) -- Welcome to this week's Biotech Stock Mailbag.

Steven D. writes, "I have been long

Exact Sciences

(EXAS) - Get Report

for a number of years waiting for their pivotal study to read out. Any idea on the timing of the study and views from the short side of the trade?"

Top-line results from Exact Sciences' pivotal "Deep-C" study of Cologuard are expected before the end of April. Steven is right, the wait has been long, so let's go over the study design and talk about expectations.

The Deep-C study evaluates Cologuard as a new, non-invasive screening test for colon cancer and pre-cancerous lesions. Cologuard isolates and identifies cancerous and pre-cancerous DNA from a patient's stool sample. Exact Sciences designed Cologuard to more accurately detect early stage colon cancer and pre-cancerous lesions compared to the existing stool-based screens FOBT and FIT, which can pick up 40-60% of colon cancers and are even less accurate in detecting pre-cancerous lesions.

Cologuard isn't necessarily designed to be more sensitive than a colonoscopy, but Exact Sciences argues that adoption of the non-invasive and easy-to-use Cologuard will lead to higher colon cancer screening rates. (Half of Americans recommended for colon exams choose not to be tested.) Used ahead of colonoscopy, Cologuard could also improve the detection of pre-cancer and early stage cancer when it is most treatable and curable.

More than 10,000 patients at average risk for colon cancer were enrolled in the Deep-C study. Each patient in the study receives a colonoscopy while a sample of their stool is also tested with Cologuard and a FIT test. The study's primary endpoint compares the sensitivity and specificity of Cologuard to colonoscopy. Secondary endpoints will compare Cologuard to colonoscopy in the detection of pre-cancerous lesions, and non-inferiority between Cologuard and FIT.

The target performance for Cologuard is 85% sensitivity and 90% specificity.

Are these targets achievable? Yes, easily, given the available screening data already presented. Exact Sciences has conducted three validation studies of Cologuard overall. The last two studies conducted in 2011 and 2012 were the most relevant and yielded colon cancer sensitivity rates of 98% each time. Importantly, sensitivity rates for stage 1 and 2 colon cancers were just as high. For pre-cancerous lesions, the sensitivity rates were 59% and 57%, respectively.

Specificity in the 2011 and 2012 validation studies were 91% and 90%, respectively.

I don't necessarily expect sensitivity rates in Deep-C -- which is a more stringent "real world" study -- to be as high as those seen in the validation studies but they should be close. Without a crystal-clear handle on investor expectations for Deep-C results, my best guess is that Wall Street will be happy with sensitivity rates of 90%-plus for cancer and mid-50% for pre-cancerous lesions. Specificity needs to be close to 90%.

Exact Sciences shares, which have advanced just 1.2% this year, have under-performed in 2013 relative to the rest of the healthcare sector. If Cologuard can meet the efficacy hurdles described above, the stock should rally.

I received two emails this week from Dietrich F., both within 24 hours of each other:

Email No. 1: "Hey Adam, looks as though you were wrong about

Galena Biopharma


. The stock has been trading strong and over $2 per share even through a financing round, looks as though the facts that NeuVax has behind it are stronger than your debunked conspiracy theories. When are you going to admit you were wrong?"

Email No. 2: "Adam, Galena is about to break through some technical markers and moving in the right direction. How about a follow-up article admitting fault and that your analysis was incorrect on Neuvax's chances."

Sorry Dieter, I'm not aware of any conspiracy theories surrounding Galena's breast cancer vaccine NeuVax. In phase II studies, treatment with NeuVax failed to demonstrate a benefit over control in breast cancer patients. Galena

mined the negative phase II data

to find subgroups of patients where the

vaccine appears to work better

but these signals are a mirage that will disappear when the ongoing phase III study is completed.

Galena shares are up 30% since I wrote about the Galena bear thesis about one year ago. In that same time period, the biotech sector overall is also up 30%, so the appreciation in Galena's stock price is in line and unsurprising. High risk, small-cap biopharma stocks often run up on speculation and momentum. If the NeuVax bear thesis was truly debunked, you'd expect to see institutional investor ownership in Galena increase. That hasn't happened. Only 8% of Galena shares are owned by institutions -- a sign that Wall Street has little interest and no confidence in NeuVax. It's a bit early to invoke the Feuerstein-Ratain Rule on Galena but I expect the stock to fall victim eventually.

Retail investors own the biggest slice of Galena so I expect the stock's rise and fall will correlate directly with the volume of published stories on sites like Seeking Alpha.

If you're curious, I count 21 stories on Galena published by Seeking Alpha contributors since the beginning of the year -- almost all bullish, naturally. This trend will end badly for Galena bulls when the NeuVax phase III study fails.

One more note on Galena: The acquisition of U.S. marketing rights to Abstral, a sublingual fentanyl tablet for breakthrough cancer pain, was a dumb move. Abstral is no better than any of the cheap, generic fentanyl products available for use by doctors here. Galena not only went into debt to buy Abstral, but it will now waste even more money trying to sell the product -- unsuccessfully.

Tom B. asks, "What is your take on the FDA's breakthrough therapy designation?

I snarked on Twitter recently that this year's hottest FDA badge of honor -- breakthrough therapy -- was in danger of becoming as irrelevant as the now-derided fast-track status. I hope I'm wrong but the tangible benefits of breakthrough therapy status are unclear because FDA hasn't bothered to tell us what makes it so special. Right now, breakthrough designation is a shiny crown that drug companies want to wear. It elicits oohs and aahs from investors, but that's about it.

