Feuerstein's Biotech-Stock Mailbag

My story Monday about the Securities and Exchange Commission's fraud charges against Biovail(BVF) and some of its executives ticked off at least one reader.

Andy V. was peeved that I appeared to be taking credit for shedding the spotlight on misleading statements made about the truck accident that kicked off the entire Biovail brouhaha.

"I can't believe years later you are still trying to pass off David Maris' excellent investigations of the Biovail truck accident as your own. Unbelievable," writes Andy.

I agree with Andy's point about the fantastic work done by Maris, who at the time was working as an analyst for Bank of America Securities. But far from stealing the credit due Maris, I actually wrote a story about him and his investigative work into Biovail a week after the October 2003 accident.

Maris used video and photographic evidence, as well as eyewitness testimony, to reach the conclusion that the Biovail truck carrying a shipment of the antidepressant Wellbutrin XL was half full at best. This raised serious questions about Biovail's claims regarding the value of that shipment.

My work on Biovail in early 2004 took a different path. Instead of estimating the truck's volume (which is what Maris essentially did) I calculated the value of the Wellbutrin XL shipment using the weight of the truck and its cargo, which I was able to obtain from the accident report filed by the state troopers investigating the accident. This was, arguably, a more scientific and definitive way of reaching the same conclusion as Maris.

In the end, we were both right.

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Riffing off the Biovail theme, Dennis T. is one of many disgruntled shareholders of Encysive Pharmaceuticals(ENCY) who believe Pfizer (PFE) is acquiring the company on the cheap.

Writes Dennis: "Adam, you are our only hope to spotlight the strange doings at Encysive, just like the Bank of America analyst did going the extra mile to check the facts on Biovail. Encysive issues negative press releases, but no positive ones. Does Pfizer control Encysive's investor relations department?"

From what I've been told, there were multiple bidders for Encysive, but Pfizer came out on top with a bid of $2.35 a share. That was more than double Encysive's stock price at the time the offer was made.

Seems like a good deal to me, although folks like Dennis, who may be holding stock at a higher cost basis, probably aren't too thrilled.

I don't see the strange things Dennis sees, and I don't see anything wrong with Pfizer's bid. Nor do I believe there's any real chance that another drug company will swoop in with a higher offer.

As I've said before, the Encysive story is coming to an end. Any bitterness over that should be directed at people like former CEO Bruce Givens, who monumentally mismanaged the company.

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Next. Vertex Pharmaceuticals(VRTX) had some interesting data to report Thursday on an experimental drug, VX-770, for cystic fibrosis. The news prompted a couple of questions from Ron. R.:

"Will this drug benefit the broad range of cystic fibrosis patients or just a small group who possess the gene variant targeted by VX-770? And will this announcement finally give Vertex respect on Wall Street, or is it just another factoid to be ignored by the hard-shell analysts?"