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Biotech Stock Mailbag: YM Bio, Exact, Peregrine

As an investor, it's smart to be skeptical when presented with a press release purporting to describe the results of a clinical study, particularly a small phase II study. But as I said above, Peregrine gets credit for running a controlled study of bavi, which definitely lends credibility to the data announced Tuesday. It will be interesting to see how the data hold up as the study matures and additional results are reported.

Peregrine is an interesting challenge to the "Feuerstein-Ratain Rule", which states that an oncology drug company's market value is inversely correlated to the risk of phase III clinical failure. Granted, bavi is still in phase II studies, but Peregrine's market value of under $100 million suggests bavi has little chance of success. That the drug's been around a long time and has never generated interest from partners also weighs against it.

"The only thing that gives me pause is that the study was not blinded. Other than that, I see no holes," said Dr. Mark Ratain, a professor and oncologist at the University of Chicago and the co-inventor of the "Feuerstein-Ratain Rule."

Adds Ratain: "This is truly a test of our rule since the publicly disclosed data look pretty solid!"

Patrick A emails, "Please blast Spectrum Pharmaceuticals'(SPPI - Get Report) CEO, Raj Shrotriya. Please. I am a shareholder but I am absolutely sickened by the amount of compensation this guy receives. Yes, the stock has had a nice run, but assuming Shrotriya gets his 520,000-share award this month, the total amount of shares awarded to Shrotriya in 2011 will be 2.87 million shares. Yes, 2.87 million shares in either awards or options in a single calendar year! This in addition to a $1.9 million cash bonus!

Am I wrong in considering this absolutely ridiculous? I am pissed off as a shareholder. The dude pays himself like he's running a multibillion-dollar large pharma with thousands of employees bringing in billions of revenue. Spectrum is a $800 million [market value] company with 150 employees. His compensation is ridiculous."

Well said. Shrotriya's compensation is obscene. He had a good year, no doubt. I even nominated him for the Best Biotech CEO of 2011 award. But Patrick is right, Spectrum's board pays Shrotriya as if he's running a highly profitable, large-cap biotech company. He's not.

John Paul writes, "I really don't know who the worst biotech CEO should be, but I pronounce you the winner in the homer [sic] Simpson lookalike contest."


--Written by Adam Feuerstein in Boston.

>To contact the writer of this article, click here: Adam Feuerstein.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. 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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