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
TheStreet Open House

Biotech Stock Mailbag: Keryx Pharma

Stocks in this article: KERX AEZS ALTH AMAG SPPI CTIC

BOSTON ( TheStreet) -- Keryx Pharmaceuticals' (KERX - Get Report) colon cancer drug perifosine will fail when results from a phase III clinical trial are announced early next year.

Says who? I say, but noted University of Chicago oncologist and professor Dr. Mark Ratain shares my bearish outlook.

"Everything tells me that the perifosine trial is going to be negative," Ratain told me in a phone conversation Thursday. Ratain has no financial conflicts related to Keryx.

An email from W. Rubin asking for my prediction of the perifosine colon cancer study prompted a phone call to Ratain to get his opinion. The question is especially relevant in the context of an editorial Ratain and I co-authored and published last month in the Journal of the National Cancer Institute (JNCI) which demonstrated a 100% failure rate for phase III cancer drug trials conducted by micro-cap cancer drug developers.

Our JNCI paper analyzed the outcomes of 59 phase III clinical trials of cancer drugs going back 10 years, stratified by the market value of the companies four months prior to trial results being announced. What we found was a remarkable difference between the market values of companies that had positive and negative announcements.

Specifically, the median market capitalization was approximately 80-fold greater for the companies with positive trials vs. companies with negative trials. There were no positive trials among the 21 micro-cap companies (companies with less than $300 million market capitalization) whereas 21 of 27 studies reported by the larger companies analyzed (greater than $1 billion capitalization) were positive.

Keryx today carries a market value of approximately $200 million, which makes it a micro-cap cancer drug stock per our definition. The phase III colon cancer study of perifosine is also expected to report top-line results in the first quarter of next year, or approximately four months from now.

Ergo, Keryx is running headfirst into bad news real soon. Perifosine will be a bust.

I expect some of you -- maybe most of you -- will scoff at our prediction, particularly because perifosine demonstrated a significant survival advantage (17.7 months vs. 7.6 months) in a randomized, controlled phase II colon cancer study -- albeit a study that enrolled just 38 colon cancer patients. Still, these perifosine data, which have been presented at the big ASCO cancer meeting and were published last week in the Journal of Clinical Oncology, seem to justify confidence in a successful phase III study.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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!

Markets

DOW 17,483.47 -195.23 -1.10%
S&P 500 2,040.87 -16.22 -0.79%
NASDAQ 4,717.0640 -54.6990 -1.15%

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