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Biotech Stock Mailbag: Ampio, Cel-Sci and Ziopharm

Stocks in this article: AMPE IMGN KERX THLD VVUS CVM ZIOP

Oral drugs are not included in the Medicare dialysis bundle today but that changes in 2014, when two related events are expected to happen: 1) generic versions of Sanofi/Genzyme's Renagel/Renvela will be launched; and 2) Keryx will launch Zerenex.

From Genzyme's 10-K: "The Medicare Improvements for Patients and Providers Act of 2008, or MIPPA, directs the CMS to establish a bundled payment system to reimburse dialysis providers treating patients with end-stage renal disease, or ESRD. On July 26, 2010, CMS issued a final rule setting forth the dialysis bundled payment system that will begin Jan. 1, 2011. The final rule delays until 2014 the inclusion of ESRD-related oral drugs such as Renagel/Renvela and other oral phosphate binders that do not have an intravenous or injectable equivalent, in the bundled payment system. As a result, Renagel/Renvela will continue to be separately reimbursed by Medicare until 2014."

Once dialysis providers get the chance to lower costs (and boost profits) by switching to generic phosphate binders, Zerenex loses its market.

Frank J. asks, "I've read a number of your articles on Cel-Sci (CVM). Like most others, I was sucked in to all the hype of their 'breakthrough' drug Multikine. However, the more information I read, the more I'm starting to think it's just a scam to reel in retail investors. With all your history on drug stocks, can you please share your knowledge with all of us on whether this is a blockbuster or a bust? Thank you."

I've lost track of how many times I've counseled biotech investors to run screaming from Cel-Sci, which isn't a drug company as much as it's an efficient cash-transfer mechanism from retail investors to the pockets of Cel-Sci's top executives. President Max de Clara made $645,000 in total compensation last year; CEO Geert Kersten cleared $744,000.

Multikine is a bust. If you're new to the Cel-Sci story, I suggest reading my two-part dismemberment of the Multikine phase II study. Part I covers the misleading response rate reported in the study; part II demonstrates the absurdity of a purported Multikine survival benefit, as Cel-Sci still claims to this day.

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