) -- The Biotech Stock Mailbag has returned -- rested, re-energized and ready to educate, inform (and likely infuriate) for a fifth consecutive year.

Before I get to your emails and tweets, a couple of related housekeeping items. I'll be in San Francisco next week to provide wall-to-wall coverage of the JPMorgan Healthcare Conference. I wrote a

preview story about this important gathering of the biotech tribe

on Wednesday, so please check that out.

While at the JPMorgan confab, my plan (providing the AT&T network gods shine on me) is to live-blog the company presentations and investor breakout (Q&A) sessions to provide a more real-time and interactive reporting experience.

If this plan works, I'll be able to bring you news and insights from the conference as it happens on the ground in San Francisco -- similar to the

live blogs

I've used in the past to cover FDA advisory panel meetings.

Wish me luck, and please visit

Monday to Wednesday to check out the live blogs. Now, the Mailbag is open:

Wendall M. emails,

"Adam, what's are favorite top biotech stock picks for 2011? What should investors be looking at in the new year?"

I want to hold off on offering top stock picks until I get through next week's conference, and even then, I'm hesitant to put up a definitive list because biotech has become a sector that is so short-term and catalyst-driven that today's hot stock can easily be next week's loser.

With that copout of an excuse, I do have a list of highly anticipated 2011 biotech events and catalysts written out on the white board in my office upon which investors -- bulls and bears -- should focus a lot of attention:

I'm looking forward to the FDA advisory panel for

Delcath Systems'


Chemosaturation System. The expected approval and launch of two new hepatitis C drugs -- one from

Vertex Pharmaceuticals

(VRTX) - Get Report

, the other from


(MRK) - Get Report

-- is going to be very interesting.



will reach full manufacturing capacity for Provenge this year, which is going to be a big milestone for the company and investors.

In the big-cap arena,

Biogen Idec

(BIIB) - Get Report

needs positive results from two late-stage studies of its oral multiple sclerosis drug, while


(AMGN) - Get Report

has to show investors it can sell Prolia/Xgeva. Speaking of marketing,

Human Genome Sciences

( HGSI) is going to launch the first new lupus drug in a gazillion years.

Finally, I will be watching to see if mergers and acquisitions accelerate in 2011 after a down year in 2010. One of my

2011 predictions for the biotech sector

was that by the end of the year, one or more of these companies will be gobbled up in an M&A deal:


(AMRN) - Get Report


Seattle Genetics

(SGEN) - Get Report

, Human Genome Sciences,




Onyx Pharmaceuticals



Biomarin Pharmaceuticals

(BMRN) - Get Report


DMT36 emails,

"You were pretty harsh on Xoma (XOMA) - Get Report on Twitter Monday when they announced the Servier partnership deal for XOMA 052. Don't you think your comments were a bit too negative? The stock was up big which made you look foolish."

I was harsh on Xoma. For those who don't follow me on


(and why wouldn't you?), I called Tuesday's Xoma-


deal "idiotic," which "reinforced XOMA management's reputation as a bunch of incompetents." I also said the partnership was "bad fundamentally and doesn't validate XOMA 052's potential."

Upon further reflection and away from the pressure of snap judgments, I was too critical. DMT36 is right, and I appreciate him pointing out my overreach. I still believe the Servier partnership is less than ideal, but it's probably the best deal Xoma could manage, given its troubles, including a dwindling cash account that threatened to derail the company.

This is probably more true now after Xoma on Thursday night released the highly anticipated interim results from the phase IIa study of Xoma 052 in Type 2 diabetes. Disappointing and underwhelming would be the two words I'd use to describe the phase IIa data. Xoma 052 is no longer looking like a potential blockbuster diabetes drug, which probably explains why Xoma was forced to marry up on modest terms with a smallish, private French drugmaker like Servier instead of negotiating a lucrative deal with a larger and stronger partner.

Mark Guterman, a thoughtful and active Xoma shareholder, helped me step back from the ledge and see the value in the Servier deal more clearly.

"This is clearly not the best deal, but it does get Xoma out of the penalty box and on to the junior varsity team," Guterman told me.

