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AspenBio Finds Fault Afar for Failure

CASTLE ROCK, Co. ( TheStreet) -- I must give props to AspenBio Pharma (APPY). The company's experimental hospital test for appendicitis went up in flames Monday night, but the excuses dished out by management for the whopping failure and setback to Aspen's AppyScore are destined to become instant classics.

The dog didn't eat AspenBio's Appyscore test results. No, that would be too facile an explanation for 1) why the phase III study failed, and 2) why Aspen is jettisoning plans to seek AppyScore's regulatory approval.

Instead, AspenBio management blamed the poor AppyScore test results -- most notably an alarming number of false positives -- on "transportation shipping conditions" of blood samples from the hospital emergency rooms to a central reading laboratory and the length of time it took those samples to make the trip.

Allow me to translate: What AspenBio's management said Monday is that the dog with AppyScore blood samples in its mouth got on a cross-town bus headed to the central laboratory, but the bus driver got lost and the bus' air-conditioning system broke down so by the time the dog got to the lab, the blood samples were cooked, causing the AppyScore test results to read out a diagnosis of appendicitis when in reality the patients were just fine.

If it weren't for that unfortunate screw up, AppyScore would have been golden. Got that? Understand? Good.

So, AppyScore is dead, just as I warned back in April when AspenBio was trading above $4. The stock closed Monday at 97 cents and was down another 10% in the after-hours session as investors digested the bad news.

Where does AspenBio go from here? Monday night, the company said it would forge ahead with an AppyScore version 2.0 appendicitis test, one that could be administered fully in a hospital emergency room, which theoretically, will eliminate the sample transportation excuses… er, I mean issues… that derailed AppyScore version 1.0.

AspenBio said if all goes well, a pivotal clinical trial of AppyScore 2.0 could start in 2011.

If all goes well… not exactly comforting words from a management team whose only real talent seems to be explaining why stuff doesn't go well.

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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