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Biotech Stock Mailbag: Xoma's Big Backers, FDA Approvals Contest

Indeed, it is a big week for FDA drug approval decisions starting Monday. My stated predictions, according to my entry in TheStreet's FDA Drug Approval Contest are:

Monday: MAP Pharma (Levadex for migraine) -- Rejection

Tuesday: Affymax (peginesatide for anemia) -- Approval

Wednesday: Chelsea Therapeutics (Northera for low blood pressure) -- Rejection

One note: If I could amend my predictions, I would switch Chelsea to "approval." After the positive panel vote in late February, I feel like Chelsea has a decent shot. At worst, FDA may "softly" reject the drug, meaning approval would be delayed for a relatively short time and wouldn't require significant new clinical data.

Chelsea's stock is not trading like Northera approval is in the bag, which gibes with the more skeptical view I hear from some of my buy-side investor sources. However, I feel like the company made a strong case for approval at the recent advisory panel, and I'm OK with being contrarian.

MAP is probably the most controversial of the three. The active ingredient in Levadex is DHE, a drug already approved to treat migraine in other formulations. Levadex, however, is an inhaled version of DHE and the track record for inhaled drugs going in front of FDA is very spotty.

The efficacy and safety data shared by MAP with investors looks good but that doesn't mean FDA is satisfied. It's hard to say if regulators will have concerns with either the manufacturing or safety of Levadex, especially since it's part-drug, part-medical-device.

MAP hasn't exactly been projecting confidence in Levadex approval either. The company decided not to pre-build inventory prior to hearing from FDA; and the filing of its most recent 10-K was delayed last week for what the company claims is an accounting issue.

Then there's the mystery of the Special Protocol Assessment (SPA) for the sole phase III study conducted with Levadex. In the past, MAP claimed that FDA granted an SPA for the Levadex study, but more recently the company said that FDA had no record of an SPA. Weird.

I tried to get an explanation from MAP about the "missing" SPA but company executives declined to speak so close to the FDA's decision date.
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