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Biotech Stock Mailbag: Vical, Sangamo, Spectrum Pharma

2. The buzz in melanoma therapy today and at the upcoming American Society of Clinical Oncology (ASCO) annual meeting is about new PD-1 and PDL-1 drugs from Bristol-Myers, Roche and Merck. What are melanoma experts and institutional healthcare investors saying about Allovectin? Crickets....Silence and dis-interest is not what you want heading into pivotal trial results.

Moving on.

In early March, I wrote a column calling Sangamo BioSciences' (SGMO - Get Report) HIV gene therapy SB-728 a valuation prop. In the column, I argued that this "functional cure" for HIV is more hype than reality, but it's also the only drug Sangamo has in the clinic. Without SB-278, the company would be hard-pressed to maintain its $500 million market value.

Fast forward two and a half months and Sangamo's stock price is down 20% in a raging biotech bull market.

Sangamo presented some new data on SB-278 Wednesday, described as "remarkable" by the company's chief medical officer. The market appears to disagree, and for good reason. The graph below is from an HIV patient described as a responder to SB-278:

Pay attention to the black line, which represents the viral load, or the amount of HIV in the patient's system. At the start of the study, the patient's viral load is so low it's undetectable. That's because the patient is taking anti-retroviral therapy, or ART. These are the drugs that Gilead Sciences (GILD) is famous for. Right around 60 days, the patient stops taking ART. Almost immediately, his viral load shoots up. Now, it does fall a little during the ART interruption period, which is why Sangamo calls this patient a responder, but viral load never gets back to undetectable. Not even close. Once the patient resume ART, his viral load drops quickly to undetectable.

Whew! I wouldn't call this slide a "remarkable" indication of SB-278 efficacy, as Sangamo suggests. Instead, I'd say this slide screams, "THANK GOD FOR ANTI-RETROVIRAL THERAPY!"

Next. I tweeted this Wednesday night about Spectrum Pharmaceuticals (SPPI - Get Report):

Insane, I know, which is why I received some responses like these:

All jokes aside, the belinostat data released Wednesday night as part of the ASCO abstract dump do compare favorably to competing drugs used to treat peripheral T-cell lymphoma such as Celgene's Istodax and Spectrum's other PTCL drug Folotyn.

In the single-arm pivotal study, the overall response rate to belinostat was 26-28%, which matches Istodax and is just a tiny bit lower than Folotyn. Median duration of response to belinostat was 8.3 months, which is on the low end compared to Istodax (12 months) and Folotyn (10 months.)

Belinostat's strength is safety and tolerability. Patients in the study reported low rates of thrombocytopenia (13%), neutropenia (13%) and anemia (10%) -- much improved over Istodax and Folotyn which generally cause thrombocytopenia and neutropenia in 40% and 30% of patients, respectively. Anemia is reported in about 24% of patients for both drugs.

If these belinostat data hold up, FDA approval seems likely. The market opportunity in PTCL is small, however, and belinostat, if approved, will cannibalize Foltyn sales to some extent. Still, let's not start raining on Spectrum's parade just yet.

-- 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.
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