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Biotech Stock Mailbag: Corcept Therapeutics, Reader Retorts

You believe the Stimuvax lung cancer study is taking longer to complete than expected, which means patients are living longer i.e. Stimuvax is helping patients live longer. This is the same assumption made by followers and believers of Cell Therapeutics (CTIC), Novelos Therapeutics and Genvec (GNVC), among others. Each of these companies conducted phase III cancer drug studies with survival endpoints that ran longer than expected. Each trial failed.

Bears will admit there's something odd about Stimuvax if/when Merck and Oncothyreon announce a statistically significant boost in lung cancer patient survival -- in other words if/when the phase III study is successful. Until that happens, those of us on the other side of the Stimuvax story are more apt to sharply discount the optimistic and assumptive modeling based on incomplete knowledge of the phase III patient enrollment curve. Bears are more likely to believe that lung cancer patients in both arms of the Stimuvax study were always more likely to live a lot longer than Merck and Oncothyreon assumed due to factors apparent in the older phase II study. This "delay" in reporting results isn't a delay at all.

Lastly, @given2tweet asks, "Why has Merck [KGaA] started hiring people preparing for an [New Drug Application] and launch?

Drug companies invest in post-approval activities all the time before ever having in hand results from pivotal clinical studies. Prepping regulatory filings, investing in new manufacturing and hiring commercial/sales people can take a long time so almost by default these investments have to be started early. If a drug works, these investments can be accelerated; if a drug flops, companies throttle back, plans are changed, new hires are laid off. It happens all the time.

Tuesday's column Six Drug Stocks Unworthy of Biotech Bull Market set the Hostile React-o-Meter aflame.

"Peterpmf" was succinct in his criticism: "Go [Bleep] yourself."

"Adam Gaystien" has issues: "You bald [bleep] go kill yourself [bleep]."

Other readers were a bit more constructive. "Native American Fans" writes, "You never really do research or present cogent arguments when you mention Regeneron(REGN - Get Report). For instance, when you predicted their launch of Eylea would fail without giving any reason(s). You obviously had no clue what you were talking about then. As far as the REGN valuation is concerned, how much you think big pharma would be willing to pay to buy them out? Is this your way of trying to wipe the egg from your face since you got the drug launch completely wrong?"

I never predicted a bust for the Eylea launch. What I said, and still believe, is that Regeneron's $9 billion-plus valuation is excessive even if you assume a successful Eylea launch and peak sales of $1 billion. Regeneron is a stock that has worked for investors and analysts love it, but at some point, pushing Eylea estimates higher and higher to justify increasing price targets and valuations becomes unsustainable.

Kenneth double-dog dares me: "Adam, how about stating categorically, in writing, that you have never, nor would ever, comment on a stock as a practice of assisting short sellers in their quest to make a quick buck? It would be something that you could put in writing, and then the SEC could probably just pick up and go away because 'that would be that'. Oh wait, you may not want to do that because it would clearly not be an accurate statement... I don't have any skin in the game of these companies but I routinely keep up on research of biotechs and it is remarkable the amount of times AF steps in to bash a company that appears to be doing good. Seems to me that Mr. AF is developing a measurable pattern that the SEC should eventually be able to decipher and take action on..."

Ken, I have never, nor would I ever, comment on a stock as a practice of assisting short sellers in their quest to make a quick buck.

BuggyFunBuggy asks, "How could you leave out HEB?? Still listed on AMEX and hasn't been near a buck in years????"

Ah yes, good ol' Hemispherx Biopharma (HEB). Amazingly, the stock is up 65% this year for reasons that defy logic or explanation. More evidence of a biotech bubble.

Hairy Beary (nice nickname) asks, "Adam, can you please give me your thoughts on Sanofi(SNY - Get Report) discontinuing the Prochymal graft-versus-host disease program? It seems this would raise a red flag given this drug's past."

More like a red invisibility cloak since Osiris Therapeutics (OSIR - Get Report), which owns Prochymal and licensed the do-nothing stem cell therapy to Genzyme (now Sanofi) has said nothing publicly to its shareholders or investors about the demise of the graft-versus-host-disease partnership.

Sanofi disclosed the discontinuation of the Prochymal program in the early morning hours of Feb. 8. As I write this column on Thursday at noon, Osiris has said nothing, even though GVHD is the linchpin of its Sanofi partnership.

Update: Late Thursday night, Osiris finally issued a press release in which it claims Sanofi never told the company about pulling out of the Prochymal-GVHD partnership. Osiris is now free to seek a new partner "without restriction," the company says.

Good luck with that, Osiris.

--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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