Biotech Stock Mailbag: MAP Pharma, Affymax

BOSTON (TheStreet) -- A question about MAP Pharmaceuticals (MAPP) and the FDA's rejection of its inhaled migraine drug, Levadex, leads this week's Biotech Stock Mailbag.

Via Twitter, @recervan asks, "Adam, have you ever seen a CRL like MAPP where the price goes up? Very weird."

Strange, indeed. FDA drug rejections typically cause significant and sudden stock declines. I can't say the MAP Pharma situation is unprecedented, but it's certainly unusual to see a stock fall just slightly following an FDA rejection, particularly for a one-product, cash-burning company like MAP Pharma. At one point on Tuesday, the first trading day after Monday night's FDA announcement, MAP Pharma shares traded briefly in the green.

Since then, the stock has started to weaken. On Thursday, MAP Pharma closed at $15.25, down 11% since Levadex was rejected.

Investors seem to be sticking with MAP Pharma because they believe Levadex's approval is now "de-risked." FDA's only lingering concerns are related to the manufacturing of the inhaler and the way it's used by migraine patients -- issues that are easily resolved. Importantly, FDA has no concerns about the efficacy of inhaled DHE (the active ingredient in Levadex) to treat migraines nor did the agency raise unaddressed problems with the safety of inhaled DHE, particularly when it comes to lung function or side effects, according to MAP Pharma.

Let me repeat that last bit with emphasis: according to MAP Pharma. You got that? It's important, of course, because only MAP Pharma knows the content of the FDA's complete response letter. We don't get to see the letter, which means you have to believe MAP Pharma executives are telling us the truth.

Which is a good segue into a comment from @shaneblackmon regarding my questioning of MAP Pharma's execs on Tuesday morning's conference call.

"@adamfeuerstein asking dumb questions about the SPA [Special Protocol Assessment]. When the issues of the CRL have absolutely NOTHING to do with phase 3 trials. Moron."

The credibility of MAP Pharma's executives is important. If CEO Tim Nelson and his team are being straight with us about the simple requirements necessary to get Levadex approved, then the optimism that's buoying the stock is easier to justify.

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