Feuerstein's Biotech-Stock Mailbag

I've said this before so I'm not necessarily breaking new ground here, but I think the odds are against Flurizan. The phase II study of Flurizan wasn't very impressive. At the end of March, a panel of Alzheimer's experts convened as part of a Cowen & Co. investment conference was decidedly ambivalent on Flurizan's prospects, a sentiment that, I think, is shared by many of Wall Street's biotech investing crowd. (And which helps explain why the stock is down for the year.)

I've seen Myriad executives speak at several forums this year. They don't seem as confident about the drug as much as they did in the past; choosing to talk up their genetic diagnostics business over drug development (and rightly so, since the diagnostics business is performing quite well).

And that latter point is very important. If Flurizan fails and the company stops spending money on it, the profitable diagnostics business is a good safety net. How much is that worth? It depends on who you talk to, but amongst my buy-side sources, I hear anywhere from $25 to $40 a share ($30-$35 most often). I'm not endorsing these valuation calls, just passing along what I hear. Myriad is trading currently between $42 and $43 a share.

Back to Flurizan: On Tuesday, Lancet Neurology published the final manuscript on the phase II Flurizan study accompanied by an editorial. Strangely, Myriad Genetics didn't issue a press release to highlight the phase II Flurizan publication. Lancet Neurology is a high-profile medical journal, so you'd think the company would have said something. Instead, the silence sends a different message.