BOSTON (TheStreet) -- This week's Biotech Stock Mailbag opens with good news.
Sepgeninvestor writes, "Adam, I value your skepticism about biotechs in general. You saved me more times than I can count, but I wish you'd write more about the biotech stocks that you like. Are there any positive stocks you want to highlight for the end of the year?"
Valid criticism. Guilty as charged. I'm a glass-half-empty guy so focusing more on what's wrong in biotech is irresistible to me. In my defense, I will say that my early August call recommending Celgene (CELG) and Alexion Pharmaceuticals (ALXN) as a safer haven for biotech investors amid an ugly stock market turned out prescient and profitable.
Looking ahead, I'm most excited and optimistic about the prospects for Medivation (MDVN) and Targacept (TRGT) as each stock nears make-or-break releases of data from pivotal late-stage clinical trials.Medivation's BIG EVENT is the fourth-quarter interim analysis of the phase III "Affirm" study of MDV3100 in advanced prostate cancer patients who have progressed after chemotherapy. Positive results from the MDV3100 study propels Medivation's stock price into the high $20s or even $30s (depending on how good the data are.) Failure sends Medivation shares plummeting to around cash, call it $5-$6 a share. [I'm offering these guesses on stock moves with the assumption that a global recession doesn't completely obliterate the equity markets. Wishful thinking, perhaps.] The primary endpoint of the MDV3100 study is overall survival compared to a placebo, the gold standard for cancer drug stocks. Medivation designed the study to show an approximate 20% reduction in the risk of death favoring MDV3100, or about a three-month median survival advantage. Another important benchmark for success, particularly as it relates to Medivation's stock price, is the 3.9-month survival advantage in the same prostate cancer patient population demonstrated by Johnson & Johnson's (JNJ) Zytiga. Zytiga and MDV3100 will compete for the same prostate cancer patients, so investors will want to see similar efficacy between the drugs. Zytiga must be administered with a steroid that can cause side effects. That's a potential advantage for MDV3100, which doesn't require steroid co-administration. A win in the MDV3100 study will also be a nice resurrection story for Medivation and its CEO David Hung following the Dimebon -- Dimebomb -- Alzheimer's blow-up. Hung has proven himself to be one of the best dealmakers in biotech, negotiating huge partnerships with Pfizer (PFE) and Astellas, but he needs a drug development victory to gild his reputation. Targacept is waiting for its partner AstraZeneca (AZN) to take the wraps off results from the first of four phase III studies of TC-5214 in depression augmentation. [TC-5214, if approved, would be prescribed as an add-on therapy for patients who respond poorly to commonly used anti-depressants.]
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