Short sell­er Cit­ron draws fresh blood go­ing af­ter an­oth­er biotech scalp — but can it still cut that deep?

Bioreg­num Opin­ion Col­umn by John Car­roll

Over the past 3 years, since Cit­ron’s An­drew Left made a name for him­self as the cru­sad­ing an­a­lyst who helped take down Valeant with an ex­posé on its shady ties to the spe­cial­ty phar­ma Phili­dor, he and the firm have tack­led a se­ries of big play­ers — with a sure­fire ap­proach to carv­ing up the stock price.

The Valeant take­down be­came a mod­el for biotech short at­tacks. And Cit­ron found plen­ty of lever­age as it went af­ter some much big­ger game.

— Ab­b­Vie $AB­BV, Cit­ron as­sert­ed in a tweet, was marked for share price de­struc­tion af­ter Scott Got­tlieb at­tacked phar­ma strate­gies used to stymie biosim­i­lars. Sure­ly that had to be bad news for the gi­ant Hu­mi­ra fran­chise.

— Ex­press Scripts $ES­RX — the “Phili­dor of the phar­ma in­dus­try” — would be ripped apart by Don­ald Trump’s at­tack on high drug prices.

— Mallinck­rodt $MKD was guilty of price goug­ing on Ac­thar, watch out be­low as the con­tro­ver­sy wreaks hav­oc, said Cit­ron.

In every case, in­vestors re­act­ed to the in­flam­ma­to­ry Twit­ter cam­paign from the mas­ter of may­hem by dump­ing shares, with a quick dive in the stock price. But the com­pa­nies shook off the short at­tacks, with lit­tle of the longterm fall­out that forced Valeant to re­vamp the busi­ness. Cit­ron’s blade drew blood, but the wounds weren’t deep enough to leave much of a scar.

On Wednes­day, Cit­ron went af­ter an­oth­er scalp, this time be­long­ing to Lig­and Phar­ma­ceu­ti­cals $LGND. And once again the Cit­ron ef­fect — touch­ing on that old Valeant mag­ic — was in­stan­ta­neous, with the stock tak­ing a 16% hit af­ter be­ing shoved in­to the bright spot­light.

So what’s in the lat­est Cit­ron at­tack, which ac­cus­es Lig­and ex­ecs of ly­ing about their pro­ject­ed up­side?

Large­ly, they are slic­ing and dic­ing Lig­and’s busi­ness strat­e­gy — de­pend­ing heav­i­ly on promised drug roy­al­ties from part­ners — and the com­pa­nies they do busi­ness with, ques­tion­ing whether much or any of the mile­stone rev­enues Lig­and touts to in­vestors will ever ma­te­ri­al­ize.

Why is man­age­ment sell­ing Viking stock rather than buy­ing it, if they thought the com­pa­ny was so great? Ver­nalis just took a hit on a failed Phase II study. There was a blast against Roivant’s Meta­vant, which li­censed RVT-1502 from Lig­and. Sure­ly, says Cit­ron, the num­bers pro­ject­ed by Lig­and have to be in­flat­ed. The core busi­ness is on­ly worth $20 a share. And so on.

Their con­clu­sion:

It is time for Lig­and Man­age­ment to dis­close to Wall St the at­tri­bu­tion of your pipeline/mile­stone pay­ments from spe­cif­ic com­pa­nies and in­crease your dis­clo­sures about the true vi­a­bil­i­ty of the pipeline. Once in­vestors see that they do not own a phar­ma ETF but rather a col­lec­tions of the lazy man’s sub par as­sets, Cit­ron ex­pects Lig­and stock to re­flect its true val­ue.

Time will tell whether Lig­and bet wise­ly or wrong. But the lat­est ex­posé from Cit­ron failed to de­liv­er any smok­ing gun like the one they found at Valeant. The stock closed at $110.05 Wednes­day, giv­ing the com­pa­ny a $2.34 bil­lion mar­ket cap. So one way or the oth­er, they have plen­ty of fire­pow­er left to see things through.

Cit­ron’s knife is still plen­ty sharp enough to draw blood. But it may be los­ing some of that old Valeant edge.


Im­age: An­drew Left. CIT­RON

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

Covid-19 vac­cine boost­ers earn big thumbs up, but Mod­er­na draws ire over world sup­ply; What's next for Mer­ck’s Covid pill?; The C-suite view on biotech; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

You may remember that at the beginning of this year, Endpoints News set a goal to go broader and deeper. We are still working towards that, and are excited to share that Beth Snyder Bulik will be joining us on Monday to cover all things pharma marketing. You can sign up for her weekly Endpoints MarketingRx newsletter in your reader profile.

