My Marketocracy Fund was up 23% in first half of 2015

2015 to date, has been good for my model fund. I am up 23% vs 0% for the S&P500 and vs 20% for the IBB biotech index.
My long-term performance also remains strong - I have returned 385% over the past 10 years vs 76% for the S&P500. 

I anticipate the second half of 2015 will also be good for my fund. My core holdings have several upcoming catalysts that will likely be positive events.

July brings us increased market risk thanks to the Greece stand-off. We will likely see higher market volatility which may present buying and selling opportunities.
However I do not anticipate this Greece issue will have a long term negative effect on our market.

I have adjusted my fund to deal with this today's conditions. I have increased my cash position without reducing my core holdings. Later this month I plan to be fully invested.

   

Disclosure - This Fund is available for investment at http://www.marketocracy.com/managers.php?manager=781
Follow the links.
I do not short stocks.

My Biotech & Medical Watchlist - June 2015

Disclosure - I do not short stocks

Northwest Biotherapeutics - promising vaccines for all solid cancers

Here is the link to my interview on Forbes.com


Below are my responses in an article format -

On the 30^th of May at ASCO, Northwest Biotherapeutics (NWBO) presented new positive results from their Phase1 clinical trial of DCVax-Direct for treating various inoperable solid tumor cancers. DCVax-Direct is NWBO’s second immunotherapy vaccine candidate. 

The Phase 1 trial has so far easily met its primary endpoints of safety and tolerability, the trial is on going. The vaccine continues to show an excellent safety profile without chemo/radiation like side effects. The vaccine also shows promising signs of effectiveness across a broad range of cancers. NWBO are now preparing to move to Phase2 to test its effectiveness. 

The Phase1 study enrolled 40 patients with late stage4 cancers, the patients had 3 inoperable tumors on average and a poor prognosis. The trial covered 13 different cancers included lung, sarcoma, pancreatic, breast and melanoma. 

The purpose of the Phase 1 trial is mainly to test the vaccine’s safety and tolerability. The safety findings are excellent. Patients injected with DCVAX-Direct mainly experience minor side-effects usually mild fevers after their injection. 2 grade3/4 Adverse Events were reported, one for dehydration and one for systemic inflammatory response syndrome. A maximum tolerable vaccine dose was not reached. 

The trial also looked at patient survival and tumor response. The findings are encouraging. The vaccine appears to invoke an immune response at the tumors and in many cases stabilizes the disease across the broad range of cancers tested. 

27 of 39 patients (69%) are still alive at up to 18 months after their first injection. While these are impressive survival figures they are from a very small patient population. The next Phase2 trials will specifically test the vaccine’s effectiveness.

Two different versions of the DCVax-Direct vaccine were tested.  A group of 21 patients were injected with the Method B version of the vaccine. 18 of those patients (86%) are still alive at up to 18 months after their first injection, another impressive survival response.

The other version of the vaccine, Method A, was considered inactive, 9 of 18 (50%) patients are still alive.

Considering these are survival results from very sick stage4 cancer patients from a range of different cancers NWBO’s vaccine shows positive enough results to move onto Phase2 clinical testing.  

NWBO is planning to now run three separate Phase2 trials. Two trials will test separate cancer indications, one for non-small cell Lung Cancer and the other for Sarcoma. The third trial will test various solid cancers like their Phase1 study did. 

NWBO will be making several trial treatment changes for Phase2 to improve their vaccine’s performance. Their next trials will only use one vaccine version (Method B), more tumors will be injected (up to three per patient), and the frequency of injections and the duration of treatment will be increased. These changes should improve patient responses.

NWBO will do a final Phase1 report-out after patients pass 24 months survival.

NWBO’s approach to treating cancer is unique and exciting. They claim their dendritic cell based cancer vaccine is able to educate and direct the human immune system to attack all cancer cell antigens. Cancers are known to each carry thousands of different antigens so it makes sense that attacking all of them is your best approach at defeating the cancer. 

There are other companies also developing promising dendritic cell based vaccines but their treatments are designed to attack a single or several cancer antigens so their approaches are likely to have more limited successes with the fight against cancer. Examples of other companies developing dendritic cell based cancer vaccines include Immunocellular Therapeutics (IMUC), Argos Therapeutics (ARGS), Prima Biomed (PBMD), and the former Dendreon (DNDNQ). 

