Fearless Football and Biotech Picks For Fall 2012

9/4/12Follow @xconomy

Football season starts this week, which means a few things to me. Summer vacation season is over, people’s batteries should be recharged, and it’s time to start fresh at work and school. This is also the time of year I look for lessons and storylines from America’s most popular spectator sport for ways to liven up and explain what’s going on in this wild and nutty business called biotech.

Since I had so much fun this time a year ago writing about fantasy football/biotech awards and predictions, I figure this could become an annual tradition. For those unfamiliar with fantasy football, it’s a simple game. The object is to outwit your friends by selecting real-life NFL quarterbacks, running backs, receivers, kickers, and team defenses who you think are poised to have statistically outstanding seasons—while you try to avoid the overhyped/overrated players.

It’s a bit like picking stocks, where you want a balanced portfolio of safe, predictable veterans mixed in with a few promising newcomers that might add a little pop to your portfolio. To be really good, you’ve got to work hard, be consistent, and have some vision to see patterns that others don’t, a tolerance for risk, and some luck.

With that, here are my fantasy football-inspired biotech picks for the fall of 2012, along with a quick recap of how my biotech picks did in the fall of 2011.

The Reggie Bush Don’t Believe the Hype Award. This dubious honor, named after the former star running back at USC who never panned out in the NFL, went to Brisbane, CA-based Intermune (NASDAQ: ITMN) last year. The company’s stock has indeed fallen from the mid-$20s to $7.37 at the most recent close. This year I expect two highflying obesity drugmakers to disappoint their owners—San Diego-based Arena Pharmaceuticals (NASDAQ: ARNA) and Mountain View, CA-based Vivus (NASDAQ: VVUS). I didn’t think these companies could win FDA approval for their drugs a year ago, and they both proved me wrong. But I still don’t think either of these drugs is the answer for millions of Americans struggling to achieve healthy body weight.

The Adrian Peterson Fading Superstar Award. For a few years, the Minnesota Vikings running back was the best combination of speed and power in the game. Then the workhorse blew out the anterior cruciate ligament in his left knee in December. Like Peterson, Summit, NJ-based Celgene (NASDAQ: CELG) was once a shining star of biotech, but it did the biotech equivalent of tearing its ACL back on June 21. The company withdrew its application to market lenalidomide (Revlimid) in the European Union as a maintenance therapy for newly diagnosed multiple myeloma patients. Celgene said it intends to try again to get that approval when it has more long-term follow-up data. The stock tumbled on that disclosure, and has since bounced back, but that’s still the kind of regulatory misstep that you don’t expect from a traditional Pro Bowl-caliber performer like Celgene.

Packers-Bears best rivalry. Last year I predicted that Vertex Pharmaceuticals and Merck would have the best rivalry in biotech, as they faced off with new protease inhibitor drugs for treating hepatitis C infections. This has actually been a pretty lopsided matchup, just like how my Green Bay Packers have gained the upper hand over the Bears for a few years now (take that, Bears fans!). Vertex (NASDAQ: VRTX) generated $328 million in sales of telaprevir (Incivek) in the most recent quarter ended June 30, while Merck (NYSE: MRK) lagged behind with $126 million in sales of boceprevir (Victrelis). But the bigger story, which I didn’t see coming last September, was how all-oral nucleotide polymerase inhibitor regimens in development would upstage the protease inhibitors so quickly. It’s still too early to say who will end up winning this battle for the long term, but odds are that the rivalry will continue to intensify with multiple players, especially Gilead Sciences (NASDAQ: GILD) and Vertex.

Tom Brady Sleeper Pick of the Year. Brady will forever provide inspiration to underdogs, as a lowly 6th-round draft pick who went on to become a three-time Super Bowl champion. Last year I picked Richmond, CA-based Sangamo Biosciences (NASDAQ: SGMO), and it promptly disappointed everyone when its diabetic neuropathy clinical trial failed. But Sangamo has some strong science with its zinc-finger binding proteins, and it has recovered from last fall’s stumble because of encouraging results against HIV. This year’s sleeper pick is Bothell, WA-based Sarepta Therapeutics (NASDAQ: SRPT). This little company has shown some provocative interim results from a trial of a RNA-based therapy for Duchenne Muscular Dystrophy, and has lately attracted more than a few speculative investors. Critical information on this drug’s safety and effectiveness will come in October when Sarepta analyzes 48-week follow-up data from a clinical trial of 12 boys with the disease.

Peyton Manning Comeback Player of the Year. The NFL might as well give the future Hall of Fame quarterback this award in advance, because he sat out all last season with a neck injury, and now looks poised to return to form. Last year’s honor went to South San Francisco-based Exelixis (NASDAQ: EXEL), which made a legit comeback in 2011. It looks like Cambridge, MA-based … Next Page »

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  • lebronz

    Guess that means you and your buddy Mr. Loncar are definitely buying DNDN shares now yes..? Cool! I’m in too!
    Good luck sir!