Biotech idea of the day: $LOOKOUT! No, that’s not a ticker. Today I’m not going to talk about a specific company, but rather an often underappreciated threat to biotech businesses. $XBI, $IBB 1/9

In terms of threats to biotech businesses, top of mind are safety issues, or lackluster efficacy. Drug pricing is always front and center, and shareholder dilution. But I often see one area of concern being glossed over / given limited credence by analysts; competition. 2/9

Competition is the hidden portfolio killer. How often has your exciting bio had a very promising approach but then is leapfrogged by newer, better modalities? Or the addressable markets shrink drastically with competitive “me toos”. 3/9

With significant leaps in basic science, and the growing flood of biotech private and public money, competition has become even more important to assess. Take in oncology for example. Below is an incomplete list of modalities you may need to know about. 4/9

CD-1-137, IL-2-15, PI3K-A,B,G, ROR1,2, IRAK-1,2, TROP-2, TIGIT, PD-1/L1, TKIs, EGFR, OX-40, STING, HER2, HER3, MGM2, MCL1, cRAF, EED, FolRalpha, MUC-1, NK, CAR-T, 4-1BB, PSMA, WEE-1, ER+, Adenosine Rec. Ant., TLR7-9, SHP2, KRAS, G-D T-Cells, Elec fields, Porcupine, Radiopharm 5/9

Yes it’s exhausting, but are you confident your favorite approach is going to be better at treating your target co’s patients? And you better make sure your approach is cost-effective and more convenient as well. Even demonstrably worse products going generic could hurt you. 6/9

And remember, if your company’s product is at parity with others, you don’t just have to split the market, but your pricing could also suffer. See Hep C cures. I would be worried this could happen to the PCSK9 space, and PARP inhibitors. 7/9

I am personally worried about leapfrogging in CRISPR and NK cells. Much of immuno-oncology is tough as well, but there are still many good niches. Hematological oncology is very crowded (AML, CLL etc…). There are only so many patients. Where are you worried? 8/9

Not saying there aren’t great oncology (or other) biotech opportunities out there (I certainly think there are), I’m just highlighting the need to spend a lot of time considering competition. Only place big LT bets where you are sure you have a clear LT advantage. 9/9