Logan, Redemption and Fallen Biotechs (LIFE, DRNA). Look for Fix at Cowen HCC
If you haven’t seen Logan yet, don’t worry, this is a spoiler-free zone…. Hugh Jackman and James Mangold have created what may be the best superhero/comic book adaptation yet. Consider the quality of a film in this genre that even Manohla Dargis recommends!
Walking out of the film, I began thinking about stories of potential redemption…. which led naturally in my head to thoughts of biotechnology companies that are trading at fractions of their former valuations that are still researching potential medical breakthroughs.
And if you follow that stream of consciousness, then we’re of common minds with William James and you’re in the right place…
We have been examining the universe of biotechnology companies, and no other sector is littered with so many fallen angels. To be fair, some stocks are trading at deservedly low valuations. There are many stocks, however, which:
- Seem to have been driven well below reasonable levels over the past couple of years
- Have been moving most recently in a positive direction after bottoming
- Are developing therapeutics for rare diseases
- Have potential platform technologies that could have broad applicability in multiple disease markets
- Are presenting at the Cowen Health Care Conference in Boston this week
We discussed last week our position that the President has unfairly criticized the FDA, and previously highlighted the collaboration between the FDA and the European Medicines Agency (EMA). We believe the FDA and EMA will continue to create a smooth orphan drug roadway for companies that are focused on rare diseases. Two companies that have hit our criteria above are: aTyr Pharma (LIFE) and Dicerna Pharmaceuticals (DRNA).
aTyr Pharma, the company with the best ticker in all of biotech, announced on Friday that it had received Orphan Drug Designation by the EMA for limb girdle muscular dystrophy (LGMD). LGMD encompasses a group of rare genetic muscle tissue diseases caused by a toxic loss of function in a specific gene.
The company’s scientific platform is based on a category of proteins that it has dubbed “Physiocrines.” In simple terms, there is a group of naturally occurring enzymes known as transfer-RNA-Synthetases. RNA is the body’s messenger molecule, transmitting DNA’s genetic instructions to create proteins. The company’s founder and current board member, Dr. Paul Schimmel, discovered nearly 20 years ago that one of these enzymes included an extracellular signaling region – which the company calls Physiocrines. These Physiocrines are potentially involved in numerous physiological pathways (errors in cellular signaling interactions lead to cancer, diabetes and other diseases) and, consequently, numerous potential therapeutic intervention points to halt the progress of diseases.
The stock was north of $28.00 two years ago and bottomed before Christmas at $2.10. Since then, the stock is up over 60% and is still only an $80 million market cap story. Dr. John Mendlein, CEO of aTyr Pharma, presents at the Cowen Conference today, March 7th, at 8am ET.
Dicerna Pharmaceuticals (NASDAQ: DRNA)
Dicerna, also with a very apropos ticker, is developing therapies based on RNA interference. If you interfere with a particular RNA molecule’s message, you halt the synthesis of that protein and potentially the progress of a particular disease. It’s an ambitious platform technology that, if successfully developed, could be the foundation therapy for a range of rare and not-so-rare diseases. Dicerna’s initial targets are rare, inherited diseases affecting the liver.
The company is still in the preclinical stage, and the stock, at $60 million market cap, is trading at about one-tenth of the heady levels of two years ago. Additionally, the technicians in the audience may see what we think was the bottom last month followed by the move to break through the long term downtrend.
Dicerna’s CEO, Dr. Douglas Fambrough, will be presenting at the Cowen Conference tomorrow morning, March 8th, at 8am ET.
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