Biotech Stock Mailbag: Cardium Therapeutics

BOSTON (TheStreet) -- The Biotech Stock Mailbag opens with an email from Paul B.

"Any chance of some coverage on Cardium Therapeutics(CXM Quote)? This was a very low-volume stock until quite recently, and had been trucking along nicely in the $2 range, then all of a sudden on October 14th, immediately following the announcement of GOOD results from a clinical trial, the stock tanked and kept going down. Even though a share offering was in the works, at $1.30, the price has now gone below 70 cents. What ... is going on? Why did the stock tank on good news?"

Let me say right upfront that I didn't know anything about Cardium before reading Paul's email, and I've only now taken a cursory look.

The fall in Cardium shares might be related, at least partially, to what looks to me like so-so results from the phase IIb study announced on Oct. 14.

In its press release, Cardium said that 48% of diabetic foot ulcer patients treated once with Excellerate, its wound-healing drug, had complete wound closure after 12 weeks compared with 31% of patients treated with standard of care (the control arm of the study.)

That's a 55% relative improvement for Excellerate over control, but nowhere in the press release does Cardium say this benefit was statistically significant. That's a red flag I'd want explained if I were doing more research into Cardium and this study.

Excellerate is composed of an active drug suspended in what was supposed to be an inactive collagen matrix (think gel.) A potential problem and another red flag, however, is that Cardium says treatment with the collagen matrix alone "contributed substantially" to wound-healing responses in the study.

Cardium either doesn't know, or doesn't say, whether the active drug in Excellerate or the "inactive" gel was mostly responsible for the wound-healing benefit observed in the study i.e. what was the wound closure rate for Excellerate compared to the gel alone? You can take this question one step further by asking about the wound-closure rates for just the active drug component in Excellerate as well.