than prospects for BG-12, daclizumab
and PEG-Avonex in MS.
Summary
Large-Cap US Biotechnology stocks have had a relative pipeline draught over the last several years with most activity dominated by
Genentech, now part of the larger Roche organization. In looking ahead to 2H09, however, we see several key pipeline events for the largecap
biotech universe that in many cases could potentially be transformational. As franchise products for AMGN, BIIB, GENZ, GILD and
CELG mature, we expect greater scrutiny on product pipelines and have endeavoured to provide a comprehensive review of both late-stage
products, as well as earlier-stage pipeline opportunities. Our comprehensive pipeline review is designed to allow for cross-company
comparisons, to identify areas of relative strength and weakness and to provide a timeline for potential value enhancing events. Graphics on the next several pages summarize the key pipeline programs for large cap US Biotechnology companies, in terms of both risk/reward and
timeframe. |
