We are probably due for a bounce in the sector as it has almost been straight down for a little bit. I think the $84 level on the XBI
looks to be some support but that is still a couple points lower. Do we get to those levels before a bounce or has the selling been so intense that we bounce from these levels? Either is plausible at this point but I am not sure I would buy any bounce as being meaningful at this point.

I
talked yesterday about the SGEN data that was an ADC combined with a checkpoint. SGEN was actually a dual winner as they additionally presented data on tucatinib in combination with trastuzumab (Herceptin) in patients with HER2-positive (HER2+), RAS wild-type metastatic colorectal cancer (mCRC) after treatment with first- and second-line standard-of-care therapies.  The treatment generated an ORR of 52% with a median duration of response of 10.4 months.
These are good data. Of course, this is not an ADC but a tyrosine kinase inhibitor that is highly selective for HER2 without significant inhibition of EGFR (it is the inhibition of EGFR that has been hypothesized to generate the side effects). It seems odd to talk about a non-ADC with SGEN but this was licensed from ARIA awhile back and clearly seems like a winner.

So SGEN has two winners at ESMO and
Adcetris is expected to do $610M to $640M in sales this year. The market cap is about $14B. So that puts it trading around 21X revenues,
which clearly means that the valuation has some pipeline value. Of course, if you get both of these drugs approved and selling then the valuation looks more reasonable but does that make it a bargain at these levels? I do not think so. I would not argue that it is expensive but you clearly need the pipeline to hit for it simply to stay at these levels and while I think that will happen, the upside seems limited right now. I still want to look into some more but it does not seem like an obvious bargain.

There was some talk today about the
upcoming BGNE data comparing its BTK to ibrutinib in WM. It is being touted as a major catalyst for the stock with the potential to have double digit moves. I did not see it as that important as a catalyst given that WM is a relatively small indication. I saw this data as the first real test of whether BGNE has a better BTKi or simply another BTKi. My assumption had been they simply have another BTKi and one that would be used after ibrutinib in the US and perhaps become preferred in China. It seems like people are seeing this as a more important catalyst than me and given that people make the market, it is probably going to be a big mover for BGNE. The data will be coming in the fourth quarter and so keep an eye out for it as it is going to move the stock.

I will end it here as we are getting a little bounce in the sector but it remains very early and very shallow of a bounce.

Disclosure: Long
BGNE