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: Oncothyreon, Amag, Keryx Hate Mail

Don't forget the rationale for the phase III Stimuvax trial came from a retrospective subset analysis of the phase II trial. Those kinds of analyses are always fraught with risk, so if Stimuvax fails for the final time next year, you won't be able to say that you weren't warned.






@OmatOye tweets, "What are your thoughts on AMAG's Feraheme trial?"

On Wednesday night, Amag Pharmaceuticals (AMAG) reported positive results from the first of two phase III studies of Feraheme in patients with iron-deficiency anemia (IDA) regardless of underlying cause. In the study, Feraheme was statistically non-inferior to Venofer but numerically better in boosting hemoglobin levels. Feraheme's safety profile looked in-line with what's already on the label for the approved kidney disease indication.

The best course of action of Amag is still to find a buyer for the company. The IDA trials make Feraheme a more attractive asset because it potentially doubles the addressable patient population for the iron replacement therapy. Thursday's positive data was good news.

"Biotech Toreador" fumes: "Four of the five banks who did the Verastem (VSTM) IPO come out with 'buys' exactly 40 days post-IPO (the minimum time period, per FINRA). How does the SEC not see this can't be random? Why do they even bother to pretend there is a separation between banking and research?"

You have a legitimate gripe. Savvy investors understand that investment banking and sell-side research are intertwined. It is no coincidence that all five (not just four) of the banks that took Verastem public in January have now published glowing, bullish research reports. UBS and Leerink Swann were the lead bankers on the Verastem IPO; the former slapped a "buy" rating and a $20 price target on the stock Wednesday, the latter initiated with an "outperform" and a $15 target.

Verastem is developing anti-cancer drugs based on cancer stem cells. Cool, but the company's entire pipeline is still in the preclinical stage. Initial data from phase I studies may not be ready for two years. Verastem already has a $200 million-plus market value.

If you went looking for evidentiary proof that either of these banks promised warm and fuzzy sell-side coverage in exchange for banking fees, you'd likely come up empty. The banks are smarter than that; we all know it still happens. Wink wink, nudge nudge.

I doubt you'll see a crackdown so the best you can do as an investor is recognize the biases that exist in much (but not all) sell-side research. After all, there's a reason they call it "sell-side."

2 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,055.87 -116.81 -0.68%
S&P 500 1,982.77 -11.52 -0.58%
NASDAQ 4,508.6880 -19.0010 -0.42%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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