Feuerstein's Biotech-Stock Mailbag

I received a ton of email about my bearish take on Cell GenesysCEGE and its prostate cancer vaccine, GVAX Prostate, in last week's Mailbag. The column really set some of you off.

I'm accustomed to hearing from the bottom dwellers and the tin-foil-hat crowd, but oh boy, the curses and insults were flying! Too bad I can't share the best of these emails with you for laughs, but my editors are squeamish about such things.

Thankfully, some of you were a bit more genteel than the missile throwers. Which brings me to an email from Dilip S. He asks, "How can you say that GVAX is a dud? The phase II trials showed a median survival of over 35 months. If that's not an improvement over regular Taxotere, then what is? Am I missing something here?"

Dilip, you're missing something very important. Uncontrolled phase II studies in oncology are completely worthless. The data generated from such trials -- and that includes Cell Genesys' phase II study of GVAX Prostate -- are meaningless.

If you remember one rule about biotech investing, or more specifically, one rule about investing in biotech oncology stocks, it's that you should never (never!) trust phase II data from uncontrolled studies.

Print that out. Place next to your computer. Memorize.

Prostate cancer patients taking GVAX Prostate in the phase II trial had a median survival of 26.2 months. In a subset of patients at the higher GVAX dose (oh heavens, a subset?!) median survival was 35 months.

All patients in the phase II study received GVAX, so there was no control, and the study wasn't randomized so there was nothing to which GVAX patients' survival could be compared.

But what folks like Dilip and others do is compare these GVAX patients to historical data. In this case, Taxotere, approved for prostate cancer patients, produced a median survival of about 19 months in its own pivotal study.

Twenty-six or 35 months' survival from GVAX's phase II study is way better than what Taxotere produced in the past. Therefore, the ongoing phase III GVAX study, which tests the vaccine directly against Taxotere, is going to be a slam-dunk success. Right?

Wrong!!

The quality of treatment changes, patient characteristics are different, there is selection bias -- heck, everything is different from one study to another. When the phase III GVAX results are announced next year, patients on the vaccine will live far shorter than they did in the phase II study. Likewise, Taxotere patients in the study will live longer than expected. This is why the odds are strongly against GVAX Prostate and why I'm no fan of the stock.

I don't expect the dunderheads out there who insult me to take my advice, but for the reasonable folks like Dilip and others, do yourself a favor a read this article in Slate from January. Download these two papers from respected oncology journals, here and here.

They all deal with the shortcomings and unreliability of uncontrolled phase II oncology studies.

Mark Ratain, an oncologist and professor at the University of Chicago, has long been on a crusade against non-randomized phase II oncology studies. He was responsible for the randomized phase II study of Nexavar, the successful kidney and liver cancer drug from Onyx PharmaceuticalsONXX. Ratain's phase II study was a revelation because it accurately predicted the later, positive results from Nexavar's phase III study.

I called him this week to discuss this topic (but not to specifically rip on, or criticize, Cell Genesys or GVAX, mind you.) He referred me to the articles above. Along with some very distinguished colleagues, he also co-wrote an editorial in the European Journal of Cancer earlier this year calling for randomized phase II oncology studies to become the norm, not the exception as they are today.

Sadly, Ratain explains, most small biotech companies don't bother to heed his advice because they're not interested in eliminating the uncertainty and better defining risk of their experimental cancer drug as it moves (hopefully) into phase III studies.

Instead, these companies see phase II studies as box checkers something they can do on the cheap to get a positive result -- no matter how meaningless -- that allows them to say they have a phase III drug in development.

"And for some reason, Wall Street rewards these companies by helping them raise money," he says, adding, "What should really happen is that the market should punish companies like this, making sure they can't raise money."

Amen! If that happened, maybe we'd see more successes and fewer failures in cancer drug development. Of course, savvy short sellers don't want that to happen, because they make a nice living off issues such as these.