Why the Pros Are Passing on Encysive Pharma

Has Encysive Pharmaceuticals (ENCY Quote) finally convinced drug regulators to approve Thelin?

That's the burning question on the minds of Encysive shareholders as a Friday approval decision nears for Thelin, a treatment for pulmonary arterial hypertension, or PAH. The Food and Drug Administration has delayed two previous attempts to get the drug approved in the U.S., which has only added to the tension as the decision clock winds down.

If my email inbox is any indicator, there's considerable interest from retail investors in Encysive and its quest for approval of Thelin, mainly because the stock is cheap relative to the commercial opportunity for the drug, if approved.

But whatever buzz Thelin is generating on Internet message boards is matched -- even surpassed -- by apathy among Wall Street's professional biotech investors. Sell-side analysts covering Encysive don't seem particularly willing to advocate forcefully for Thelin's approval.

In recent research notes, three analysts state their belief that the FDA will approve Thelin on Friday. Two analysts believe the FDA will once again turn Thelin away with a request for more data. Another four sell-siders aren't making any guesses at all because they just don't know what the FDA will do.

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Biotech buy-siders -- the folks I've spoken with, at least -- aren't any more engaged on Thelin. I polled about 30 contacts -- fund managers, analysts, institutional brokers -- to get a sense of where they stood on Thelin's approval. The response was underwhelming, with a majority saying they cared little or had no opinion.