BioCentury IOBUSINESS. Buyside View XXI. Sunny side up

Transcription

1 REPRINT FROM JANUARY 7, 2013 BioCentury THE BERNSTEIN REPORT ON BIO IOBUSINESS Buyside View XXI Article Reprint Page 1 of 19 Sunny side up By Stephen Hansen Senior Writer A strong crop of early PDUFA dates and a sense that FDA is more navigable have given money managers in the U.S. and Europe a positive outlook for 2013, which they hope will be another year with a high number of approvals. That will make the year more about launches than data, but even so, optimism remains. Indeed, the strength of the upcoming products means for the first time since 2010, investors no longer view biotech launches as automatic shorts. BioCentury s 21st annual Buyside View review also finds biotech investors pointing to a few hot areas earlier in the development cycle, including cancer and antibiotics. The new year may see buysiders shift their focus within cancer, however. Prostate cancer was big in 2012, but is now evolving from clinical milestones to a commercial story. Following data from the American Society of Hematology (ASH) meeting in December, buysiders named hematological malignancies as a main focus for the new year. Close behind are antibody-drug conjugates (ADCs), led by T-DM1 trastuzumab emtansine from Roche s Genentech Inc. unit and ImmunoGen Inc. Multiple investors told BioCentury that support from the GAIN Act and FDA means antibiotics are back on the radar as an attractive opportunity. And while interest in the hepatitis C race isn t going to die down anytime soon, money managers are split on whether the HCV bull run will continue into Areas generating little enthusiasm include pain, because of the regulatory minefield around the classwide REMS for opioids, and obesity, because of reimbursement risk. Other areas, such as regenerative medicine, cancer immunotherapy and cancer metabolism are interesting to buysiders, but still too early in development for public money. Approvals and FDA 2012 was a record year for FDA approvals. Last year the agency approved at least 41 NMEs, up from 30 in 2011 and almost double the 21 approved in You d be crazy, frankly, not to look at antibiotics again, given what s happening on the regulatory side with the GAIN Act. Joep Muijrers, LSP-Life Science Partners Although the reasons for the increase in FDA approvals are not entirely clear, buysiders credited some of it to industry having a better understanding of how to navigate the regulatory pathway, and some to FDA s efforts to more efficiently move NMEs through the approval process. We have a completely better regulatory situation than five to seven years ago, Medical Strategy GmbH s Harald Schwarz told BioCentury. Heading into 2013, he cited the reauthorization of PDUFA through the FDA Safety and Innovation Act (FDASIA) as potentially providing new mechanisms for speeding drugs to market. Under FDASIA, the agency is establishing a new breakthrough therapy pathway for exceptional drugs (see BioCentury This Week television, Dec. 2, 2012, & BioCentury, Dec. 3, 2012). FDA is also looking at how accelerated approval can be used more broadly outside of cancer and infectious diseases. Schwarz also noted the recent report from the President s Council of Advisors on Science and Technology (PCAST) that calls for a doubling of FDA approvals (see BioCentury, Oct. 8, 2012). Omega Fund s Otello Stampacchia agreed: We have already seen 41 approvals in 2012, and I believe we will be seeing potentially even more in 2013, he said. So far there are at least 30 PDUFA dates in 2013, and nine companies have said they expect to submit NDAs or BLAs for a combined nine NMEs in 1Q13 (see Approval Watch, A14). The past two years also have seen an increased number of positive opinions for new medicines from EMA s CHMP. The committee recommended approval of 36 new drugs in 2012 and 35 in 2011, well above the 19 positive opinions issued in But as commercial prospects in Europe become less attractive, an improved U.S. regulatory pathway is all the more important. European approvals have a fragmented, piecemeal commercial effect because they are just the signal of the start for pricing and reimbursement negotiations in markets, rather than revenue generation, said Mann Bioinvest s Andy Smith. International Biotechnology Trust s David Pinniger agreed, noting the European markets present a tough pricing environment that is only getting tougher.

