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Biotech Stock Mailbag: Navidea, Celsion, Raptor and Threshold

Raptor Pharmaceuticals (RPTP - Get Report): This is a controversial selection. Raptor is the orphan disease stock you probably know little about. Its drug, RP103, is an extended release version of Cystagon, approved in 1994 for the treatment of nephropathic cystinosis, a rare lysosomal storage disorder that affects about 2,000 kids worldwide.

In order to be effective, Cystagon must be taken on a strict every six-hour schedule. The drug also causes gastrointestinal side effects. Raptor's RP103 works just as well but can be taken twice a day and may cause fewer side effects.

Given a choice, docs and cystinosis patients will prefer RP103 because it's more convenient and tolerable. Better convenience translates into higher compliance which can mean better outcomes for patients.

Here's the rub, however: Cystagon costs $10,000 per year. Raptor can't make any money on RP103 with such the tiny number of cystinosis patients unless it jacks up the drug's price to orphan disease levels. Raptor won't say what it wants to charge for RP103 but a good guess is around $200,000 per year.

You're not alone if Raptor's strategy reminds you of KV Pharmaceuticals (KV.A) and the obscene price hike it tried to push through for the premature labor drug Makena. For KV, that effort ended disastrously.

Can Raptor avoid KV's fate? That's the controversy. What makes Raptor's price hike more palatable (possibly) is the support the company is seeking from doctors and cystinosis patients. If Raptor can convince this crucial constituency that the benefits of RP103 are worth the huge price hike over Cystagon, then Raptor wins where KV lost.

Tim P. asks, "I don't know how familiar you are with Celsion(CLSN - Get Report) and their ThermoDox treatment in conjunction with RFA (and other approaches) for certain kinds of cancerous tumors. At any rate, they have a Phase III trial (HEAT) testing ThermoDox in conjunction with RFA for HCC (liver cancer). They are expecting results late 2012 or early 2013. Do you think that the Feuerstein/Ratain rule applies here?"

The Feuerstein-Ratain rule stipulates that the outcome of a phase III cancer study is directly correlated with the market value of the company running the study. A small market value equates to a low probability for success (or a high risk of failure.) The reverse also applies: Big market cap equals higher odds for study success.

Mark Ratain, an oncologist at the University of Chicago, and I found that for companies with market value below $300 million, the odds of a successful cancer drug clinical trial were zero. Celsion has a market value of $160 million. If the Feuerstein-Ratain rule is true, Celsion's Thermodox study will fail.

Before Celsion fans flood my inbox with hate mail, let me say that the Feuerstein-Ratain rule was developed using retrospective data. Our thesis was confirmed once prospectively with the failure of Keryx Pharmaceuticals' (KERX) colon cancer drug perifosine. Thermodox is another good, prospective test of the rule, so we'll see what happens.

Celsion has a very small following among Wall Street's institutional investors. I worry about that because the commercial opportunity for Thermodox in liver cancer, if the phase III study works and the drug is approved, is substantial. That's particularly true in Asia where liver cancer is much more prevalent. Celsion is tremendously undervalued if Thermodox succeeds, yet big investors show little interest. Could Celsion be one of those rare under-the-radar stocks? Perhaps. But it may also be one that Wall Street has looked at closely and passed on.

I'm perfectly OK with saying that I can't predict the outcome of the Thermodox phase III study. There's nothing wrong with, "I don't know." If you're looking for evidence to support a positive result, I suggest browsing through the Celsion blog maintained dutifully by investor Siavoche Siassi. He's more on top of all things Thermodox than anyone I know.

George writes, "You are ignorant, a fraud and quite ugly. Bet you were one of those guys that were made fun of every day in childhood and you never got over it, pencil-[Bleep].

Thanks for speaking your [addled] mind, George.

@marianluxury asks, "Updated efficacy and OS data for TH-302 in pancreatic cancer potentially at ESMO, Sept 28-Oct 2. $THLD any opinion?"

Threshold Pharmaceuticals (THLD - Get Report) will present overall survival data from the TH-302 phase II study in pancreatic cancer at the European Society of Medical Oncology (ESMO) meeting on Sept. 29. The research abstract previewing these new TH-302 data will be made available by ESMO on Monday, Sept. 17. [Check the <a href="" rel="nofollow">ESMO2012 web site</a> for the abstracts.]

Threshold has said, however, the TH-302 data contained in the abstract coming Monday are old and won't be updated until Sept. 29. Keep that in mind.

This phase II study enrolled 214 pancreatic cancer patients and randomized them to treatment with TH-302/gemcitabine or gemcitabine alone. Treatment with TH-302/gemcitabine led to a two-month improvement in progression-free survival of 5.6 months compared to 3.6 months for gemcitabine alone. The benefit in PFS was statistically significant.

Approximately one-third of patients in the gemcitabine arm "crossed over" to receive TH-302 after tumor progression. How this impacts the overall survival results we'll get later this month isn't clear.
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CLSN $1.51 -1.90%
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THLD $0.33 -18.00%


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