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No­var­tis de­vel­op­ment chief John Tsai: 'We go deep in the new plat­form­s'

During our recent European Biopharma Summit, I talked with Novartis development chief John Tsai about his experiences over the 3-plus years he’s been at the pharma giant. You can read the transcript below or listen to the exchange in the link above.

John Carroll: I followed your career for quite some time. You’ve had more than 20 years in big pharma R&D and you’ve obviously seen quite a lot. I really was curious about what it was like for you three and a half years ago when you took over as R&D chief at Novartis. Obviously a big move, a lot of changes. You went to work for the former R&D chief of Novartis, Vas Narasimhan, who had his own track record there. So what was the biggest adjustment when you went into this position?

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Amit Etkin, Alto Neuroscience CEO (Alto via Vimeo)

A star Stan­ford pro­fes­sor leaves his lab for a start­up out to re­make psy­chi­a­try

About five years ago, Amit Etkin had a breakthrough.

The Stanford neurologist, a soft-spoken demi-prodigy who became a professor while still a resident, had been obsessed for a decade with how to better define psychiatric disorders. Drugs for depression or bipolar disorder didn’t work for many patients with the conditions, and he suspected the reason was how traditional diagnoses didn’t actually get at the heart of what was going on in a patient’s brain.

Susan Galbraith, Executive VP, Oncology R&D, AstraZeneca

As­traZeneca on­col­o­gy R&D chief Su­san Gal­braith: 'Y­ou're go­ing to need or­thog­o­nal com­bi­na­tion­s'

 

Earlier in the week we broadcast our 4th annual European Biopharma Summit with a great lineup of top execs. One of the one-on-one conversations I set up was with Susan Galbraith, the oncology research chief at AstraZeneca. In a wide-ranging discussion, Galbraith reviewed the cancer drug pipeline and key trends influencing development work at the pharma giant. You can watch the video, above, or stick with the script below. — JC

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Roche's Tecen­triq cross­es the fin­ish line first in ad­ju­vant lung can­cer, po­ten­tial­ly kick­ing off gold rush

While falling behind the biggest PD-(L)1 drugs in terms of sales, Roche has looked to carve out a space for its Tecentriq with a growing expertise in lung cancer. The drug will now take an early lead in the sought-after adjuvant setting — but competitors are on the way.

The FDA on Friday approved Tecentriq as an adjuvant therapy for patients with Stage II-IIIA non small cell lung cancer with PD-(L)1 scores greater than or equal to 1, making it the first drug of its kind approved in an early setting that covers around 40% of all NSCLC patients.

FDA ad­comm votes unan­i­mous­ly in sup­port of a J&J Covid-19 boost­er two months af­ter one-dose shot

The FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) on Friday voted 19-0 in favor of authorizing a second shot of J&J’s Covid-19 vaccine to follow at least two months after the initial dose.

Regulators don’t have to follow VRBPAC’s recommendation, but they almost always do. Considering that the CDC’s advisory committee has already been set to review the expanded EUA, VRBPAC’s recommendation is likely to be adopted.

Tillman Gerngross, Adagio CEO

Q&A: Till­man Gern­gross ex­plains why his Covid mAb will have an edge over an al­ready crowd­ed field

If anyone knows about monoclonal antibodies, it’s serial entrepreneur, Adimab CEO, and Dartmouth professor of bioengineering Tillman Gerngross.

Even the name of Gerngross’ new antibody startup Adagio Therapeutics is meant to reflect his vision behind the development of his Covid-19 mAb: slowly, he said, explaining that “everyone else, whether it’s Regeneron, Lilly, or AstraZeneca, Vir, they all valued speed over everything.”

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Susan Galbraith speaking at Endpoints News' virtual EUBIO21 summit

Imfinzi/treme­li­mum­ab com­bo scores As­traZeneca an­oth­er OS win — this time in liv­er can­cer

Is the tide turning on AstraZeneca’s battered PD-L1/CTLA4 combo?

A single priming dose of the experimental tremelimumab, followed by Imfinzi every four weeks, beat Nexavar (sorafenib) in helping a group of liver cancer patients live longer in a Phase III study, the company reported, meeting the primary endpoint.

Specifically, the two drugs extended overall survival for patients with unresectable hepatocellular carcinoma who had not received prior systemic therapy and were not eligible for localized treatment.

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