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Biotech Investors Should Read Bibliographies Of Chief Scientific Officers

Jun. 30, 2015 12:42 PM ET  |  Includes: AEZS, BIIB, BLUE, BNIKF, CELG, CMVLF, GILD, REGN, SGEN, SGMO, SRNE, TBIO, VICL by: Intrepid Investor

Disclosure: I am/we are long BLUE, GILD, SRNE, TBIO, SGEN, CMVLF, BNIKF. (More...)I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Summary

• Investor Relations can make an uninitiated investor think a biotechnology is better than it is.
• Publication of peer-reviewed, original research is how investigators in medical science prove themselves.
• Most articles discussing biotechnology in Seeking Alpha neglect the bibliography of Scientific Officers and thus neglect to review evidence of what drives a company's biotechnology.

Publication of peer-reviewed, original research is how investigators in medical science prove themselves. Yet short-sighted investors focus on presentations at meetings, and not on science published in prestigious journals after world class peer review. Authors writing for Seeking Alpha focus on platform, pipeline, future profits, and "management," but almost never zero in on Chief Medical or Chief Scientific Officers. I ask you this: why would you invest in an early stage pipeline, or even one with a stage 3 candidate, without looking for results published in peer-reviewed scientific journals? And why would you invest in a company that has not itself invested in a world-class clinician-investigator or scientist to run its clinical trials or laboratories?
I searched Google Scholar for all peer-reviewed scientific publications of Chief Scientific or Medical Officers of 3 groups of biotechnology companies: the 1st group was comprised of Jim Cramer's four horseman, a title referring to Biogen (NASDAQ:BIIB), Celgene (NASDAQ:CELG), Gilead (NASDAQ:GILD), and Regeneron (NASDAQ:REGN); the 2nd group was comprised by 4 small cap biotechs I own with hefty price appreciations over the past 6 months: bluebird bio (NASDAQ:BLUE) up 70%, Cellectis (OTCPK:CMVLF) up 134%, Seattle Genetics (NASDAQ:SGEN) up 43%, and Sorrento (NASDAQ:SRNE) up 65% in the past 6 months; the 3rd group comprised by 4 small cap biotechs I have owned or still own with 6-month price depreciation: AEterna Zentaris (NASDAQ:AEZS) down 56%, Benitec (OTCPK:BNIKF) down 32%, Vical (NASDAQ:VICL) down 35%, and Transgenomics (NASDAQ:TBIO) down 20% in the past 6 months.

Company	Ticker	Chief Scientist	Journal 1st authorships	Top Journals
Biogen	BIIB	Spyros Artavanis-Tsakonas	9	Cell; Proceedings of the National Academy of Science; Science
Celgene	CELG	Thomas O. Daniel	6	PNAS; Kidney International
Gilead	GILD	Norbert W. Bischofberger	17	J. Am. Chemical Soc.; J. Organic Chem.; Nucleic Acid Research
Regeneron	REGN	George D. Yancopoulos	12	Cell; Nature; PNAS

Each of the so-called 4 horseman of biotech have Chief Scientific Officers with strong track records in publishing their science in prestigious peer-reviewed journals.
The most impressive bibliography, in my opinion, belongs George D. Yancopoulos who has been with Regeneron since 1989 and who has a dozen 1st authorships including one in Nature, two in Cell, and two in Proceedings of the National Academy of Science. Regeneron's wesbsite modestly lists only the most recent of its scientists publications, four of which are in New England Journal of Medicine, one in PNAS. And look at how his company's stock has performed:
(click to enlarge)
Nearly as impressive is Biogen's CSO, Spyros Artavanis-Tsakonas, formerly of Department Of Cell Biology, Harvard Medical School. I found nine 1st authorships including two in the journal Science, one in PNAS, and one in Cell. I think most clinician scientists would tell you they would be satisfied with their research careers if they had even one publication in one of these journals!
Celgene likewise lists only a few select publications, and only those relating to Cell Therapy program - I found this section of the CELG website interesting because I know CELG best for its profitable myeloma franchise, not for cell therapy. Celgene's R&D President is Thomas O. Daniel: I found six 1st authorships mostly in journals of nephrology which is his medical subspecialty.
Gilead's Norbert W. Bischofberger is another former Harvard professor. The 1st authorships I found in Google Scholar were in peer-reviewed biochemical journals.

