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Biotech Stock Mailbag: Sangamo Biosciences

It will be at this meeting, sources tell me, that the FDA is likely to advocate for a higher heart-safety threshold for all obesity drugs, including Qnexa. One of the effects of this FDA meeting and the new safety guidance will be to force Vivus to conduct a pre-approval cardiovascular outcomes study for Qnexa. This study will take years to complete, effectively derailing the company's efforts to get Qnexa to market.

Two contradictory views of my Oncothyreon (ONTY) article, which discusses the pros and cons of the lung cancer vaccine Stimuvax:

"Billy" thinks I'm hopelessly optimistic. "Regarding Oncothyreon, in your article you promote this company and seem pretty bullish about their drug that's in phase 3. Look, I'm new to biotech and new to investing, but I am not new to science. Anyone in science knows that if you don't have statistical significance you've got bupkis. So how can it possibly be that this stock is valued so highly, that its prospects are viewed so optimistically, and even you who I perceive to be a pretty critical person in general who rips apart some of the fraudulent or not so forthcoming practices of other companies, you seem to be bullish on this one. What gives? If they get no statistical significance with their Stimuvax, I wouldn't touch this stock with a ten-foot pole."

Bupkis! Nice use of Yiddish.

Samuel L. read the same article and saw something completely different.

"Your Oncothyreon article is just another bash job cleverly camouflaged to make it look like you're given Stimuvax the benefit of the doubt. We know your motives, Adam, bash the stock so you can buy the stock cheaper, but it's not working this time. We're on to you. You can raise questions about Stimuvax all you want but this is the next Dendreon(DNDN), another stock you bashed and were dead wrong about."

Yes, Adventrx Pharmaceuticals (ANX) is over valued, regardless of what Steve N. happens to think:

"The SEC should investigate you and your attempts to manipulate the price of a stock to your benefit. Time and time again it has been brought to my attention that you write an article bashing a stock, causing the stock's price to temporarily loose [sic] value, and then recover after you buy stock or options. You are an example of what makes the stock market a corrupt investment vehicle."

Remember the golden rule: Stock prices lie. Fundamentals do matter -- eventually.

One more thing, Steve: It's l-o-s-e, not l-o-o-s-e. C'mon dude, spell check!

I called the merger between Amag Pharmaceuticals (AMAG - Get Report) and Allos Pharmaceuticals (ALTH) the worst ever in biotech history, which prompted Daniel L. to ask, "But how do you really feel?"

Ha! I wasn't clear enough? Some additional thoughts on the deal:

Amag put itself up for sale but found no bidders, which is why Amag was forced into a consolation merger with Allos, according to a large Amag shareholder who asked to remain anonymous.

Amag is trying to sell the Allos deal as a financial transaction that brings cost savings and more cash to the balance sheet plus additional leverage to the income statement. Having two products (Feraheme and Folotyn) to sell by a single sales force should help Amag reach profitability, something the company was not going to be do by selling Feraheme alone, Amag argued.

Interesting strategy, but why believe anything Amag's management team spins given its terrible track record of over-promising and under-delivering results in the past? Other than talking about $55-$60 million in cost savings by merging with Allos, Amag management offered little detail about how taking on the marketing of an underperforming, orphan cancer drug like Folotyn is going to get the company to profitability.

The utter lack of financial disclosure and guidance from Amag this week stands in start contrast to Alkermes (ALKS), which provided investors with a plethora of financial metrics and modeling to support its smart merger with Elan Drug Technologies announced in May. Alkermes provided even more financial guidance on the deal at an investor meeting this week.
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