Feuerstein's Biotech-Stock Mailbag

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Brian writes: "Can I get your views on Vion Pharmaceuticals?"

Another winner. (Yes, that's me leaning on the snark-o-meter again.)

You can pick up a share of Vion for 71 cents. That's not a good thing. One of the lessons I relearned from the Sonus Pharma(SNUS) debacle is that I'm no longer going to try to be the smartest guy in the room. The Vion chart is screaming "Stay Away!!" It's not saying, "I'm cheap -- I'm a hidden gem because investors are missing something!"

Vion's lead drug, cloretazine, is being developed for some blood cancers but has run into trouble. A phase III study in acute myelogenous leukemia was put on clinical hold because of high on-study mortality. Another trial, this one in elderly, high-risk AML patients is ongoing with data expected at the American Society of Hematology meeting in December.

I don't see any reason to own the stock going into that data. If cloretazine can dig itself out of its current hole, fantastic, but there's too much risk here. Go spend your 72 cents on some other biotech stock. Or a candy bar.

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Let's end with the best letter of the week, from Cary L.:

"When Discovery Labs got its FDA approval letter pending solving the stability issue, I took a 'country-boy' whupping in the stock! With the stability issue pending and new 12-month results in October, should I put myself into another situation of preparing for another 'whupping,' or stay away from Discovery? I'm seriously thinking about taking a small position with hopes that the whupping will be done with a small belt, as opposed to the large belt the last time."

Oy, this Mailbag is chock-full of quality stocks. (Snarks-ville, again.)

Cary, it sounds like you like whupping a bit too much. There are therapists you can see about that. I kid! I kid!

Seriously, stay away from Discovery. For those unfamiliar with the story, it's real simple: Discovery developed a drug, Surfaxin, to treat infants with respiratory distress syndrome. The drug seems to work OK, but Discovery can't manufacture it. The FDA has refused to approve Surfaxin twice now because of manufacturing and stability issues.

Discovery says it's making progress solving the manufacturing issues, but let's just say management has credibility issues that make it hard to take their statements at full face value.

Cary, I'd try wearing your belt instead of getting slapped on the you-know-what by it.

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