Since March, NWBO’s share price has moved up from $7 to near $9. I think the share price will continue trending up this year. Without surprises, I think the share price will climb near the $13 level by the end of 2015.

There are several upcoming catalysts to support this positive share price trend. One imminent catalyst is a full enrollment announcement for NWBO’s lead vaccine candidate, DCVax-L at Phase3 for Glioblastoma (GBM). DCVax-L’s first interim efficiency analysis will closely follow. Also an announcement is likely in the coming months on commercial negotiations with German hospitals (HE) for early compassionate use of DCVax-L. Final Phase3 DCVax-L data is expected near summer in 2016. 

The market valuation for NWBO is around $660M, still significantly lower than many small biotech companies developing immunotherapy treatments. I think a Market Cap (MC) around the $2.0B mark would be a fairer value. $2.0B would place NWBO amongst the leaders of its peers (KITE, JUNO). The market does not consider NWBO a leader in immunotherapy. I do, I see them as having an exciting vaccine platform with a superior mechanism of action (attacks all cancer antigens) that can theoretically be used to treat all solid cancers, and their vaccines are also showing superior safety profiles. When the market realizes NWBO’s full potential its MC will quickly reach the levels of its peers.  

Short interest remains high in this stock at 23%. More positive patient data will eventually soften and sway many of these cancer vaccine and NWBO skeptics. 

NWBO’s financial position is improving. Recently, UK’s famous investor Neil Woodford backed NWBO with investments over $65M. NWBO should have enough funds to run operations into late 2015. Their future financing will come easier now that their vaccines are further advanced and less uncertain.

My Marketocracy Fund up 17.3% in May

My Marketocracy Fund just produced a healthy 17.3% monthly return.

The coming months also look positive for my fund.
Two of my largest holdings are presenting at ASCO this weekend (Northwest Biotherapeutics - NWBO & TG Therapeutics - TGTX). If they present positive data, as I expect, my fund will continue earning strong returns.  

My 12 month return is 49.1% and 5 year return is 280%.

Below are my fund's current Top10 holdings:

Disclosure - This Fund is available for investment at http://www.marketocracy.com/managers.php?manager=781
Follow the links.
I do not short stocks.

2015 ASX Stockmarket Game1 update - How are you doing?

This competition ends on the 10th of June so we are in the home stretch.

Leading is Prof Profit from Western Australia with a 42% return, second is Jimj from Queensland with a 38% return and third is Ellison from New South Wales with a 37% return.

I am ranked #8.

 I have a good chance of winning prize-money this year, but will need a little luck!

Acadia Pharmaceuticals (ACAD) - still heavily discounted

Acadia Pharmaceutical's (ACAD) short and long term prospects make it an excellent investment idea. ACAD have created an anti-psychotic drug candidate that is highly effective with a best-in-class safety profile. ACAD's new drug will likely provide medical benefits to a wide variety of psychosis patients around the globe.

ACAD is a small biotechnology company developing treatments for nervous system disorders. Their lead drug candidate is called Nuplazid. Nuplazid is a  selective inverse agonist targeting 5-HT2A receptors which are believed to play an important role in psychosis. Psychosis is a severe mental disorder which alters peoples thoughts and emotions so much that they lose touch of reality. Psychosis comes out as a symptom of many types of mental illnesses such as Dementia, Autism, and Bipolar Disorder.

Nuplazid's excellent safety profile and effectiveness will likely make it the preferred psychosis patient treatment. ACAD has already proven their drug works for Parkinson's Disease Psychosis (PDP) and are in Phase 2 clinical trials for Alzheimer's Disease and Schizophrenia psychosis. Nuplazid is also likely to be a popular off-label treatment choice. ACAD plans to market its drug beyond the USA so eventually psychosis suffers around the globe stand to benefit from this treatment.

Nuplazid is almost a certainty to win FDA approval for PDP. In its Phase 3 clinical trial, Nuplazid showed highly significant anti-psychotic effectiveness (p=0.001) with safety and was subsequently granted Breakthrough Therapy Designation (BTD). The FDA was also impressed enough with the clinical results that it awarded ACAD an exemption from needing to run a confirmatory Phase3 trial.