Xoma's many missteps have scared off institutional investors, which now make up only 10% of the company's shareholder base, down from 60%," says Guterman. What he likes most about the Servier partnership is that it solves Xoma's cash problem by requiring Servier to pay for much of XOMA 052's development costs. Xoma also has the option to buy back U.S. and Japan rights to diabetes and cardiovascular disease indications. That's why the upfront payment to Xoma, just $35 million and most of that in the form of a loan, is so small, he adds.

Guterman acknowledges that the phase IIa diabetes data released Thursday weren't encouraging, but he wants to see results from the larger phase IIb diabetes study later this quarter before reaching any definitive conclusions.

"I'm still positive on the company given minimal cash burn and the ability to move preclinical assets through the pipeline," he added.

Makes sense to me, although I think Thursday's disappointing Xoma 052 diabetes data puts a new overhang on Xoma's stock, which will take a lot to clear away. Xoma closed Thursday at $6.78 but fell 11% to $6.04 in the after-hours session upon release of the diabetes data.

The bottom-line data from the study -- a blood glucose (HbA1c) reduction of just 0.2% for Xoma 052-treated patients compared to an HbA1c reduction of 0.1% for placebo patients -- fell well below expectations.

On a more positive note, Xoma 052 did demonstrate a 49% reduction in C-reactive protein, a key marker of inflammation, compared with a 2% reduction in placebo. This finding may bode well for future studies in cardiovascular indications, but this phase IIa study was about diabetes, so the lousy HbA1c reduction is the headline.

Paul K. asks,

"Opexa Therapeutics (OPXA) . What do you make of this huge move in the stock?"

Wednesday's 54% surge in Opexa's stock price (86% at the intraday peak) was great if you're a nimble biotech trader, especially someone who likes to churn through small-float, momentum-driven stocks (and knows when to sell and bank profits.)

If you're a biotech investor -- more of a fundamentals oriented, buy-and-hold type -- Wednesday's action was totally unjustified and potentially ruinous if you decided to buy in at the top.

I'm a fundamentals guy, so I've followed Opexa and the development of its multiple sclerosis drug Tovaxin for quite some time. I know that the main

Tovaxin phase II study

failed to demonstrate any benefit for MS patients -- tanking Opexa's stock price in 2008 when the data were released.

Since that time, Opexa has been reanalyzing subsets of patient data from that failed study in order to find something positive to say. The company has also, since 2008, been telling investors about plans to meet with FDA to discuss possible phase III studies and of potential partnering interest in Tovaxin from other drug companies.

The failure of Tovaxin phase II study was disclosed in September 2008, so we're talking about almost two and a half years of repeated promises from Opexa's management.

Opexa issued a press release Wednesday announcing that it had completed two "successful" meetings with the FDA, which offered "positive feedback" about Tovaxin. Opexa now "believes" it can advance Tovaxin into a phase III study.

"Believes" is an interesting word in corporate legalese. It's a form of insurance, designed to insulate any CEO from liability if something goes wrong. For example, "We signed a contract believed to be worth $10 million" is a much different statement than "We signed a $10 million contract." As a biotech observer who focuses on fundamentals, I pay attention when a company relies too heavily on the word "believes."

Opexa states in the release: "Based on positive feedback from the FDA, Opexa


it is now positioned from a regulatory perspective to advance with a pivotal Phase 3 clinical study of Tovaxin in MS."

Emphasis mine.

I read a statement like that and think: This is absolutely meaningless because FDA doesn't endorse or "approve" the start of phase III studies. Regulators only object if there are safety concerns or risks that may harm patients. Outside of that, companies are free to conduct phase III studies whether FDA thinks a drug is deserving or not.

The press release continues with a quote from Opexa CEO Neil Warma:

"We are very pleased with the outcome of our two recent FDA meetings regarding Tovaxin, the first ever personalized T-cell therapy for MS patients, as we


we now have a well defined path forward for Phase 3 clinical studies. Importantly, we


the outcome of these meetings will contribute positively to our ongoing discussions with potential development partners due to the importance of the FDA's feedback, as well as our ability to secure the necessary resources for the continued development of Tovaxin. We remain motivated to again treat patients in a clinical setting as we continue to


Tovaxin is the most promising therapy in development for MS."

