Liver disease becomes in fashion

Growing investment in liver

“Allergan Plc’s agreement to buy Tobira Therapeutics Inc. for as much as $1.7 billion sent biotech stocks soaring Tuesday, as investors bet that buyers will emerge for other companies developing experimental treatments for a liver disease known as NASH.

NASH, or non-alcoholic steatohepatitis, is a severe type of fatty liver disease that has become one of the hottest areas in biotech — and Allergan’s 498 percent premium for Tobira just made it even hotter” (Read full: http://www.bloomberg.com/news/articles/2016-09-20/allergan-agrees-to-buy-tobira-for-as-much-as-1-7-billion)

 

Tobira undervalued

Let’s first take a closer look on the numbers:

  1. $1.7b is not a small amount and definitively a real home run for Tobira – it’s a real success story [I will come back to this]
  2. Allergan’s premium almost reaching 500% is also impressive. At the same time, it is obviously not a sign of Allergan’s generosity  but a result of how Tobira was strongly undervalued [as millions of other Tobiras out there!].
  3. And Tobira’s eight-fold stock jump to $38.28 (see the picture): you can imagine how it feels for those who bought the stock two months ago…

 

What is going on

Together with the spreading epidemics of metabolic syndrome, NASH [in particular] and liver cancer [in general] were overlooked for many years. Liver cancer has now become the second death cause in all cancers worldwide (http://globocan.iarc.fr/old/FactSheets/cancers/liver-new.asp), and it is far from only hepatitis viruses and alcohol destroying our livers today. NASH should be taking very seriously, and the increasing mortality in liver cancer as well. I am very glad that investors, including Pharma investors, are starting to wake up. With our promising product SA-033 we are on the frontier of the needs and development, and we are happy that the interest in liver drugs investment is soaring.

 

Timing

Market-wise, one very important thing here was timing. Big Pharma [Allergan] acquires a company with several products in phase II, i.e. when efficiency of the products is already to some extent investigated, and the price is still “reasonable”. It is a no-brainer that the same products at the same company after several years and successful phase III trial will be much more expensive. Which falls perfectly into our model described earlier (see Success story), where we discussed this very simple and straight-forward Big Pharma business strategy step by step. Tobira is a good case study for those interested, and simply a success story against odds of liver disease.

Igor

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