2 BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM JANUARY 7, 2013 PAGE 2 OF 19 Tom Brakel of Federated Investors said the lack of transparency in the European approval process, coupled with opaque pricing negotiations and difficulty tracking country-by-country launches, means new products in Europe are a bit of a blind spot for investors. But that doesn t mean European markets are to be ignored. Once these markets get going, they can be great contributors to revenue, Brakel said. The most highly anticipated U.S. approval is BG-12 from Biogen Idec Inc. for multiple sclerosis (MS). Kai Bruening of Apo Asset Management, a unit of Deutsche Arzte und Apotheker Bank, said BG-12 will determine how the competition plays out in the MS space. But Pinniger noted BG-12 is already priced into Biogen s stock as a $4 billion drug, so you wonder where the upside is. Two other key regulatory decisions anticipated this quarter include Celgene Corp. s pomalidomide for relapsed or refractory multiple myeloma (MM) and T- DM1 for breast cancer. Leading up to the new year, investors also were watching for approval of Eliquis apixaban from Bristol-Myers Squibb Co. and Pfizer Inc. to prevent stroke in atrial fibrillation (AF) patients. They got their wish, as FDA approved Eliquis in late December, almost three months ahead of its March 17 PDUFA date. Launches The large number of 2012 approvals and important early 2013 PDUFA dates means the coming year is more about launch stories than anything else, said Marshall Gordon of ClearBridge Advisors. Yet according to buysiders, short the launch is no longer the overarching mantra as it was in 2010 and I do see that changing, Andrew Singer We have already seen 41 approvals in 2012, and I believe we will be seeing potentially even more in Otello Stampacchia, Omega Fund of RBC Capital Markets told BioCentury. Two years ago the general view was short the launch, as almost every stock had run up too much ahead of the launch and expectations were too high. He credited the change in sentiment to strong launches over the past year, such as Regeneron Pharmaceuticals Inc. s launch of Eylea aflibercept for wet AMD. He added that companies have gotten smarter about managing launch expectations. Geraldine O Keeffe of LSP-Life Sciences Partners agreed. As an example, she said ThromboGenics N.V. has so far been good about managing expectations, such as saying they won t give weekly updates on sales of Jetrea ocriplasmin. In October, FDA approved Jetrea to treat symptomatic vitreomacular adhesion (VMA). The biotech plans to launch Jetrea in the U.S. on Jan. 14. Brakel said Ariad Pharmaceuticals Inc. also has done a good job of managing expectations for the highly anticipated launch of leukemia drug Iclusig ponatinib. Although Ariad s stock has lost significant value since FDA approved Iclusig in December with an unexpected boxed warning for arterial thrombosis and liver toxicity, many buyside investors argue the market has overreacted (see BioCentury, Dec. 24, 2012). Indeed, the Iclusig launch was on most buysiders watch lists. According to BB Biotech s Daniel Koller, the shift in sentiment means buysiders are now much more selective in terms of what they think is a good launch or will have room for upside. That means investors will judge each launch on its merits (see New Products to Watch, A12). Ivo Staijen of HBM Partners thus is looking for credible launch stories that can drive smaller biotechs into the mid- or large cap space. He defined credible launch stories as companies with drugs that address a high medical need and can achieve wide reimbursement at a high price point. He named Onyx Pharmaceuticals Inc., Ariad and Medivation Inc. as examples that have jumped into the mid-cap tier. Most buysiders are watching Onyx s multiple myeloma drug Kyprolis carfilzomib, which launched in August. Since the launch, Onyx s market cap has increased about $150 million. In September, Medivation and partner Astellas Pharma Inc. launched Xtandi enzalutamide to treat prostate cancer. The biotech s market cap is up about $220 million since the launch. Staijen cited Amarin Corp. plc and Vivus Inc. as two recent examples where the launch has lost momentum with investors. Vivus launched its once-daily obesity drug Qsymia in September, and since has lost over $900 million in market cap. The Amarin case is more complex. As Pinniger noted, management had been promising an M&A takeout for the past year, and it hasn t happened. Since the July 30 FDA approval of Vascepa icosapent ethyl for severe hypertriglyceridemia, Amarin is down almost 40%. Most of the drop came after Dec. 6, when the company announced it had secured $100 million in debt to hire up to a 300-person sales force to launch Vascepa in 1Q13. But not all investors are bailing on Amarin. LSP-Life Sciences Partners Joep Muijrers said he still believes there is a significant commercial opportunity for Vascepa, and an snda for mixed dyslipidemia that is expected to be sub- BioCentury T HE BERNSTEIN REPORT ON BIO IOB USINESS PO Box 1246 San Carlos CA Voice: Fax: DAVID FLORES President & CEO KAREN BERNSTEIN, Ph.D. Chairman & Editor-in-Chief BioCentury, The BioCentury 100, and The Clear Route are trademarks of BIOCENTURY PUBLICATIONS INC. All contents Copyright 2013, BIOCENTURY PUBLICATIONS INC. ALL RIGHTS RESERVED. No part of this publication may be reproduced, photocopied or reproduced in any form, retransmitted, or stored in a retrieval system without prior written consent of the publisher. The contents of this publication are gathered from sources believed to be reliable, but in any case are not warranted by the publisher for a particular use or purpose. Also, the content and opinions herein may change without notice and do not constitute investment advice.

