6 ms·

A billion-dollar pharma startup that Silicon Valley has missed

67 points by iamjeff 10y ago

jamesash 10y ago
A more skeptical take. http://blogs.sciencemag.org/pipeline/archives/2017/01/11/12110 http://blogs.sciencemag.org/pipeline/archives/2017/01/11/121... Tl;dr Alzheimer's is hard to drug, and the approach this company is trying has been tried before.
- kgwgk 10y ago
  See also https://www.thestreet.com/story/13178707/1/inside-the-hedge-fund-club-pitching-a-new-alzheimers-drug-ipo.html https://www.thestreet.com/story/13178707/1/inside-the-hedge-... The plan is simple. You fund a company and spend $5mn acquiring the rights to a drug that might be worth billions (not very likely, if you can get it at that price). And before investing your own money to find out, you sell one fourth of that company for $360mn because "Hey, it could be worth billions!!!!"
  - 55555 10y ago
    Who on earth bought into that IPO? Who priced it? Did they really just spend 5mm on rights to a drug, put it in a shell company, and then convince the public via IPO that it was worth 1.3+ billion? This sounds like a pump and dump or money extraction scheme. I imagine it was mostly sold to pensions, etc.
- deleted 10y ago
  [deleted]
hprotagonist 10y ago
See a rather scathing rebuttal here: http://blogs.sciencemag.org/pipeline/archives/2017/01/11/12110 http://blogs.sciencemag.org/pipeline/archives/2017/01/11/121... >You would never know, to read a lot of Ramaswamy’s press coverage (here’s a recent profile from TechCrunch) that the Axovant drug works through a mechanism that has failed twice in Alzheimer’s clinical trials so far. >You wouldn’t know from such articles, though, that there have been (and are) other companies which have been formed around the idea of taking pharma cast-offs and getting them through the clinic (larger companies already try to monetize what they can in their portfolio by partnering or outlicensing, of course). The Medicines Company is one such dealmaker, acquiring and partnering late-stage compounds and trying to get them approved. Outside of the for-profit business model, there are a number of initiatives trying to repurpose or revive older compounds for new diseases.No one so far has been able to take over the world doing this. There are not, unfortunately, many big piles of such candidates sitting around. Most of the shelved compounds were shelved because (a) they did not work, and/or (b) they showed toxicity. You’re going to have to figure a way around those problems before you go back into humans, and that’s not easy. There are a few drugs that have been dropped for business reasons, or were lost or mishandled during a merger or the like, but I don’t think that there are enough of those to make a Ramaswamy drug empire.
- andrewtbham 10y ago
  If you're confident this is true... why not short the stock? if correct, you could make a lot of money.
  - deepnotderp 10y ago
    Is it public?
    - SpeakMouthWords 10y ago
      From the article: >It was the biggest biotech IPO ever in the U.S., raising $360 million. It has largely held up, too. Axovant’s shares, which opened at $15, currently trade around $13.25. and further down: > When Axovant went public, a columnist at FierceBiotech warned that it should “scare the hell” out of investors
  - in_cahoots 10y ago
    "The market can remain irrational longer than you can remain solvent." The quote itself may be apocryphal, but the meaning is certainly true.
    - danieltillett 10y ago
      Never short based on the rationality of the market. Plenty of investors have been right and ended up totally broke. On a personal note the worst investment I ever made was a short position where I was right, but six months too early.
      - jimlawruk 10y ago
        Reminds me of Michael Burry and others in The Big Short, who shorted the housing market, but had to wait a long time for the market adjust.
    - adventured 10y ago
      Never short a stock, use puts. You define your maximum potential loss ahead of time. By doing so you can entirely remove the solvency factor in question. Then it becomes a matter of giving yourself enough time on the puts to be right (assuming your core premise is correct).
mbesto 10y ago
> Whether the scheme will work longer term isn’t clear > https://www.google.com/finance?q=NYSE%3AAXON&fstype=ii&ei=2U94WJmbHoHRjAH27rbYBA https://www.google.com/finance?q=NYSE%3AAXON&fstype=ii&ei=2U... Wait, what? How is this a startup and how does this have anything to do with SV... TC is really reaching here...
dnautics 10y ago
A friend of mine who used to work for a hedge fund on the short book had an adage... Good plays when CEOs suddenly do a lot of press.
- arikr 10y ago
  as in, whenever a CEO does a bunch of press, the co is a good candidate to short? just want to check i'm interpreting correctly
  - dnautics 10y ago
    Yeah I was examining long-term puts on the company but decided it was a bad idea since my roommate reminded me Trump's pick for the FDA may scrap phase III altogether (which is a policy I'm not entirely opposed to; PIII tests efficacy not safety, and presumably the drugs could be tested for efficacy by independent NGOs, like what UL does for electronics)
    - refurb 10y ago
      Phase 3 certainly does test safety. It's a bigger trial and safety signals often pop up that didn't in phase 2. Torceptipib is a great example. Phase 2 looked great; phase 3 was stopped due to an increase in deaths.
      - dnautics 10y ago
        In that sense you could make the argument that 'selling approved drugs on the market' also tests safety. To the point that the FDA has created the pseudo-category "phase 4". Vioxx looked great. Was recalled due to an increase in deaths (which was actually counted in exactly the way you shouldn't, if you've ever read the "how not to run an A/B test").
        rpedela 10y ago
        Phase 4 recalls are relatively rare thanks to the extra testing in Phase 3. If you removed Phase 3 then the number of recalls would dramatically increase as would the number of deaths.
cylinder 10y ago
Scam senses tingling. Once again.
- ainiriand 10y ago
  Couldn't agree more. A billion-dollar pharma with nothing in the market? Nothing to be marketed in 2017, possibly not even in 2018? Hmmm... I've seen this before...
doomlaser 10y ago
Abandoned drug speculation? The business model looks like it's in a similar vein to patent troll
shiven 10y ago
Too much hype, too little proof. Until then, this is pure shit, nothing more. SV BS spreading from software to Biotech/Pharma.
zebraflask 10y ago
I highly doubt Shkreli was interested in treating toxicoplasmosis, or had a "small company." I think the HN moderators need to remove things like this.

