This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: MannKind, Ariad, Oncolytics Biotech

It's a neat trick, if it works. Unfortunately, Oncolytics has been more interested in hiding Reolysin clinical data (and altering clinical trials mid-stream) than producing results to demonstrate the oncolytic virus' efficacy.

Unlike Reolysin, Amgen's T-Vec is a "smart" virus, meaning it not only invades and kills cancer cells from within (like Reolysin) but it's also genetically modified to alert and strengthen a patient's immune system to fight the cancer. This added cancer immunotherapy capability may explain why T-Vec works but Reolysin does not.

On March 28, Oncolytics said it met the "primary overall statistical endpoint" in a phase II study of squamous cell lung cancer patients treated with Reolysin in combination with carboplatin and paclitaxel. Who cares? The study was single arm, so without a comparator, the Reolysin result -- an arbitrarily selected rate of partial tumor shrinkage -- is meaningless. (Nevermind that Oncolytics issued these same Reolysin squamous lung cancer data last February.)

Alex C. asks, "Adam, Seattle Genetics (SGEN - Get Report) has been on a tear in recent trading sessions and as a shareholder I'm not complaining, but I don't understand this move in the stock at all. A cursory look around the Internet makes me think it's one of the most un-followed biotech stocks of its size on Wall Street. Adcetris sales aren't spectacular, very limited data are available for the rest of its pipeline and what's supposed to be coming out won't for a long time. Can you shed some light on this a bit and if you can, offer your opinion of their pipeline, particularly ASG-5ME?"

Seattle Genetics shares rose 53% in the first quarter and 25% in March alone. The performance is nothing short of phenomenal. The stock is expensive. At $34 per share and a $4 billion enterprise value, Seattle Genetics trades at 18 and 14 times 2013/2014 revenue estimates, respectively. That's a significant premium to its peers given Adcetris market share for its approved indications is nearing the peak and sales won't grow much over the next two years.

The stock's EV/sales multiple is still high even if you believe Adcetris will grow more than expected due to European royalties and U.S. compendia listings this year and next.

Seattle Genetics is pricey but buyers keep piling in and the stock marches higher (much to the chagrin of short sellers.) How is this possible? Credit CEO Clay Siegall for attracting a core group of committed, long-term shareholders (the large health care fund Baker Brothers plus most of the mutual fund giants) who do not care about the short term. These investors own Seattle Genetics because they believe, like Siegall does, that expanded indications -- particularly front-line Hodgkin's lymphoma -- will eventually transform Adcetris into a billion-dollar plus drug. Throw in the pipeline (both internal and partnered) and the scarcity value of a proven antibody drug conjugate technology platform and Seattle Genetics is a core biotechnology holding with a stock that defies gravity. Siegall should bottle his secret sauce and sell it because whatever he's doing is clearly working.

Peter Stankowski, CEO of Pharmepa, writes: "Hi Adam, regarding your story Steve Rosenman Says Amarin Has Sticky Web Eyeballs!, I want to thank you for keeping Vascepa in the news. All this fuss regarding Vascepa has given a phenomenal boost to our sales. Our EPA (DHA free) Omega health supplements are virtually identical to Vascepa and have been available for years, thanks to all the press our sales have gone through the roof. Cheers."

You're welcome!

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AMRN $2.52 2.70%
ARIA $7.92 -2.20%
MNKD $5.32 -4.70%
ONCY $0.54 7.40%
SGEN $47.66 -0.33%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs