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Poniard's CEO Pulls a Belichick: BioBuzz

SOUTH SAN FRANCISCO, Calif. ( TheStreet) -- Poniard Pharmaceuticals (PARD) finds itself in a worrisome financial hole following Monday's failed phase III study of picoplatin in small cell lung cancer.

The company reported cash and marketable securities totaling $40 million at the end of the September quarter. But Poniard is also burning about $10 million a quarter and carries an $18 million loan on its books that requires the company to maintain cash reserves at least equal to the outstanding balance on the loan.

At its current rate of spending, Poniard could be in violation of its loan agreement at the end of the year, which would make the loan callable and thereby force the company to restrict the use of its remaining cash.

Poniard does have a $60 million equity line of credit that it could tap, but only if the company's stock price is above $3 a share. Obviously, Monday's negative picoplatin results make that impossible, unless the company can re-negotiate the terms of the deal. The stock is down 76% to $1.77 in recent trading.

In many ways, the financial mess that Poniard finds itself is the biotech equivalent of the gamble taken Sunday night by New England Patriot's head coach Bill Belichick, when he decided to go for it on fourth down, late in the game with the ball still deep in his own end of the field.

Poniard could have partnered picoplatin earlier to bring in much-needed money, but CEO Jerry McMahon decided to hold off, betting that positive results from the picoplatin lung cancer study would boost the drug's value and bring with it much better partnering deal terms. McMahon rolled the dice, even with the knowledge that the company was getting uncomfortably close to a financial cliff.

Belichick was too smart for his own good Sunday night. On Monday, so was McMahon.

A Closer Look at Cardium's Wound-Healing Drug

(At 10:51 AM ET)

The publication of last Friday's Biotech Stock Mailbag was hampered by a technology glitch in our web-publishing software. To make up for the mistake, I'm going to re-post the reader email and my responses today:

Paul B. writes, " Any chance of some coverage on Cardium Therapeutics (CXM)? 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.

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