3 BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM JANUARY 7, 2013 PAGE 3 OF 19 mitted in 1Q13 would greatly expand the patient population for the drug. Muijrers said an expanded label would likely require the company to bring a partner on board, although it also could trigger a sale. Cancer, cancer, cancer As in 2012, buysiders expect 2013 will be a big year for cancer, but the areas of interest within the space have changed. Prostate cancer was hot in 2012, with Johnson & Johnson s Zytiga abiraterone, Medivation s Xtandi and Radium-223 (formerly Alpharadin) from Algeta ASA garnering most of the attention. With Zytiga and Xtandi approved and Radium-223 under review in the U.S. and Europe, the prostate cancer plays have become commercial stories. Money managers told BioCentury that investors will be highly focused on hematological malignancies in 2013, given the large amount of impressive data presented at ASH. Koller noted there is excitement around Pharmacyclics Inc. s ibrutinib, which is in Phase III testing for chronic lymphocytic leukemia (CLL) and mantle cell lymphoma (MCL). The Bruton s tyrosine kinase (Btk) inhibitor, which is partnered with J&J, drove Pharmacyclics 250% rise in 2012, giving it a market cap approaching $4 billion. Some buysiders think ibrutinib is now fully priced into the stock, leaving little room for upside. Thus investors who missed out may be looking for other rising stocks in the space. Pinniger suggested Infinity Pharmaceuticals Inc. Infinity has got a lot of attention for its IPI-145, he said. You can see people are beginning to think, I ve missed the Pharmacyclics story, where is Pharmacyclics 2 and 3 going to come from? And Infinity they see as the lead candidate. At ASH, Infinity presented Phase I data for the oral inhibitor of phosphoinositide-3-kinase (PI3K) delta and gamma in hematological malignancies. On the back of the data, Infinity raised $150 million in a follow-on that Janus Ethan Lovell said removed a financial overhang for the company. This was evidenced by a 10% run-up in the stock on the day of the financing, giving Infinity a market cap of around $1 billion. Investors also frequently mentioned Celgene s hematological cancer franchise, with a focus on pomalidomide, which has a Feb. 10 PDUFA date. Spotlight on ADCs Investors also expect ADCs or similar technologies to be in the spotlight in Leading the way is T-DM1. The humanized mab against EGFR2 (HER2) linked to the DM1 cytotoxic agent is under review to treat HER2-positive, unresectable locally advanced or metastatic breast cancer, with a Feb. 26 PDUFA date. While Smith said ImmunoGen s royalty on T-DM1 is so low that it may not be a large revenue stream, the expected approval I think everyone is expecting T-DM1 to get approved, as the data are so strong. I think it is a marker that the ADC technology has come of age. David Pinniger, International Biotechnology Trust would be a major validation for the ADC technology. Perhaps 2013 will be the year of the antibody-drug conjugate, he said. Pinniger agreed: I think everyone is expecting T-DM1 to get approved, as the data are so strong. I think it is a marker that the ADC technology has come of age. John Chambers of Roth Capital Partners noted ImmunoGen and fellow ADC company Seattle Genetics Inc. should draw significant interest from strategic players and investors alike. Schwarz and Koller noted that interest around targeted conjugate technologies isn t limited to antibodies. Both named Endocyte Inc. which uses the same principle as ADCs but conjugates the toxin to a small molecule as a company to watch in Endocyte s vintafolide, a conjugate consisting of a vinca alkaloid microtubule destabilizer connected via a linker to a folate vitamin analog, is under review in Europe to treat folate receptor-positive, platinum-resistant ovarian cancer. Vintafolide is being developed with a companion diagnostic and is partnered with Merck & Co. Inc. Pinniger and Schwarz also mentioned Celldex