Why the Pros Are Passing on Encysive Pharma

Of the 12 responses I did receive, 11 people felt the FDA would issue another "approvable" letter for Thelin, delaying the drug once again. Only one respondent felt that Encysive would succeed this time.

Just as interesting, none of these Wall Street biotech pros were involved in the stock at all, long or short.

Encysive shares have seen some bids as the decision date nears. At its Tuesday close of $4.66, the stock is up nearly 77% from its recent low in late March.

Just under two years ago, Encysive was a $12 stock. Its fall is largely due to two failed attempts at getting Thelin approved, and it's a big reason for the indecisiveness of the many biotech sector participants viewing the company.

The company first submitted Thelin to the FDA in May 2005. The agency issued an "approvable" letter in March 2006, refusing to approve the drug until Encysive provided additional information on the drug.

Encysive resubmitted Thelin to the FDA in May 2006, but two months later, in July 2006, the FDA once again refused to approve the drug. Thelin was resubmitted to the FDA for a third review in late 2006, and now the company and investors wait to see what happens.

Thelin is approved for use in Europe, Australia and Canada, which makes the long delay for a U.S. approval even more mystifying. The situation is compounded by the reticence of Encysive management, which has never given a full airing to explain the questions or issues that prompted the FDA to keep Thelin on ice for so long.