This Day On The Street
Continue to site
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

Biotech Stock Mailbag: Raptor, Chelsea, Oncogenex, More Hate Mail!

NEW YORK (TheStreet) -- This week's Biotech Stock Mailbag opens with an email from Charlie R.:

I read your tweets so I saw your skepticism on Raptor Pharmaceuticals (RPTP - Get Report) and its Huntington's study. Sounds like you don't believe this any more than Prana Biotech's (PRAN) results from earlier in the week, but is there a way to say if one is better than the other?

With Prana Tuesday and now Raptor Thursday, you're seeing companies seeking to salvage something positive from failed studies in Huntington's disease. From a stock perspective, the strategy has been somewhat successful -- both Prana and Raptor are higher after their respective announcements and conference calls. It's still going to take a lot more to prove either of these drugs work in Huntington's. The data promoted this week were weak.

Analysts on Raptor's call Thursday didn't ask the obvious question: How did RP103 perform in the subset of Huntington's patients who were taking concurrent tetrabenazine?

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

The answer is RP103 seemingly harmed these patients. Funny, but you didn't hear Raptor mention this in its press release or discuss on the conference call. I wonder why? Probably for the same reason analysts didn't bother to ask the only question which matters.

Total Motor Score (TMS) progression for Huntington's patients treated with RP103 plus tetrabenazine was 7.7 points compared to 6.4 points for patients treated with placebo plus tetrabenazine. Higher numbers indicates faster progression, so the RP103 patients performed worse.

Raptor didn't disclose these negative data but they can be calculated using the TMS progression scores for all patients and the subgroup of patients who weren't treated with concurrent tetrabenazine, which the company did disclose.

The company's executives are disingenuous for hyping the "good" data-mined results while ignoring the "bad" data-mined results, which they clearly have on hand but want to hide.

Tetrabenazine is the only drug currently approved to treat the deterioration of motor function in Huntington's patients. Why would RP103 be effective in patients not treated with concurrent tetrabenazine but harm patients who do take the drug?

Raptor executives didn't have a very good response on the conference call, other than to say tetrabenazine might be "masking" the effect of RP103.

Okay. Possible. But here's another equally plausible explanation: The study was not controlled for tetrabenazine use, meaning patients were free to start the study on the drug, or not, or even begin taking tetrabenazine during the study.

Why is this significant? Because patients are prescribed tetrabenazine when their motor function starts deteriorating. Therefore, the patients not on tetrabenazine are self-selected for slower Huntington's progression. These patients should already have lower TMS progression scores, so Raptor's data-mined results are not surprising nor likely attributable to RP103. [It really makes no sense for RP103 to work better without tetrazenabine than in combination.]

Furthermore, RP103 causes diarrhea and bad breath, meaning Raptor's study could not be blinded. Patients knew if they were being treated with RP103 or a placebo, which likely skewed results in RP103's favor.

It's very difficult to believe any follow-on study of RP103 would confirm the benefit observed in Raptor's post-hoc analysis of the failed phase II study.

Pole567 asks:

Thanks for the great call on Chelsea Therapeutics' (CHTP) FDA approval but what is happening with the stock now?

The Chelsea approval trade is over? That's as good of an explanation as any for the stock trading down following FDA's approval of Northera on Tuesday. "Trading down" is relative, of course. As I write this column, Chelsea shares can be bought for $5.93, so still higher than pre-approval prices. The stock is up 34% for the year.

With the immediate post-approval euphoria subsiding, investors are also probably thinking about Chelsea's next financing. Even if the company does partner or sell itself to someone, raising money first won't surprise anyone.

The ongoing confirmatory, post-approval studies of midodrine in orthosatic hypotension being conducted by Shire (SHPGY) (under threat from FDA) might also be weighing a bit on Chelsea's stock price.

This is a strange situation. FDA approved Shire's midodrine under an accelerated approval review in 1996, which required the company to conduct a post-approval study to confirm the drug's benefit in orthostatic hypotension patients.

Shire never performed the confirmatory studies and then stopped marketing midodrine in 2010 when generic copies entered the market. But FDA still insisted that a confirmatory study be done and threatened to pull the drug off the market if Shire -- midodrine's NDA holder -- didn't comply.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CHTP $0.00 0.00%
ORMP $6.14 0.00%
OGXI $0.62 0.00%
PRAN $0.50 0.00%
RPTP $3.99 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs