Feuerstein's Biotech-Stock Mailbag

Originally posted on RealMoney.com at 6:59 a.m. EDT

Now that the annual meeting of American Society of Clinical Oncology is wrapped, it's time to open the first post-ASCO Biotech Mailbag.

The first email comes from Robert D., who wants to continue the ImClone (IMCL Quote) discussion that dominated my coverage of the cancer research confab. Robert writes:

"I just read your ImClone assessment, but here is a bit from an AP [story]: 'FLEX is Erbitux's ticket into the lucrative lung cancer market, said Cowen and Co. analyst Eric Schmidt. He said that with 40 percent to 50 percent of lung cancer patients ineligible for Avastin treatment ImClone and Bristol-Myers could see peak Erbitux sales in lung cancer of $700 million.'

"Plain and simple, doesn't this mean Avastin just lost 40-50% market share in treating this type of lung cancer, and ImClone just gained 40-50% market share? Colon cancer aside -- why should Genentech (DNA Quote) shares leap at this news? They just took a major hit."

No. If Erbitux is approved in lung cancer, it will most likely be used in patients who cannot tolerate Genentech's Avastin (mainly for safety reasons.) Read again the quote from that AP story, where it says that 40-50% of lung cancer patients are "ineligible" for Avastin treatment.

Now, with all due respect to Cowen analyst Schmidt, I haven't heard any oncologists talking about using Erbitux in that many patients -- yet.

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Sticking on the topic of ImClone, Ketan T. asks:

"Can you help with what company is doing the [KRAS] gene tests and should expect more revenue from these tests?"

ImClone made available a list of diagnostic companies with tests that determine the status of the KRAS gene in colon cancer patients. There are three publicly traded companies listed -- Genzyme (GENZ Quote) (actually, its subsidiary Genzyme Genetics), Exact Sciences (EXAS Quote) and LabCorp (LH Quote). [I think Exact Sciences and LabCorp are partners.] Four private diagnostics companies are also listed: Biotage, Response Genetics, Targeted Molecular Diagnostics and TrimGen.

These companies use various approaches to collecting and analyzing the KRAS gene, and I don't know enough about each of them to say which test is best or better than the others. But you can use this info as a starting-off point for any additional homework on the subject.

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Sticking with ASCO but moving on to another company, John S. asked the following:

"Please comment on Peregrine Pharmaceuticals (PPHM Quote), since they presented so-called 'promising' data on their lead drug candidate at ASCO this year. Is this a head fake in order that they reach the minimum bid according to Nasdaq rules?"

Peregrine has until July 21 to get its stock above the $1-a-share minimum bid required by Nasdaq to maintain a listing on the exchange.

It'll likely take more than an ASCO press release or two for Peregrine to achieve that goal. It's been one year since Peregrine traded above the $1 mark and investors today aren't exactly acting overly generous to small-cap biotech stocks. The fact that Peregrine already has an eye-popping 226 million shares outstanding and will definitely need to raise a lot more cash to move its drugs forward won't help matters either.