Here's how FDA describes breakthrough therapy designation:

Breakthrough therapy designation is intended to expedite the development and review of drugs for serious or life-threatening conditions. The criteria for breakthrough therapy designation require preliminary clinical evidence that demonstrates the drug may have substantial improvement on at least one clinically significant endpoint over available therapy. A breakthrough therapy designation conveys all of the fast track program features (see below for more details on fast track designation), as well as more intensive FDA guidance on an efficient drug development program. The FDA also has an organizational commitment to involve senior management in such guidance. 

"Preliminary clinical evidence" isn't defined, nor is "substantial improvement" but I guess it's like porn, you know it when you see it.

The two primary drug-review branches of FDA have received 50 applications for breakthrough therapy designation from July 2012 through March 31, 2013. Ten drugs were granted the designation, 12 were denied during this period. Presumably, the remaining applications are still under review.

Three breakthrough designations were awarded to the leukemia/lymphoma drug ibrutinib that's being developed by




Johnson & Johnson

(JNJ) - Get Report

. Why the same drug requires three different breakthrough crowns is unclear. Other "winners" disclosed so far include

Vertex Pharmaceuticals

(VRTX) - Get Report



(PFE) - Get Report



(NVS) - Get Report


I don't mean to be totally derisive of breakthrough therapy status. I'm just waiting to see if the new program actually accelerates drug development and approvals. Ibrutinib, for instance, is already in phase III studies, so how much will breakthrough status change timelines, compared to the "old" accelerated approval pathway? And if we rush drugs through shortened clinical trials based on preliminary data, will drug developers and FDA miss important safety findings?

Joe G. asks, "Your opinion on

Titan Pharmaceuticals

(TTNP) - Get Report

getting the nod from the FDA this month?"

The only reason FDA might not approve Titan's Probuphine for the treatment of opioid addiction on April 30 is if the two sides haven't had enough time to hammer out an acceptable risk-management plan. We know that the FDA objected to the Titan's proposed "REMS" plan in part because the agency wanted tighter controls on who can dispense Probuphine as well as better training for doctors implanting the buprenorphine-containing rods. Titan submitted a revised REMS plan last month, but as we heard at the advisory panel, FDA officials said finalizing the details of the revised plan before the April 30 approval decision date for Probuphine would be a challenge.

Experts sitting on that advisory panel voted 10-4 to recommend Probuphine's approval, with one abstention.

FDA may still approve Probuphine on time, but I'd say Titan will still be happy -- and rightfully so -- if the FDA rejects Probuphine on April 30 citing only the need to complete negotiations on the REMS plan. A rejection asking for more clinical data on Probuphine -- perhaps tied to proper dosing of the implant -- would be far more of a negative for the company.

Titan shares at $1.74 are still lower than they were before the March 21 advisory panel. I suspect that investors are more concerned about Probuphine's commercial potential given the concerns about dosing and training required to implant the product aired during the panel. Anyone believing Probuphine could quickly grab significant market share in the $1 billion-plus opioid addiction treatment market was thrown a curve by the cautious comments made by addiction specialists at the panel. Titan and its partner Braeburn Pharmaceuticals face a challenging Probuphine launch, which is reflected in Titan's market valuation. Investors will want to see some evidence of successful sales before buying into the bull thesis.

@WCoastGuynCA tweets, "I own a lot of $ARNA shares. Patience is a virtue. I'm expecting $12 before the end of the month. Stay tuned."

Twelve dollars at the end of April would represent about a 50% move in

Arena Pharmaceuticals's

(ARNA) - Get Report

stock price from its current price. Anything is possible, particularly in this biotech bull market, but probable? I have my doubts.

Arena bulls and bears are both annoyed about the

long delay in DEA scheduling for Belviq

, but make no mistake about it, bears expect Belviq to launch soon, so the announcement -- whenever it comes -- will not be a surprise.


will pay Arena $65 million when Belviq is launched. Again, this is well known, so it's not surprise to anyone. I've read some articles insisting the Belviq launch and $65 million payment will spark a short squeeze. Why would that happen when the Arena short thesis is focused on poor Belviq sales, not the drug's launch?

@cantex3840 asks, "What on earth is holding

Ampio Pharmaceuticals

(AMPE) - Get Report

up here?"

Hopium. It's a powerful drug. I'm still waiting for Ampio to explain how a

12-week study of Optina in diabetic macular edema

will be sufficient to secure an FDA approval filing. Ampio's PR guy Rick Giles is usually pretty good about responding to my emails but not in this instance.

Carroll R. writes, "I just want to express my disappointment at how Mr. Feuerstein failed to use facts to condemn Afrezza to failure. All of the latest scientific research shows the efficacy and safety of Afrezza, and patient surveys show that as many as 75% would switch or begin to use Afrezza due to the ease of use and efficacy and speed of metabolism of the drug. Mr.Feuerstein's continued misuse of connections to Exubera, with its bulky and difficult to use applicator and complicated instructions for use made it a failure, not that it was inhaled."


(MNKD) - Get Report

supporters -- I like to call them the Al Mann-iacs for their cultish devotion to the company's founder -- live in an echo chamber where all diabetics are clamoring for Afrezza.

Facts paint a gloomier picture for Mannkind

, which I described last week with the assistance of diabetes expert David Kliff. The Al Mann-iacs are running through a mine field without a map.They've been warned, but I don't expect they'll stop until it's too late. We've seen this sad story play out in countless other retail cult stocks. Some people never learn.

If you're wondering why the MannKind's stock price is going up, it's largely due to short seller buy-ins caused by a big spike in the cost of borrowing shares. In other words, this is not a demand-driven move.

-- Reported by Adam Feuerstein in Boston.

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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;

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