Emphasis mine.

Again, who cares what Opexa believes? Opexa wants investors to "believe" that the FDA has blessed Tovaxin's continued development. Smart biotech investors who do their fundamental research know that's nonsense. FDA will judge Tovaxin if or when the drug is filed for approval -- not before.

Now, traders don't care about stuff that fundamental-focused people like me care about. Opexa's press release, with "Successful Meetings with FDA" in the headline was more than enough to get the stock moving higher. The stock's low float (just 16 million shares) and historically anemic daily trading volume (70,000 shares) were like dry tinder in a forest fire. Whoosh! By Wednesday's close, 9 million (!!) shares traded hands.

Churn, baby, churn! I see nothing wrong with that, as long as you remember biotech trading is not investing. From my perspective, Tovaxin is no closer to getting approved than it was the day the phase II study failed. "Successful" FDA meetings about phase III studies don't matter.

Via Twitter, @jrock452 asks,

"Your take why Amarin raised cash when it didn't need it? More leverage for them in buyout discussions?"

Rule No. 1 in biotech: Raise money when you can, not when you need to. I still believe the ultimate goal of Amarin's management is to sell the company. Hopefully, having the extra cash on hand helps that happen. More cash or not, Amarin's

powerful lipid-lowering drug AMR101

is the big draw.

@crusadernz tweets,

"Would you have expected at least some efficacy data to be released after 1st look into phase 3 Stimuvax $ONTY?"

On Dec. 22,



filed an 8-K stating an independent data monitoring committee recommended the continuation of the phase III "START" study of Stimuvax in non-small cell lung cancer. This study is being run by Oncothyreon's Stimuvax development partner, the German drug firm

Merck KGaA


The "START" study is double blinded and placebo controlled, which means participating patients and doctors do not know who is being treated with Stimuvax or a placebo. As a result, it's not unusual at all for efficacy data to remain blinded and undisclosed during the course of the trial. In fact, that's the way studies like these are supposed to work.

Phase III studies like "START" are designed with independent data monitors, who are charged with insuring that patients are not harmed. They're the only people who are supposed to have access to unblinded data until the study is done and ready to be analyzed. Data monitors also can stop studies early if an experimental drug demonstrates a profound benefit for patients. Typically, however, the statistical hurdle is very high for early stoppage due to efficacy, so again, it's not unusual that at the first look, the data monitors recommended the continuation of the Stimuvax study.

@jacobskip tweets,

"What do you think about ACTC? Is Socius funding kiss of death? Have any additional information to share on Socius/Peizer?"

This was in response to a tweet of mine pointing out that

Advanced Cell Technologies


nabbed $25 million in funding from

Socius Capital Group

. Sounds innocuous enough, but Socius is chaired by Terren Peizer, the founder and CEO of



, peddlers of the

controversial Prometa addiction treatment program

. Peizer claims Prometa is a revolutionary new way for addicts to kick the habit. Critics accuse Peizer of selling snake oil. I suggest checking out Hythiam's stock chart over the past few years before deciding which side is right.

Now, Advanced Cell's embryonic stem cell research has nothing to do with Hythiam or treating drug addicts. However, if Advanced Cell's stem cell technology is as revolutionary as its founders claim, why does the stock trade on the bulletin boards, and why does the company need to seek out funding from someone as controversial as Peizer?

Socius has an "impressive record of making investments in emerging life scienes companies," said Advanced Cell in its funding announcement. I checked Socius' recent filings with the

Securities and Exchange Commission

and found that the firm's investment holdings include

Muscle Pharm



New Generation Biofuels Holdings






Dutch Gold Resources



International Stem Cell



DayStar Technologies



ZBB Energy


, among others.

Advanced Cell, even trading for 20 cents a share, has an enterprise value of $250 million because the company has 1.3 billion shares outstanding! Traders likely consider a 20-cent stock to be cheap and love that the company issues press releases all day long to keep the stock liquid. For those of us who look at fundamentals and balance sheets, a $250 million enterprise value for a high-risk company like Advanced Cell is really expensive.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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