Therapeutics Inc. On Dec. 10, Celldex jumped 26% to $6.93 after reporting an almost doubling of overall survival (OS) in a subgroup of patients with high glycoprotein NMB (GPNMB) expression in the Phase IIb EMERGE trial of glembatumumab vedotin (CDX-011) to treat advanced, refractory or resistant GPNMB-expressing breast cancer. The human mab against GPNMB linked to the tubulin inhibitor monoethyl auristatin E (MMAE) uses ADC technology from Seattle Genetics. In 2012, Celldex was up more than 130%, giving it a market cap of over $400 million. The growing interest in ADCs has attracted others to the space, such as Genmab A/S and a growing list of small, private biotechs. Some buysiders are also keeping their eye on cancer immunotherapy. The space has fewer milestones in the coming year, but Pinniger said any that do hit would quickly gain the attention of investors. He noted Celldex s rindopepimut (CDX-110), a vaccine targeting EGFR variant III (EGFRvIII), is in Phase III testing for newly diagnosed, EGFRvIII-positive glioblastoma, with data expected in Phase IIb data for rindopepimut in combination with Avastin bevacizumab in recurrent glioblastoma multiforme (GBM) are expected in Brakel said he likes Vical Inc., which is developing Allovectin velimogene aliplasmid, a DNA plasmid encoding major histocompatibility complex (MHC) class I B7 (HLA-B7) complexed with lipid. Phase III data for Allovectin to treat metastatic melanoma are expected mid-year. If Vical s immune therapy works and shows survival benefit, why not try that first? he said. It seems to be well tolerated. Buysiders also are watching Bristol-Myers programs targeting programmed cell death 1 receptor (PDCD1; PD-1; CD279) and its ligand, PD-1 ligand 1 (CD274; PD-L1; B7-H1). BMS has worldwide rights from Ono Pharmaceutical Co. Ltd. to BMS , a human mab against PD-1 that is in Phase II testing, while BMS is a human mab against PD-L1 in Phase I. Most investors said the recent setback of L-BLP25 (formerly

4 BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM JANUARY 7, 2013 PAGE 4 OF 19 Stimuvax) from Oncothyreon Inc. and partner Merck KGaA shouldn t dampen investor interest in cancer immunotherapies. Bruening said the Phase III miss was product-specific and most investors already viewed L-BLP25 as a long shot. Revisiting antibiotics FDA guidance and congressionally mandated financial incentives to develop antibiotics have breathed new life into the space. You d be crazy, frankly, not to look at antibiotics again, given what s happening on the regulatory side with the GAIN Act, Muijrers said. In June, Congress passed the Generating Antibiotic Incentives Now (GAIN) Act as part of the PDUFA reauthorization. The law provides added exclusivity and Priority Review for qualified antibiotics. It also mandates the creation of a pathogen-focused antibacterial drug development pathway (see BioCentury, Nov. 19, 2012, & BioCentury This Week television, Nov. 18, 2012, & Nov. 25, 2012). Chambers and Singer said they have renewed interest in antibiotics, while Stampacchia said his fund has already made some sizeable bets. If I were to pick one sector where I expect some true development and attention in the next months, it is antibacterials, Stampacchia said. Because of the potential to really treat patients effectively, antibiotics are a pretty lowhanging fruit. Schwarz named Basilea Pharmaceutica AG, Intercell AG and Trius Therapeutics Inc. as companies to watch. Basilea s ceftobiprole is under review in Europe. In 2H13 the company also expects Phase III data for isavuconazole, a broad-spectrum water-soluble azole antifungal to treat Candida and Aspergillus infections. In early 2013, Trius expects to announce Phase III data for tedizolid phosphate to treat skin and skin structure infections (SSSIs). Intercell, which recently announced plans to merge with Vivalis S.A. to form Valneva SE, is expecting Phase II/III data for its IC43 Pseudomonas aeruginosa vaccine in 2H13. Brakel said he