The long-term prospects of ACAD are the best reasons to invest in this company. By my calculations ACAD is very under-valued by nearly three fold.
I determined my valuation using the times Revenue multiple method. I only factored potential sales for the lone indication of PDP in the USA. I used a population of 400,000 patients, a treatment penetration of 50% and a treatment cost of $13,500 per year. These assumptions give me peak-sales of over $3.0B for PDP. Then using a conservative 3 times revenue multiple gives ACAD a $9.0B Market Cap (MC). ACAD's current MC is $3.5B well below my $9.0B valuation. My valuation becomes much higher when I factor in likely global sales, the possibility of FDA approval for additional psychosis indications and then the likely high off-label use.
 
The markets may be factoring a high discount for the risk Nuplazid does not get FDA approval. While there is never certainty in any drug getting FDA approval Nuplazid's risk ought to be very low especially when considering the very favorable FDA treatment its received so far. Nuplazid is likely to be a popular off-label use drug. Current anti-psychotic drugs have harsh side-affects that can even cause death, particularly in the elderly and children. Abilify, Seroquel, Clozaril, Geodon, Zyprexa,  and Risperdal are examples of approved anti-psychotics. Abilify is the largest selling anti-psychotic drug in the USA drawing sales of over $7B per year. Nuplazid's excellent safety-profile and effectiveness will enable it to capture a slice of this anti-psychotic drug space through off-label use.


In the near-term, investment in ACAD also offers good value. Its share price nearly reached $46 in early March this year before it quickly fell to a low near $30. The sell-off was triggered by a negative announcement that the company was delaying their New Drug Application (NDA) for Nuplazid. I think the large sell-off was a market over-reaction to a relative minor issue. ACAD stated the delay was due to “additional time required to complete the preparation of systems to support commercial manufacturing”. Basically they felt they were not prepared for an FDA audit of their Quality Controls. The delay does not increase risk for Nuplazid. Nuplazid's chemistry is not in question, the drug has already been successfully produced and passed Phase 3 clinical testing (with flying colors). The market may already be realizing the price drop was an over-reaction. ACAD's share-price has already bounced back to over $37. I think ACAD will quickly return to its $46 high level and will probably trade above $50 once their NDA is submitted which will be in the latter part of this year.

I have been following ACAD for over 3 years. I first bought the stock back in November 2012, just  before their successful Phase3 trial (study-020). I felt confident at the time that ACAD would get positive results from my knowledge of their previous trials. ACAD did in fact halt a previous Phase3 study for this drug, their "012-study".

In the 012-study, ACAD discovered a high placebo-affect caused its drug to lose effectiveness. They discovered the high placebo-affect was generated from study centers used in countries offering a low standards of care for psychosis patients. Half of that studies' patients that were treated in the USA did show positive and significance efficiency and safety.

ACAD then redesigned and ran a new Phase3 study (020-study). The new study excluded low standard of care psychosis centers. This study went on to produced highly significant positive results that have catapulted ACAD's share price from then $2.30 to now over $37.

At the time I was considering investing in ACAD, thestreet.com was warning investors to stay away. Their warning was easy to ignore because their biotech pundit did not show any knowledge of ACAD's clinical history.

ACAD’s scientists and management have done a tremendous job in creating and bringing through the clinic their anti-psychotic drug candidate. Their next challenges will be to win FDA approval and then successfully commercialize. ACAD have already shown they are capable of overcoming difficult issues as demonstrated by overcoming their early clinical failures so I have confidence they can deal with new obstacles as they come up.

ACAD at its current share price is offering investors great long and short-term value. The risk of its drug candidate failing is now very low and its success will be highly rewarding.

Disclosure – ACAD is a large position of my Marketocracyportfolio, I do not short stocks.

My Marketocracy Portfolio - BK11

My Fund has returned 10% ytd. Easily beating the S&P500's 2% return but not so good against the IBB (nasdaq biotech index) which returned over 17%.
My 10year return is 355% beating the S&P500's 80%.

My Fund incurred losses towards the end of Q1. There was a general biotech sell-off which particularly affected my small-biotech focused portfolio. I do not think there was a good reason for the sell-off so I remain fully and cautiously invested in this sector.

I have made several changes to my portfolio and look forwards to an exciting Q2. Several of my large holdings will be affected by data presentations at ASCO so this quarter may be more volatile than usual for this fund.

Below is a peek at my holdings;). 

Disclosure- This Fund is available for investment at http://www.marketocracy.com/managers.php?manager=781
I do not short stocks.