This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Biotech Mailbag: BIO CEO Wrap

BOSTON ( TheStreet) -- Let's devote this week's column to the BIO CEO conference and address simmering controversies involving Rexahn Pharmaceuticals (RNN), MannKind (MNKD) and Nymox Pharmaceutical (NYMX).

Controversy first. "Kantzler" called me out on my most recent bearish column on Rexahn, saying I intentionally omitted any mention of the company's partnership with Teva (TEVA).

"Your failure to mention the Teva investment is, to me, a significant indicator of bias you imply on the part of others. Regardless of how funds may be applied, an Israeli pharmaceutical putting up the funds it did is as solid an endorsement as one could hope for. Unlike most justifications, the Teva investment is money put where your mouth is. While all small, research biotechs are a gamble, a significant player in the game has seen Rexahn's cards and likes the odds, making this gamble less hair raising than many others."

I strongly disagree. Teva spends about $1 billion a year on research and development. All in, the Israeli pharmaceutical company invested roughly $8 million in Rexahn in order to fund the preclinical development of a single cancer drug candidate. That means Teva allocated eight-tenths of 1% of its entire annual R&D budget to the Rexahn cancer drug known as RX-3117 -- a completely insignificant figure.

I'm even tipping the scale in favor of the Rexahnians because Teva's investment actually came in separate $4 million tranches over two years, so as a percentage of total annual R&D spend, Teva's "partnership" with Rexahn is even smaller.

Under the terms of the agreement, Rexahn must use the money received from Teva to fund the preclinical work necessary to advance the drug to the point at which permission can be sought from regulators to proceed to human clinical trials. In other words, RX-3117 can hardly be called an experimental cancer drug because it's still being tested in the lab.

Let's be clear: Teva has not endorsed, licensed or invested in any of Rexahn's more advanced drugs -- Serdaxin, Zoraxel or Archexin. Moreover, to call Teva's investment in RX-311 a "solid endorsement" is laughable. The only thing Teva is doing is funding some lab work.

And Rexahn can't even get that RX-311 lab work done on time. The company was supposed to have RX-3117 ready for human clinical trials in 2010, but the company recently pushed that goal into 2011, according to Rexahn's quarterly filings with the Securities and Exchange Commission. The same SEC documents also explain how Teva paid less money to Rexahn than previously agreed upon under the original RX-3117 agreement.

Here's a helpful hint: Stop using press releases as your primary source of due diligence. Press releases are fungible documents that companies rely on to disseminate a sanitized and largely optimistic version of events. A press release is a piece of propaganda -- plain and simple.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CTIC $2.34 0.00%
MDVN $117.53 0.00%
MNKD $6.52 0.00%
NYMX $0.64 0.00%
RNN $0.80 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs