The data seem to indicate that inflation has not clearly broken and the Fed continues to talk about rising rates and keeping them high until it breaks.  I think I saw that expectations are now that rates peak in June 2023, which is longer than the previous expectation of March 2023.  As long as the market keeps pushing out that expectation we will continue to struggle.  There will be some nice rallies but I cannot see anything sustainable in this environment.

1. I wanted to add one caveat from the UTHR discussion from last week. There is clearly bullishness around Tyvaso and the DPI version.  The market is growing and UTHR will reap the benefits.  There is still the legal battle with LQDA over DPI Tyvaso.  LQDA has victories in PATN and UTHR in the courts.  Worst case scenario for UTHR is LQDA entering the market in mid-2024 with a competitive product (some argue that LQDA has a better profile but it is at least similar).  It might make sense at some point to hedge a UTHR position with LQDA to take out the legal risk but at this point I am simply holding UTHR and keeping an eye on LQDA and doing some more diligence into it.

2. SRPT had a good quarter but everyone remains focused on the DMD gene therapy review. There was a sad story out last week about a CRISPR DMD gene therapy that led to the death of its only patient.  It is not sure if the death was related to treatment or not but it highlight the risks.  I do not think that will impact the FDA review of SRPT gene therapy as it has been treated in a lot more patients than one and has an established safety record.  All in all, SRPT is working as expected with the PMO revenues acting as a core underlying value and the gene therapy acting as the upside potential.  After this quarter, there is nothing to think that does not remain the case.

3. Another company that is still on pace is KRTX. It reported positive data in the EMERGENT-1 and EMERGENT-2 trials, which as sufficient for approval in schizophrenia.  EMERGENT-3 data are due in 1Q23 but are not required to be positive for regulatory approval.  The more interesting trials that would expand the market potential would be the ARISE in adjunctive treatment in schizophrenia and the ADEPT set of studies in Alzheimer’s psychosis.  Expectations are for ARISE data in 2024 and ADEPT in 2025.  It could be the case that KRTX remains in a holding pattern until the approval and launch.  Expectations are high and the question is whether KRTX launch ends up being quick and slow and steady.

4. A quick note on AMGN, which was consistent with other large cap numbers. It was a slight beat and while some questions remain about the long term potential KRAS market and Otezla, there are a lot of levers for AMGN to continue to be a cash flow generating machine.  There were some questions around the upcoming AMG-133 data for obesity but I cannot see a phase I trial result moving the needle of AMGN (or at least it should not move the needle).  I get it that obesity is a massive market but that being the case a phase I trial result is not going to say a lot (either way) of AMG-133 potential in the obesity market.

I will end it here and hope that everyone had a good weekend and that this week is kind to us all.

Disclosure: Long UTHR