Biotech Stock Mailbag: Onyx Pharma, Amarin

BOSTON (TheStreet) -- This week's Biotech Stock Mailbag opens with a question from Pamela K. "What's your latest opinion on the expected outcome of the FDA adcomm for Onyx Pharmaceuticals (ONXX)?"

A housekeeping item: Onyx brings its multiple myeloma drug carfilzomib in front of an FDA advisory panel meeting next Wednesday, June 20. I will live blog the Onyx panel, which is scheduled for the afternoon session starting around 1 p.m. My special guest for the Onyx FDA panel live blog will be health-care investor and TheStreet contributor Nate Sadeghi. Please join us.

Nate and I are both predicting a positive panel vote recommending the accelerated approval of carfilzomib as a treatment for advanced multiple myeloma in patients who are refractory or intolerant to Celgene's (CELG) Revlimid and Takeda's Velcade. [In other words, in very sick multiple myeloma patients who have no other approved treatment options.]

Predicting good news for Onyx is a contrarian bet. Investor consensus goes the other way, forecasting a close, but negative, vote for reasons I'll explain below.

[ISI Group analyst Mark Schoenebaum's recent buy-side survey had 72% of respondents forecasting a negative FDA panel vote against carfilzomib.]

So, yes, the odds are against carfilzomib but the risk-reward for Onyx shares is favorable. A negative vote on June 20 is widely expected, so I wouldn't expect Onyx's stock price to take much of a hit on bad news. In fact, any significant dip in Onyx shares is likely to be bought because few investors doubt carfilzomib will be approved eventually. This is a highly active and effective drug in multiple myeloma with billion-dollar sales potential. Carfilzomib may take longer to reach the market, but the drug will get there.

Of course, if the FDA panel goes Onyx's way next week and votes to recommend approval, Onyx shares will move higher on the upside surprise of earlier-than-expected carfilzomib revenue.

Carfilzomib's fate next week is likely to rest on the panel's interpretation of unmet medical need in multiple myeloma. Onyx is seeking FDA accelerated approval based on a single-arm phase II study of carfilzomib of 266 heavily pretreated multiple myeloma patients with progressive disease after two or more prior therapies.

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