Company	Ticker	Chief Scientist	Journal 1st authorships	Top Journals
bluebird	BLUE	Philip D Gregory	8	Cell; Nature;PNAS
Cellectis	CMVLF	Philippe Duchateau	5	J Biol. Chem.; J Lipid Res.; Molecular Therapy
Seattle Genetics	SGEN	Jonathan Drachman	11	PNAS; Blood; J Biol Chem
Sorrento	SRNE	NONE	N/A	N/A

Last week I read an article here on SA that attempted to compare bluebird bio to "its closest rival Oxford BioMedica." BLUE recently announced a new CSO whose name I immediately put into Google Scholar, unchecking the boxes for citations and patents. "Philip D Gregory" turned up 321 hits, the 1st 20 of which are all co-authorships in the highly prestigious journals Nature, Cell, and Proceedings of the National Academy of Science. I found eight 1st authorships, all from 1998-2001, earlier in his career which shows the natural progression from being a 1st author as a junior investigator to being a co-author at a later stage of career development. All these articles are related to gene editing, mostly with zinc-finger nucleases which is his field of expertise, and which became the platform of Sangamo (NASDAQ:SGMO). So I'm pretty sure these papers are bluebird's Philip D Gregory, and not those of someone else with the same name.
I then searched the bibiography of Oxford BioMedica's CSO "Kyriacos Mitrophanous" and did not find a single 1st authorship on a peer-reviewed research publication. This is not to impune his career - he has been part of research teams that published results in good journals, but I do not find the bibliography of a world-class scientist in his - but I do in his "rival" who is now at bluebird bio. But if you read the SA article by EP Advantage you might come away with the mistaken notion that these two companies are comparable except in stock price which is just not true.

Company	Ticker	Chief Scientist	Journal 1st authorships	Top Journals
AEterna Zentaris	AEZS	Richard Sachse	3	Oncogene, Eur. J. Endo.
Benitec	BNIKF	David Suhy	8	Molecular Therapy; J Virology; J Biol Chem.
Transgenomics	TBIO	NONE	N/A	N/A
Vical*	VICL	Mammen P. Mammen	2	PLoS Med; Clin. Infectious Dis.

Vical has two VPs for Vaccines: Dr. Mammen is for Clinical, and Dr. Larry R. Smith is for Research - some of his research may be listed at the company website here.
Conclusions: there is certainly more to learn about a biotechnology than you can get by just looking at the bibliography of the chief scientist. You can look for publications at the company website and read some of them. I routinely scan the New England Journal of Medicine looking for important new therapies. For example, about the same time Gilead stock began its decline after the Waxman letter to congress, two articles about Idelalisib appeared in New England Journal of Medicine here and here - those simultaneous events were a strong BUY signal.
When I look at the bibliography of Regeneron's chief scientist, I find it extremely compelling, and it sets the bar for other biotech stocks I consider buying. When I look at the research accomplishments of the Chief Medical Officer for SGEN, it gives me confidence to own that stock as it appreciates to become one of my top holdings; same for BLUE. Absence of a chief scientific or medical officer in Sorrento's leadership, something I overlooked when I purchased, now gives me significant concern. When I look at the bibliographies of the CSOs of the 4 companies in the 3rd table, I now see a possible basis for their underperformance, Benitec excepted - I think David Suhey is doing some excellent research for this very small Australian biotech. To the contrary I now see TBIO as a SELL.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Source: Biotech Investors Should Read Bibliographies Of Chief Scientific Officers

Additional disclosure: this is not a recommendation for a particular stock, it is a recommendation to incorporate a bibiography check into your due diligence on biotechnology companies.