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Biotech Stock Mailbag: PTC Therapeutics, Vanda, MannKind

BOSTON (TheStreet) -- An email from D.H. kicks off this week's Biotech Stock Mailbag.

Do you have any thoughts on PTC Therapeutics (PTCT)? They are in the process of going public. It is an interesting example of post-hoc subgroup analyses. Would be interested in seeing an article on this.

PTC Therapeutics went public Wednesday night, selling 8.4 million shares at $15 and raising about $114 million. That's a decent haul for a company developing a drug with a spotty clinical and regulatory track record. The stock closed Thursday, it's first trading day, up 10% to $16.49.

Existing PTC investors bought a bit less than 40% of the shares sold during Wednesday night's public offer, which takes some of the shine off the first-day trading performance.

PTC's lead drug ataluren is designed to treat patients with genetic disorders arising from so-called "nonsense mutations" which cause cells to produce shortened and malfunctioning proteins. Ataluren is supposed to act like a detour around the nonsense mutation, allowing cells to produce full-length, functional proteins.

Ataluren's mechanism of action is similar to the drugs being developed by Sarepta Therapeutics (SRPT) and Vertex Pharmaceuticals (VRTX) for Duchenne muscular dystrophy and cystic fibrosis, respectively. In fact, PTC is targeting DMD and CF as lead indications for ataluren, although for subgroups of patients with different mutations so not directly competitive to either company.

Sounds promising, except ataluren has a bad habit of failing clinical trials. A phase IIb study conducted a few years ago in DMD patients with nonsense mutations failed to show a significant walk benefit. Likewise, a phase III study of ataluren in cystic fibrosis patients failed to demonstrate a benefit in lung function.

Despite the clinical setbacks, PTC is pushing ahead with ataluren's development based on promising hints of efficacy observed in subgroups of patients enrolled in the previous studies. These are the "post-hoc subgroup analyses" that D.H. refers to in his email.

There's some validity to PTC's approach, particularly in DMD where we know now that younger kids and those with higher baseline walking ability tend to have disease that progresses more slowly i.e. the loss of muscle function and walking ability of these "less sick" kids doesn't decline as rapidly. This makes it harder for any DMD drug to demonstrate a benefit.

PTC's phase IIb study enrolled a good number of these "less sick" DMD kids in addition to older kids with more advanced disease. Excluding the former and including only the latter in a post-hoc efficacy analysis showed a more profound ataluren benefit.

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