Some Tongue-in-Cheek Fantasy Baseball (and Biotech) Picks
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to bid for young players with potential to have long career arcs with sustained greatness. Clayton Kershaw, the 24-year-old Dodger lefty, looks to have a long, great career in front of him after winning the Cy Young Award last year as the best pitcher in the National League. Vertex’s ivacaftor (Kalydeco) is one of those rare drugs that is truly life-altering for patients with cystic fibrosis. It’s the first drug that affects the underlying protein abnormality, rather than just treats the symptoms. It works extremely well, and costs a fortune at $294,000 a year. Vertex will make a lot of money from this drug for many years to come, even though it’s only for less than 5 percent of cystic fibrosis patients. And this could be just the beginning of this story, as Kalydeco is designed to be combined with another Vertex drug, VX-809, which could become a combo that helps many more CF patients.
The Howie Kendrick Sleeper Pick of the Year: Affymax (NASDAQ: AFFY). If you really want to win in fantasy baseball, you’ve got to find “sleepers”—players who are undervalued and can be picked up late after superstars are all taken. Howie Kendrick, the second baseman of the LA Angels, has underachieved much of his career, but he can hit, and should see much better pitches now that he’ll be hitting in front of superstar free agent Albert Pujols. Like Kendrick, Affymax hasn’t lived up to its full potential yet, and has disappointed owners along the way. But this year, Affymax is poised to step up. The Palo Alto, CA-based drug developer (NASDAQ: AFFY) won an endorsement from an FDA advisory committee in December for its anemia treatment, which should be the first product to challenge Amgen’s 23-year-old monopoly in the U.S. for kidney dialysis patients. Just like having Pujols in the lineup provides a lift for Kendrick, Affymax will be buoyed this year because it is bringing forward a lower-priced alternative to Amgen’s drug, just at the time insurers are clamoring for more cost-effective treatments. The FDA’s deadline to complete its review of the Affymax drug is tomorrow.
The Barry Zito “Can We Renegotiate That Contract Now?” award: Gilead Sciences (NASDAQ: GILD). Zito, the left-handed pitcher, signed a seven-year, $126 million contract with the San Francisco Giants before the 2007 season. He’s been mediocre at his best, and downright stinky at his worst. Gilead paid the shocking sum of $11 billion last November to acquire Princeton, NJ-based Pharmasset and its portfolio of hepatitis C drugs even though none of its programs had completed Phase III clinical trials. Wall Street mostly cheered at the time, but then turned skeptical when Gilead released data that essentially said Pharmasset’s lead drug wouldn’t be a solo magic bullet for every patient with hepatitis C. This drug, GS-7977, may still be a market leader, but you can bet that just like the Giants wish they hadn’t guaranteed Zito so much money, Gilead probably wishes it had structured “earn-out” provisions into its deal, in which Pharmasset had gotten some money up front, and the rest of the $11 billion when it truly delivered.
The George Steinbrenner Impatience Award: This one should go to most everybody in the biotech venture capital community. Steinbrenner, the famously demanding owner of the New York Yankees who died a couple of years ago, was known for firing managers and trading players after getting irritated over just a few bad games in a 162-game season. Venture capitalists are known for taking the long view, betting on companies that are supposed to grow and pay off over the life of a fund, which is typically seven to 10 years. But as we’re now almost four years removed from the financial crisis, and biotech VCs have struggled to generate returns that enable them to raise new funds, there are a lot of antsy biotech VCs who want to make money THIS YEAR, and they can’t afford to wait. Last week, I reported on how Kirkland, WA-based OVP Venture Partners sold much of its stake in Complete Genomics (NASDAQ: GNOM) for peanuts. I think this is just one sign of the times, and I suspect we’ll see a few more companies get pushed through the IPO process, and many more acquisitions (good and bad) will get done as VCs run out of time and patience. Whether the itchy trigger fingers will help them turn around their portfolios, or just mess things up, will be one of the stories to watch this year.