is looking forward to data from Cubist Pharmaceuticals Inc. The biotech has two antibiotic programs in Phase III testing. CXA-201, a combination of the cephalosporin antibiotic CXA-101 and the beta lactamase inhibitor tazobactam, is in Phase III for intra-abdominal infections and urinary tract infections. The company expects to submit NDAs for both indications in 2H13. Brakel thinks CXA-201 could eventually be a bigger seller than Cubist s Cubicin daptomycin, which had $629.2 million in revenues for the first nine months of The other Phase III program is CB-315, an oral antibacterial lipopeptide Clostridium difficile-associated diarrhea (CDAD). In December, FDA granted both programs Qualified Infectious Disease Product (QIDP) designation, which was established under the GAIN Act and makes both products eligible for an additional five years of market exclusivity, plus automatic Priority Review and Fast Track designations. Despite Gordon s belief that the government incentives for antibiotics aren t enough on their own and their launches tend to be slow, he still likes The Medicines Co. as a pick for The company s oritavancin, a semi-synthetic lipoglycopeptide antibiotic, is in Phase III testing for SSSIs, with data expected mid HCV bull run Buyside investors were split on whether the hottest development space of the past two years HCV would continue its momentum into No buysiders argued that investors will lose interest in hep C, and most noted there will be continuing interest as different players continue to roll out interferon-free combination data. Muijrers and Koller believe interest will remain high through The main event will be Gilead Sciences Inc. s sofosbuvir (GS-7977). While 2013 could see the first approval for the nucleotide analog HCV NS5B polymerase inhibitor in the HCV genotype 2/3 setting, most investor focus will be on its combination with GS-5885, the company s HCV NS5A inhibitor. Some investors think 2013 could see preliminary Phase III data for sofosbuvir plus GS-5885, with or without ribavirin, in treatment-naïve patients with genotype 1 infection. Gilead has said a regulatory filing for the fixed-dose combination could occur by mid RA Capital s Peter Kolchinsky cautioned, however, that Gilead will face a lot of competition from other combinations, and some payers will be prepared to pay for combinations that are good enough. Thus pricing pressures could mean the commercial opportunity may not be as high as believed. Gordon agreed, saying the HCV commercial opportunity is overhyped and the market will be much smaller than expected. It is not HIV; you don t get a layering effect of putting patients on therapy and they stay on. You cure them and then you have to resell the therapy, he said. Muijrers is still holding out hope for Medivir AB and J&J s protease inhibitor simeprevir, even though the most advanced IFN-free regimens do not include that mechanism. The partners plan to submit regulatory applications in the U.S., Europe and Japan for simeprevir plus IFN and ribavirin in 1H13. But the most important data for the compound will likely be three Phase II trials of simeprevir as part of IFN-free combinations (see BioCentury, Dec. 24, 2012). Schwarz noted that most investors have already made their bets as have the big players such as Gilead, AbbVie Inc., Roche, J&J and Vertex Pharmaceuticals Inc. in terms of what HCV mechanisms they are targeting. However, he still expects significant interest in Achillion Pharmaceuticals Inc., despite the fact that management s promise of an M&A takeout had not come to fruition in Achillion has two HCV programs in Phase II: the protease inhibitor sovaprevir (formerly ACH-1625) and ACH-3102, an HCV NS5A protein inhibitor. Orphan love Orphan diseases will continue to interest investors in 2013 and beyond. With Genzyme Corp. having been taken out by Sanofi, Cowen s George Milstein said investors are focusing on the next companies that could take leadership in Orphan drug development.

