Feuerstein's Biotech-Stock Mailbag: Synta

I'm not going to take a stab at ViroPharma because I don't know enough about the hereditary angiodema (HAE) market to offer an opinion on whether the company did the right thing in buying Lev Pharmaceuticals. (Or, if ViroPharma overpaid.)

My colleague Elizabeth Trotta did a fine job laying out the dynamics of the HAE market in an article this week, so please check it out.

I will, however, say something about Immunogen: Nice steady climb in the stock price this week following Genentech's (DNA Quote) first-quarter conference call Monday.

After listening to the call, it was fairly clear that Genentech is still jazzed about Trastuzumab-DM1, the company's experimental breast cancer drug, which uses Immunogen's drug-delivery technology.

Investors need to wait until sometime later this year, when Genentech is expected to make a go/no-go decision on moving TDM-1 into a phase III study. Clearly, that's going to be a big catalyst for Immunogen shares.

It remains to be seen, also, how Genentech intends to position TDM-1 in relation to its exiting breast cancer drug Herceptin and another drug in its pipeline, pertuzumab.

---

Onward. Jim O. emails with a question about Vanda Pharmaceuticals (VNDA Quote):

"Do you have an opinion on the FDA decision coming up on July 27 pertaining to Vanda Pharmaceuticals? The stock has taken a serious hit from one of its other drugs in the pipeline and I was wondering if you felt they would get the approval on the most recent request."

Vanda is expecting an FDA approval decision for its schizophrenia drug iloperidone, which if approved will be marketed under the brand name Fanapta. As Jim states correctly, the FDA is expected to issue a decision on or before July 27.

My guess is that the FDA will not approve Fanapta on the first pass, but will instead ask Vanda to conduct another clinical trial and submit more data to support approval. I base my skepticism on the existing clinical data, which to me, show Fanapta to be a me-too drug on efficacy and a mixed-to-worse side-effect profile.

Vanda trades at just over $3 a share, in part because of lackluster data from a phase III study of the company's insomnia drug. At this price, Vanda is also baking in an approval delay for Fanapta to a large extent.