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TheStreet Open House

Biotech Stock 'Hate' Mailbag: Readers Riot Over Galena, Prana

NEW YORK (TheStreet) -- The Hostile React-o-Meter has been spinning out of control and my email inbox and Twitter stream are filled with angry people. Welcome to a special Biotech Stock "Hate" Mailbag.

Mark R. writes:

You have to realize by now that you have a dimishing impact when it comes to moving pps [price per share]. It is almost a joke within the biotech investors that your picks are a long play the next day after our come out with your bs [bullshit] articles.  Before long you will not even get one day of price action and you will become a contraian play on the news. PS -- Rogaine is over the counter and based on you and Cramer I would think you could get a two for one deal! [All emails posted as received, no corrections made to spelling or grammar.]

The "you're bald!" insults don't deliver the same sting they did in the 1970s.

I do have one serious point to make about Mark's note. I don't write for day traders. I don't interpret charts. I have no idea what Stock XYZ is going to do in the next hour or the next 24 hours. I don't really care. This notion that you can judge the accuracy of my biotech calls based on the direction of the stock the day, or the day after, I publish is silly.

Let's say I write a column analyzing previously published phase II study data and other factors and use all this information to make a prediction about the outcome of an ongoing phase III study. In this column, I conclude Drug X is likely to fail, but later that day, shares of the company developing Drug X are higher. One week later, the stock is worth even more. By Mark's logic, my call is wrong.

Nonsense. I'm focused on the outcome of the clinical trial, which is months, maybe years, away. Between today and the release of the study results, the stock may trade up, down or sideways for any number of reasons, none of which concern me much unless the fundamental thesis changes. Hopefully, when the study results are eventually announced, the work I did earlier trying to predict the outcome correctly pays off.

Biotech timelines are lengthy, resisting the short-term demands of "Insta-Twitter" and the now! NOW! NOW!! stock-trading mindset. I understand traders are going to trade and there's money to be made in that interregnum between the start of a clinical trial and the outcome. (Same goes for FDA drug approvals.) If this is your thing, best of luck to you. Just realize I'm not really writing for you (although I hope you find value in what I say, too.) I'm writing for the last guy holding the stock before the drug trial results are announced. Hopefully, whatever call I made is correct. If not, I'll admit my mistakes, learn from them, and try harder the next time.

"Not Stupid" writes:

How about you learn to report facts and stop trying to bash so many companies. I do my DD [due diligence] and hold on to my shares of companies after you come out with facts twisted to your favor. Everytime [sic] I hold through your scams and make money. But have seen many a time where you ruin companies. Do not know how you sleep at night when I find facts that you do not mention that are positives -- all you think about are the negatives. When I first started trading I use to watch your cronie [sic] Cramer on TV and read articles at TheStreet -- more like lets [sic] see how many weak hands we can shake out today. People are starting to wise up to you and your credibility [sic] is even with question with web sites such as exposeadam.com. TheStreet has lost a supporter here and many more will follow because of the tatics [sic] Adam F [sic] does. At least people are starting to learn the truth not to trust what you say.

The irony of his alias escapes him.

If you type "Adam Feuerstein" into Google, the fifth search result links to Expose Adam Feuerstein -- a website "devoted to providing a forum to rebut and correct the numerous one sided articles written by Adam Feuerstein on behalf of the Street.com."

I don't know the identity of the investor who created ExposeAdam.com but I'm flattered he/she thought me so important and influential that a website devoted to knocking me down needed to be built. You can find mentions of the web site with links plastered on blogs and stock message boards across the Internet, which explains its prominence in a Google search of my name. In the past week, a Galena Biopharma (GALE) retail investor has taken to Twitter and the comments section of my columns to make sure everyone knows about and reads ExposeAdam.com

But here's the problem. ExposeAdam.com was built on the belief that I was a hedge fund puppet paid under the table to bash and destroy Spectrum Pharmaceuticals (SPPI). This was back in the summer of 2011 when Spectrum bulls and bears were engaged in a fairly boisterous debate over the company's cancer drug Fusilev. I wrote columns supporting the bear thesis, which believed a surge in Fusilev sales -- and Spectrum's stock price -- was destined to be short lived.

You know where this is headed. The Spectrum bears -- myself included -- were right. The Fusilev growth story blew up in March 2012. Spectrum shares sank and have never fully recovered. The Spectrum investor behind ExposeAdam.com stopped updating the blog before the stock blew up. I wonder what he'd say about me now?

My truth-telling about the masterfully spun results from Prana Biotech's (PRAN) PBT2 Huntington's disease study and pushback against the "rah rah" tweets of Prana promoter Dr. Rudy Tanzi set some of you on fire. It reminded me of 2008. I'll explain why below, but I'll let the angry Praniacs speak first:

Fred M. emails:

You are a jerkoff. Glad your shorting pals had their asses ripped off today. Anyone that follow your recommendations deserves to get screwed.

Todd S.:

Your article is complete BS and you should be banned from allowing to write for financial publications forever. Every other analyst and publication loves the news and you have to try and destroy Prana with inconclusive BS just to get your name in the paper. I have a person in my family with Alzheimer's and if this drug could even just help her in the slightest way it would be a life changing improvement. What you wrote here doesn't only affect the company but affects everyone that needs a cure or at least a therapeutic fix at this time for a nasty disease. You are just another Wall Street fool thats only in it for himself. You can affect this company from getting the funding to complete its testing. Do you even realize the BS you talk and how it affects millions of people and I am not talking about the stock but the real reason behind the company. I seriously hope you don't get Alzheimer's because if you do Prana should disallow you from using their drugs. 

"Steviee" writes:

adam feuerstein you are a freakin disgrace, how much are the shorters paying you to write this drivel? get some ethics about you.

There are more emails and tweets just like these but you get the idea.

Now for the history lesson for those relatively new to biotech investing. Back in 2008, Elan was a very hot stock because of its experimental Alzheimer's drug bapineuzumab. Elan's partner, Wyeth, was running concurrent phase II and phase III studies of bapineuzumab, which many investors believed would yield positive results and transform the drug into a mega-blockbuster.

I was a bapineuzumab skeptic -- shocking, I know -- and wrote several stories explaining the risks involved with the drug. Much of Wall Street was solidly behind Elan in 2008 and the stock had a huge retail investor following. Needless to say, stories outlining the Elan bear thesis weren't well received by the Elan-loving crowd.

The next four emails were sent to me by Elan investors in 2008. Read them. Notice how they're almost identical to the emails I'm receiving this week from Prana lovers.

Elan email 1:

You DO realize that you are looking like an idiot on this subject, don't you? I hope some hedge fund is lining your pockets well because your credibility is sure to be shot & you will need to find a new career soon! 

Elan email 2:

You are, Sir, quite unbelievable in trying to tint/spin the published top-line results into "something not so positive", whereas scientists who's comments I am reading seem to agree that those results are better than expected - shall we wait and see how the professionals, namely GoldSachs and Leerink Swann are going to comment? But then you were once quoted as saying you liked creating mischief.   

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