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Biotech Stock Mailbag: Galectin, Keryx, Navidea, Cytori

Stocks in this article: GALT KERX NAVB AMRN CYTX

Returning to my Amarin analogy, Keryx's pursuit of the kidney dialysis market for Zerenex is akin to Amarin's "Marine" indication for Vascepa -- a relatively easy approval but much tougher to sell, especially solo without a partner. The Zerenex non-dialysis opportunity is to Keryx what the Vascepa "Anchor" indication was for Amarin.

We know how disastrous that turned out for Amarin. Keryx is walking the same footsteps.

Navidea Pharma (NAVB) is in serious trouble when typically table-pounding Ladenburg analyst Kevin DeGeeter cuts his price target in half to $3.50 and writes the following:

On 11/6/13, NAVB reported 3Q13 financial results in line with our forecast and disclosed Norgine BV as the European marketing partner for Lymphoseek. While we believe it is still too early to draw conclusions regarding the U.S. launch of Lymphoseek, we are lowering our PT on shares of NAVB from $7.50 to $3.00 based on concerns regarding the European growth model and NAVB's governance structure. Specifically, after an extended negotiation process we were disappointed by the selection Norgine as the European partner for Lymphoseek. While we view Europe as a significantly smaller market opportunity we are concerned Norgine, which does not have any prior experience selling to radiology departments, does not have adequate commercial presence to drive optimal reimbursement and distribution of Lymphoseek. As such, we are cutting our peak gross EU sales forecast from $35M to $12M. Additionally, we, and other investors, in our view, continue to struggle with the terms and structure of NAVB's September $30M financing. Given that NAVB already had a single large shareholder with the potential to exert significant influence over corporate governance, we question the wisdom of placing $30M with a single (new) institutional investor and further accentuating shareholder concentration.

Lymphoseek revenue in the September quarter was a miniscule $144,000. As I explained more than a year ago, this product is not going to perform well commercially. Navidea's pipeline offers nothing of value and its balance sheet/shareholder structure are a mess.

Navidea is trading at a three-year low.

Greg F. writes:

I saw your article on Cytori Therapeutics (CYTX). The biggest problem with Cytori is their technology sucks. It has small capacity, low yields, FDA concerns and it is old technology. They spent over $400 million developing a technology that doesn't work and will not be FDA approved. Tell that to the shareholders. It looks to me like they found a buyer that was sold a lot of hype. Regardless of his experience in the stem cell field, it's going to fail simply because the technology is terrible.

Agreed. I've long maintained Cytori's biggest problem is that the stem cell "soup" spun out of its belly-fat liposuction machines isn't an effective therapy for anything. This is why Cytori is shut out doing business in the U.S. -- FDA won't approve its stem-cell processing device because the company hasn't run clinical trials demonstrating patients benefit from the stem cells. Cytori seems to be migrating to Asia now where regulatory standards are more lax.

-- 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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