Feuerstein's Biotech-Stock Mailbag

In other words, this latest twist in the Dendreon story does not change the fundamental thesis on the stock one iota.

As for traders whipping the stock around, well, that's a whole different story.

Last weekend's blood cancer meeting had a volatile effect on Celgene(CELG Quote) and Millennium Pharmaceuticals(MLNM Quote) this week. My column on the subject prompted an email from Scott J.

"I am just writing to take issue with your comment that Velcade is less toxic than Revlimid. It has always been my understanding that Revlimid's side effects are considerably less intrusive on overall quality of life compared to Velcade. If you understand otherwise, would you mind sharing the source(s)."

I appreciate Scott's letter because my writing was clumsy and unclear in this regard, and he wasn't the only one to notice. What I was trying to convey was that the safety and tolerability profile of Millennium's multiple myeloma drug Velcade came out of the meeting looking better than previously thought, especially since many patients treated in the Velcade study were much older and more susceptible to toxicity.

There is still toxicity associated with Velcade, as there is with Celgene's Revlimid. On balance, however, I think a view of Velcade is emerging that says the drug's side effects are more manageable than previously thought.

That said, don't count me as someone who sees a clear winner here. Multiple myeloma patients are likely to get both Revlimid and Velcade, with the order up to physician preference. But from an investment perspective, Millennium had more to gain, and Celgene more to lose, from last weekend's meeting, and that's reflected in the relative performance of the stocks.

An FDA advisory panel gave a positive recommendation Tuesday to a new drug from Cardiome(CRME Quote), IV vernakalant, to treat acute atrial fibrillation. Cardiome's stock price fell, however. This prompted an email from Chris M.

"I have racked my brain and cannot figure how an FDA advisory panel recommends for approval but that drives investors to sell the company. Any ideas?"

Chris is frustrated and I don't blame him. Tuesday's panel was good news for Cardiome and should lead to FDA approval early next year. Yet, the stock is weak, down 12% as I write this column Friday morning.

I think there are a few things happening here that explain the Cardiome selloff. First, the market for acute atrial fibrillation is relatively small, so Cardiome's market value bakes in revenue from this indication to some extent. There was also some talk from the FDA panel about additional restrictions on the type of patient who might receive IV vernakalant.

The real prize for Cardiome is the oral (pill) version of vernakalant, which is being developed for chronic atrial fibrillation, a big commercial opportunity. Investors are a bit spooked right now because the FDA review of IV vernakalant released last week also disclosed a patient death from ventricular fibrillation in an ongoing phase II study of the oral drug. This, in my opinion, is the real reason behind the stock's weakness.

In response to the FDA disclosure, Cardiome sent an email to institutional investors with more details about this patient death, explaining clearly why oral vernakalant was not responsible. In fact, the FDA's own reviewer concluded that the ventricular fibrillation and death were not attributable to oral vernakalant.

Cardiome followed up with an investor call Friday afternoon to drive the point home and try to rally the stock.

Still, investor concerns could persist. That's not surprising. The only way Cardiome will allay these fears about oral vernakalant is to present clean safety data on the drug from the phase II study. That data will be ready in March.

That's a wrap. Thanks again to everyone for a successful Biotech Mailbag year. I'll be back to answer your emails in 2008.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting