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: Vanda, Onconova, Catalyst Pharma, Sarepta


A weakness of the F-R Rule is the inverse correlation between its power of predictive capabilities and the size of the data-release timing window. A wide data-release window, like the six months we have with Onconova, weakens the F-R Rule's accuracy.

For example, if we assume rigosertib results are coming at the end of February, the relevant Onconova market cap for the F-R Rule would be $360 million, placing rigosertib in the failure zone (I'm accommodating some market-cap creep due to the biotech bull market.)

The F-R Rule implies that the market is very good arbiter of failed cancer-drug clinical trials. The Rule does an okay job predicting when studies will be positive, but it's not perfect in this regard.

Onconova shares have been on a steady slide for all of October. This is a worry because the sell off suggests the market is starting to pay attention to the rigosertib MDS study and doesn't like the odds. Maybe you don't need the F-R Rule to tell you that, however.

Thank you. I have more confidence in my bearish Vanda Pharmaceuticals (VNDA) call going into next month's FDA advisory panel than I did with Amarin (AMRN).

Vanda's clinical development program for tasimelteon as a treatment for non-24 hour sleep wake cycle disorders in blind patients is riddled with irregularities, missing data, funky endpoints and shoddy analyses. It's hard for me to fathom FDA being copacetic with a substandard package of clinical data like Vanda submitted with tasimelteon.

I wrote two stories digging into the suspect tasimelteon data. You can read them here and here.

The Vanda FDA panel is scheduled for Nov. 14. The FDA's briefing documents, including the agency's review of tasimelteon, will be posted on Nov. 12. I expect the FDA's criticism of the tasimelteon data to be harsh.

Like with Amarin (or any investment thesis), there are risks, so what worries me about the outcome of the Vanda FDA panel?

Tasimelteon is essentially equivalent to ramelteon, sold as the sleeping pill Rozerem by Takeda. Well, "sold" is being generous because actual sales are minimal. Rozerem was a commercial flop. Vanda is developing tasimelteon for non-24 only because it knew the commercial opportunity as a sleeping pill was zero.

The big risk to the bear thesis is that experts on the panel conclude that tasimelteon's mechanism of action as a circadian rhythm regulator makes sense despite the shoddy clinical data, so why not let it pass for the tiny number of blind people that can't sleep at night.

I'm also worried about what the high-priced regulatory consultant hired by Vanda might be doing behind the scenes.

Let me restate the premise of your question. FDA appears to have changed its mind about allowing Amarin's Vascepa to be approved for mixed dyslipidemia patients without positive cardiovascular outcomes data from the Reduce-It study. The reason for FDA's more conservative stance: A preponderance of data from other, completed studies showing no cardiovascular benefit for drugs added to statin therapy.

Given the failure of the drisapersen phase III study in Duchenne muscular dystrophy, will FDA also take a more conservative stance against Sarepta Therapeutics (SRPT) and require a phase III study of eteplirsen before granting approval?

I'm on record believing Sarepta's regulatory risk for a speedy eteplirsen approval increased following the failure of drisapersen. I haven't changed my mind. The mistake I made was not realizing the value investors would place on the elimination of drisapersen as a competitive DMD drug. Not having to worry about drisapersen any longer was more valuable to Sarepta's stock price than any increased risk of FDA requiring a phase III study before approval.

This explains why Sarepta's stock price went from $37 to $54.

I would caution against making a direct connection between what FDA did to Amarin (rightfully so, in my book) and how regulators may rule on Sarepta. DMD is a far more serious and time-critical disease than mixed dyslipidemia. The two aren't close to being in the same league. The risk-benefit for DMD favors aggressive action by the FDA which could easily compel the early approval of eteplirsen. There was no serious unmet medical need for Vascepa.

Sarepta is no longer a $54 stock. Here's the chart: SRPT Chart SRPT data by YCharts

2 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 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

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