5 BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM JANUARY 7, 2013 PAGE 5 OF 19 One obvious candidate is BioMarin Pharmaceutical Inc. This quarter, the company expects to submit regulatory applications in the U.S. and EU for Vimizim elosulfase alfa (formerly GALNS), a recombinant human N-acetylgalactosamine-6-sulfatase, to treat mucopolysaccharidosis IVA (MPS-IVA, Morquio s syndrome). Staijen expects an increased focus on Duchenne muscular dystrophy (DMD), as multiple programs are maturing. Frequently mentioned names included Sarepta Therapeutics Inc. and PTC Therapeutics Inc. Sarepta was one of the leading gainers in 2012, up more than 450% to a market cap above $600 million. In October, the company peaked at $1 billion after reporting additional data from a Phase IIb trial of its lead program eteplirsen, a phosphorodiamidate morpholino oligomer (PMO) targeting exon 51 for DMD. The company plans to start Phase III trials by year end. PTC s ataluren is under review in Europe for nonsense mutation DMD. This quarter, the company expects to start a confirmatory Phase III trial of the small molecule, which facilitates complete translation of proteins containing nonsense mutations for DMD. Both companies will be competing against drisapersen (GSK , PRO051) from Prosensa B.V. and partner GlaxoSmithKline plc. The antisense oligonucleotide that induces exon 51 skipping on the dystrophin gene is in Phase III testing. Investors also will be closely following homozygous familial hypercholesterolemia (hofh), as Aegerion Pharmaceuticals Inc. and Isis Pharmaceuticals Inc. are expected to launch competing products in the coming year. FDA approved Aegerion s Juxtapid lomitapide to treat hofh last month. Isis Kynamro mipomersen has a Jan. 29 PDUFA date. It may not be a shoe-in for approval, however, as its FDA panel vote was closer than Juxtapid s. In addition, EMA s CHMP last month issued a negative opinion recommending against approval of Kynamro for hofh. Kynamro is partnered with Sanofi s Genzyme unit. An MAA for Juxtapid is under review, with a CHMP opinion expected in mid Pinniger and another buysider who asked not to be named also mentioned enzyme replacement therapy (ERT) company Synageva BioPharma Corp. as a pick for Synageva s lead compound is sebelipase alfa (formerly SBC- 102), a recombinant human lysosomal acid lipase (LAL) ERT. The product is in Phase II/III testing in infants with early onset LAL deficiency (Wolman disease), with a Phase III trial in cholesteryl ester storage disease (CESD) a later onset form of LAL deficiency affecting children and adults slated to start this half. Mild enthusiasm Areas such as pain and neurology hold little investor interest. Pinniger noted that while pain is an area of unmet medical need, he has concluded FDA would forever have hang-ups about the abuse potential, and it would be difficult to find huge commercial successes given the availability of cheap and effective generic alternatives. However, there was at least one exception. Muijrers and Schwarz mentioned AcelRx Pharmaceuticals Inc. as a pick. In November, the company reported its Sufentanil NanoTab PCA System met the primary endpoint of non-inferiority to IV patient-controlled analgesia with morphine in a Phase III trial to treat postoperative pain. Muijrers liked that NanoTab showed superiority to morphine, and the sublingual delivery device gives it a relatively low abuse potential compared to tablets. The company expects to announce data from two more Phase III trials in 2013 and to submit an NDA in 3Q13. Lovell said the rest of the neurology field is still fraught with lots of pitfalls. Multiple investors did note that once an Alzheimer s disease product works, AD is poised for a frenzy akin to what has been seen in HCV. Eventually an illness like AD will become the next hot spot, if we have a first initial success, Bruening said. Andrew Bogan of Bogan Associates agreed. But because the target of that breakthrough product is still unknown, I won t be able to invest in AD for a while because nothing in the clinic right now works. Smith does have hope for Baxter International Inc. s Gammagard Liquid 10% solution. The plasma-based IgG antibody therapy is in Phase III testing to treat symptoms in mild to moderate AD, with data expected in 1H13. He noted the Phase II data were better than those for any of the beta amyloid mabs, so it might actually work. Obesity also was not high on many investor lists. Some simply don t look at the space, while others questioned the reimbursement potential of the drugs. Both Vivus and Arena Pharmaceuticals Inc. are expecting a decision from EMA s CHMP in 1H13. But most investors noted the products are expected to have slow uptake and reimbursement challenges in the U.S., and the companies will have an even more difficult time convincing single-payer systems in Europe to reimburse. Investors said other areas like regenerative medicine and cancer metabolism are not expected to be big in 2013 because they are a bit too early in development, with the vast majority of the field either still on the private side or not mature enough within big pharma or biotech to have gained any visibility. Cancer metabolism is very attractive, but it still looks like direct investments by public investors are basically not possible yet, Koller said. Chambers said there is exciting science in regenerative medicine, but he added the long development timelines make clinical trials quite expensive for small companies. As companies progress in the clinic and raise investor awareness we could see a breakout within next few years, he said. Large, mid-cap picks Muijrers and Smith both picked MorphoSys AG, which is growing into a European bellwether. Muijrers noted that with positive Phase Ib/IIa data already in hand for MOR103 in rheumatoid arthritis (RA), the company may be able to partner the program. MOR103 is a human HuCAL antibody against granulocyte macrophage colony-stimulating factor (GM-CSF). Muijrers also said the biotech has a maturing pipeline of partnered programs. Two of Bruening s mid-cap picks are Halozyme Therapeu-

6