This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Biotech Stock Mailbag: Ariad, NewLink, Zogenix, 5 Falling Stocks For Rest of '13


I really like the following question:

I'm not sure the end of the biotech bull market is near. The stamina exemplified in the chart is incredible: ^NBI Chart ^NBI data by YCharts

Of course, not all biotech and drugs stocks increase in value forever. FDA rejections and failed clinical trials tend to have a depressing effect on share price. With that in mind, here are five stocks which I predict will end 2013 lower than where they trade today:

1. Vanda Pharmaceuticals (VNDA): I expect the tasimelteon FDA panel on Nov. 14 to end badly for Vanda.

2. Coronado BioSciences (CNDO): I don't believe in the "hygiene hypothesis" so I predict negative results from the CNDO-201 phase II study in Crohn's disease. The risk: Phase II study results can be fungible, meaning flaws are more easily swept under the rug.

3. Oncolytics Biotech (ONCY): In my opinion, management has worked hard to delay and hide as much Reolysin data as possible because the experimental cancer-killing virus is incapable of killing cancer at all. The ugly truth about Reolysin can't be hidden forever, however, so I expect the upcoming data from a study in head-and-neck cancer patients will be a total bust.

4. Amarin (AMRN): The stock is beaten up already so the short is less compelling, but I expect the Oct. 16 FDA panel to recommend against approving Vascepa for the so-called "Anchor" patient population. Instead, the panel will tell FDA to wait two years for definitive cardiovascular outcomes data from the ongoing REDUCE-IT study.

5. Vivus (VVUS) and Arena Pharmaceuticals (ARNA): Two stocks but they're related. Their respective obesity drug launches are flailing. Script growth is totally unimpressive and the stocks, while down sharply already, are still over-valued.

Samuel R. asks:

There have been confusing reports on NewLink Genetics (NLNK) and the interim analysis of the pancreatic cancer trial. Can you call the company to see what is really happening. Your help would be most appreciated.

It's pretty simple. NewLink CEO Charles Link spoke at a couple of health care investment conferences this week and pushed back the timing on the interim analysis of the algenpantucel-L (a cancer vaccine) phase III pancreatic cancer study.

The trigger for the interim analysis is 222 death events in the study. The company first expected the analysis to take place in the middle of the year, then it was pushed back to the second half of the year. When asked for an update at the investor conferences this week, Link said the company is now unsure if the 222nd death in the study will occur this year at all.

NewLink spokeswoman Gina Nugent confirmed Link's new guidance for me:

"Adam, What Dr. Link said during the Baird and Stifel conferences (webcast available) was that the trigger event for the first of three planned interval analysis, which will occur when 222 death events are recorded, has not yet occurred and that management is not sure that this first trigger event will occur before the end of 2013."

What does this delay in the interim analysis mean?

NewLink is encouraged, arguing pancreatic patients in the study's control arm are unlikely to be living longer than expected. Therefore, patients being treated with algenpantucel-L might be living longer. The study is blinded so there is no way to know definitively what's going on until the interim analysis is conducted.

Skeptics (and yes, I'm in this group) believe the more likely explanation is NewLink messed up the survival assumptions used to design and power the study. All patients -- not just those treated with algenpantucel-L -- are living longer than NewLink expected. We've seen ample examples of phase III studies of cancer drugs in which delays in reporting survival endpoints ended badly -- GlaxoSmithKline (Mage-A3) Vical (VICL) (Allovectin) and Oncoythreon (ONTY) (Stimuvax), most recently. NewLink is no different. This delay in the interim analysis increases the risk that the phase III study ultimately fails, not the other way around.

With that said, I also believe a lot of time is being wasted by fixating on the outcome of the algenpantucel interim analysis. Even under the most ideal circumstances, the odds that the cancer vaccine works so effectively to stop the study early for efficacy are very small. The most likely outcome is that NewLink continues to enroll patients and we wait for more definitive results next year.

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.

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.
4 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs