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Jonathan Poyer

Be Careful What You Own in Biotech - Wheat and Chaff Abounds





The S&P Select Biotech index traded back down to its 50 day moving average as generally upbeat earnings reports from large caps give way to more volatile SMID caps. Negative headlines seemed to outnumber positive ones on the week as disparate factors stymied drug development efforts.



Frequency Therapeutics (FREQ) crashed >80% upon announcing the failure of a phase 2b trial in hearing loss and a subsequent 55% reduction in force. FREQ's FX-322 previously failed to show benefit in a prior P2 trial and the current negative result leaves no path forward as it was designed to definitively demonstrate efficacy.



Blueprint Medicines (BPMC) announced FDA placed a partial clinical hold on the P1/2 VELA trial of BLU-222, a selective inhibitor of CDK2, due to visual adverse events. BPMC will not be able to enroll additional patients in the trial until the partial clinical hold is resolved. G1 therapeutics (GTHX) was cut in half when it stopped a Ph3 trial for trilaciclib in colorectal cancer after reviewing data that revealed the efficacy in the placebo arm was superior. Finally, Sorrento therapeutics (SRNE) cratered nearly 75% upon filing for Chapter 11 bankruptcy in Texas. Embattled SRNE has been the target of short reports for controversial statements by management.



Separating the wheat from the chaff is one of the more difficult tasks for every biotech portfolio manager. Snake oil is still for sale despite breathtaking advances in modern medicine.

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