“It is not a case of choosing those [faces] that, to the best of one’s judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.”
Keynes, General Theory of Employment, Interest and Money, 1936
Things are getting interesting in the Viralytics (ASX : VLA) shareholder camp in the lead-up to the much anticipated (and hyped) end-October news from the FDA about T-Vec. In April 2015, the U.S. Food and Drug Administration’s (FDA’s) Oncologic Drugs Advisory Committee (ODAC) and Cellular, Tissue, and Gene Therapies Advisory Committee (CTGTAC) voted to recommend approval of Amgen’s T-vec for advanced melanoma, a decision that a lot of Viralytics shareholders are hoping will pave the way for CAVATAK and also potentially re-value the company in the eyes of those who are leading the immuno-oncology charge.
An excellent ASCO Post article back in July, intelligently titled “Oncolytic Immunotherapy in Melanoma: It’s Not All About PD-1” spells out very nicely why we need to keep an open mind about many other kinds of novel therapies that might have a profound effect on treating aggressive cancers, not just checkpoint inhibitors. But then again, just to spite us – hot off the press – we have the potentially $1.74Bn ($350m up-front) Five Prime-BMS deal for combination Opdivo-CSF1R, demonstrating that combination product deals with Checkpoint inhibitors are still alive and well, especially for sexy targets/mechanisms of action.
The question you should be asking yourself in the next 10 days or so is “are you a betting (wo)man”? When you ask yourself that question, you should do it in a gritty Dirty Harry voice. Sneer a lot. Look at yourself in the mirror when you do…
VLA’s stock price has gone from 93c back in June to 52c earlier today. This signals to me that momentum in other parts of the immuno-oncology space isn’t rubbing off on VLA’s slightly long-in-the-tooth asset. That fall has even taken place with a lot of fairly significant positive news flow around the company’s activities. As I have previously reported, I think the CAVATAK data is actually quite nice and shows more than a little potential. But can a second-place oncolytic viral therapy generate enough excitement on the back end of a positive T-Vec PDUFA outcome? Moreover, can it really shine brighter than deals like Five Prime/CSF1R?
I think not.
Thus I think those holding on for a storm surge on the back of T-Vec are in for disappointment. I’m not a “betting man” in the way that many people are who trade in ASX-listed biotechs, and so the rationale that VLA trade opportunity around the 27/28th of October represents a Keynesian “average opinion” isn’t how I think. I simply believe that an artificial valuation of CAVATAK can’t be sustained by a frothy and fickle retail market that believes in fairy dust and Hail Marys. VLA’s valuation can only be benchmarked by the genuine and committed attention of those leading the industry, and they haven’t – as yet – appeared to show a whole lot of interest.