Developing “Better Biologics” through “Evergreening “= High Value Proposition

Investment in biologics based medicine is gaining momentum as these drugs offer targeted therapy and often safer treatment options, higher returns on investment and slower erosion of market share post patent expiry compared to small molecule based drugs. First Generation Monoclonal antibody based drugs are the cornerstone of treatment of major diseases (RA, MS, cancers, AMD, etc). As the patents for these 1st generation Mabs are set to expire from 2014 onwards we focus on companies with novel technology platforms developing 2nd Generation mabs to deliver better biologics.

Second Generation Targeted Therapies using Monoclonal Antibodies (mAbs) could offer drugs for, 1) novel targets and 2) old validated targets with better efficacy/safety profile and/or improved versions of existing blockbusters. This “Ever Greening Effort” has the potential to deliver molecules with a higher therapeutic index enabling optimally effective treatment to be achieved at a dose below the maximal tolerated dose minimizing the adverse event profile of the drug. 

Our analysis of two maturing platforms has yielded several attractive RS investment opportunities which are discussed throughout the report and highlighted in company-specific capsules.
• Second Generation Monoclonal Antibodies: Ablynx (ABLX), Morphosys (MOR), Trubion (TRBN), and Micromet (MITI). 
• Antibody Drug conjugation (ADC): Seattle Genetics (SGEN), Immunomedics (IMMU). 
We expect the innovative technology platforms used to generate new mAbs to accelerate M&A and attract robust collaborations as some of these companies are at their inflection point as their products enter proof-of-concept (POC)/pivotal clinical trials. Collectively, all the companies in this report offer a long-term investment opportunity, as the technology platforms used for generating these products are being validated by multiple partners. Positive data could trigger M&A at a premium like Abgenix, CAT, or Medarex .

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