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Biotech Stock Mailbag: Inovio, Chelsea, Exelixis, Ariad, ImmunoCellular

Forget about the ImmunoCellular spin about waiting for better results with longer follow up in the phase II study. You might see a small change in median results but not enough to significantly alter the negative outcome.

To address your specific points, Dave: The FDA does not structure or design phase III trials. ImmunoCellular will almost certainly pursue a phase III study of ICT-107 in GBM because it has nothing better to do with shareholder money. [The rest of the pipeline is very early stage.] As long as ICT-107 isn't exposing patients to an unacceptable safety risk, FDA won't object if ImmunoCellular decides to waste money on a phase III study.

A two-month survival benefit in a phase III study of newly diagnosed GBM patients that is statistically significant could be sufficient for an FDA approval. I agree with you, Dave. But the likelihood of ImmunoCellular delivering such results in any ICT-107 study are quite small, considering the phase II data in hand. Some retail investors may hope for better results from a phase III study, but hope isn't an investment thesis to place much faith in long term.

 Andrew I. emails:

Must Read: The Billion-Dollar Biotech Club: Speculation Trumped Risk

Hello Adam! Hope you have a Happy New Year! I was wondering what your thoughts are on Chelsea Therapeutics (CHTP) getting Northera approved? I saw a long article by Nick Zheng on Seeking Alpha that broke things down in detail and was not favorable. I wonder if you had seen that article and what your thoughts were?

Zheng says the Northera FDA advisory panel on Jan. 14 has a 60% chance of being negative, by which I assume he's predicting the experts on the panel will advise FDA not to approve the drug without additional clinical data.

I'm taking the other side of the bet. I laid out my reasons to be bullish about Chelsea's chances in November. I will say Zheng and I probably agree on Northera almost as much as we disagree. Chelsea is in for a tough fight at the Jan. 14 panel because the Northera data are far from confidence inspiring, as I explained in November.

No one said Chelsea is going to have an easy time at the Northera FDA panel. Like in February 2012, the company will need to present its data well and be prepared to answer some tough questions. My confidence in a positive panel vote lies in the totality of the Northera data which makes a risk-benefit argument.

Next up, Michelle L. asks:

What's up, Adam? Question for you: Ariad Pharma (ARIA - Get Report) or Exelixis (EXEL)? Which is a better value proposition right now?

Exelixis because it has more potential upside than Ariad Pharma. [Note, I'm defining "right now" as "this year" not today or even next week.]

I'll leave a more detailed write-up for a later column, but Cometriq is an active drug with a better-than-decent shot coming back a winner in Exelixis' "COMET" phase III prostate cancer study. It's hard to pinpoint timing for the interim analysis but figure second quarter.

The COMET study enrolls patients with very advanced prostate cancer. These are sick patients so demonstrating a survival benefit won't be easy. However, if the study is successful, expanded use of Cometriq in prostate cancer patients with earlier stage disease looks really promising and should do wonders for Exelixis' stock price. I also like Exelixis for the economic rights it has under a partnership with Roche developing the MEK inhibitor cobimetinib.

I know Ariad is on a tear lately with the re-launch of Iclusig in the U.S. but this move is largely momentum driven by retail investors and isn't sustainable given the small number of leukemia patients who will be treated with the drug.

The consensus Iclusig sales estimate for 2015 stands at $150 million. I'd definitely take the under given the drug's toxicity and what I expect to be a short treatment duration for each patient. At peak, Ariad will be lucky to treat half of the 1,300 CML patients with the T315i mutation in the U.S. Gaining traction for the drug in Europe will be even more challenging.

Ariad isn't likely to reach cash flow positive on paltry Iclusig sales, which means the company will be raising cash. AP26113 is a me-too ALK inhibitor with a lot of competition. Not exciting. And Ariad is still run by Harvey Berger. No way Wall Street gets back into bed with that guy.

In 2014, I'm confident Exelixis performs better than Ariad.

-- 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.
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