67 points by iamjeff 10y ago

A more skeptical take. http://blogs.sciencemag.org/pipeline/archives/2017/01/11/12110 http://blogs.sciencemag.org/pipeline/archives/2017/01/11/121... Tl;dr Alzheimer's is hard to drug, and the approach this company is trying has been tried before.

kgwgk 10y ago
See also https://www.thestreet.com/story/13178707/1/inside-the-hedge-fund-club-pitching-a-new-alzheimers-drug-ipo.html https://www.thestreet.com/story/13178707/1/inside-the-hedge-... The plan is simple. You fund a company and spend $5mn acquiring the rights to a drug that might be worth billions (not very likely, if you can get it at that price). And before investing your own money to find out, you sell one fourth of that company for $360mn because "Hey, it could be worth billions!!!!"
- 55555 10y ago
  Who on earth bought into that IPO? Who priced it? Did they really just spend 5mm on rights to a drug, put it in a shell company, and then convince the public via IPO that it was worth 1.3+ billion? This sounds like a pump and dump or money extraction scheme. I imagine it was mostly sold to pensions, etc.
deleted 10y ago
[deleted]

hprotagonist 10y ago

See a rather scathing rebuttal here: http://blogs.sciencemag.org/pipeline/archives/2017/01/11/12110 http://blogs.sciencemag.org/pipeline/archives/2017/01/11/121... >You would never know, to read a lot of Ramaswamy’s press coverage (here’s a recent profile from TechCrunch) that the Axovant drug works through a mechanism that has failed twice in Alzheimer’s clinical trials so far. >You wouldn’t know from such articles, though, that there have been (and are) other companies which have been formed around the idea of taking pharma cast-offs and getting them through the clinic (larger companies already try to monetize what they can in their portfolio by partnering or outlicensing, of course). The Medicines Company is one such dealmaker, acquiring and partnering late-stage compounds and trying to get them approved. Outside of the for-profit business model, there are a number of initiatives trying to repurpose or revive older compounds for new diseases.No one so far has been able to take over the world doing this. There are not, unfortunately, many big piles of such candidates sitting around. Most of the shelved compounds were shelved because (a) they did not work, and/or (b) they showed toxicity. You’re going to have to figure a way around those problems before you go back into humans, and that’s not easy. There are a few drugs that have been dropped for business reasons, or were lost or mishandled during a merger or the like, but I don’t think that there are enough of those to make a Ramaswamy drug empire.

andrewtbham 10y ago
If you're confident this is true... why not short the stock? if correct, you could make a lot of money.
- deepnotderp 10y ago
  Is it public?
  - SpeakMouthWords 10y ago
    From the article: >It was the biggest biotech IPO ever in the U.S., raising $360 million. It has largely held up, too. Axovant’s shares, which opened at $15, currently trade around $13.25. and further down: > When Axovant went public, a columnist at FierceBiotech warned that it should “scare the hell” out of investors
- in_cahoots 10y ago
  "The market can remain irrational longer than you can remain solvent." The quote itself may be apocryphal, but the meaning is certainly true.
  - danieltillett 10y ago
    Never short based on the rationality of the market. Plenty of investors have been right and ended up totally broke. On a personal note the worst investment I ever made was a short position where I was right, but six months too early.
    - jimlawruk 10y ago
      Reminds me of Michael Burry and others in The Big Short, who shorted the housing market, but had to wait a long time for the market adjust.
  - adventured 10y ago
    Never short a stock, use puts. You define your maximum potential loss ahead of time. By doing so you can entirely remove the solvency factor in question. Then it becomes a matter of giving yourself enough time on the puts to be right (assuming your core premise is correct).

mbesto 10y ago

> Whether the scheme will work longer term isn’t clear > https://www.google.com/finance?q=NYSE%3AAXON&fstype=ii&ei=2U94WJmbHoHRjAH27rbYBA https://www.google.com/finance?q=NYSE%3AAXON&fstype=ii&ei=2U... Wait, what? How is this a startup and how does this have anything to do with SV... TC is really reaching here...

dnautics 10y ago

A friend of mine who used to work for a hedge fund on the short book had an adage... Good plays when CEOs suddenly do a lot of press.

arikr 10y ago
as in, whenever a CEO does a bunch of press, the co is a good candidate to short? just want to check i'm interpreting correctly
- dnautics 10y ago
  Yeah I was examining long-term puts on the company but decided it was a bad idea since my roommate reminded me Trump's pick for the FDA may scrap phase III altogether (which is a policy I'm not entirely opposed to; PIII tests efficacy not safety, and presumably the drugs could be tested for efficacy by independent NGOs, like what UL does for electronics)
  - refurb 10y ago
    Phase 3 certainly does test safety. It's a bigger trial and safety signals often pop up that didn't in phase 2. Torceptipib is a great example. Phase 2 looked great; phase 3 was stopped due to an increase in deaths.
    - dnautics 10y ago
      In that sense you could make the argument that 'selling approved drugs on the market' also tests safety. To the point that the FDA has created the pseudo-category "phase 4". Vioxx looked great. Was recalled due to an increase in deaths (which was actually counted in exactly the way you shouldn't, if you've ever read the "how not to run an A/B test").
      - rpedela 10y ago
        Phase 4 recalls are relatively rare thanks to the extra testing in Phase 3. If you removed Phase 3 then the number of recalls would dramatically increase as would the number of deaths.

cylinder 10y ago

Scam senses tingling. Once again.

ainiriand 10y ago
Couldn't agree more. A billion-dollar pharma with nothing in the market? Nothing to be marketed in 2017, possibly not even in 2018? Hmmm... I've seen this before...

doomlaser 10y ago

Abandoned drug speculation? The business model looks like it's in a similar vein to patent troll

shiven 10y ago

Too much hype, too little proof. Until then, this is pure shit, nothing more. SV BS spreading from software to Biotech/Pharma.

zebraflask 10y ago

I highly doubt Shkreli was interested in treating toxicoplasmosis, or had a "small company." I think the HN moderators need to remove things like this.