) --Hepatitis C patent chatter leads off this week's Biotech Stock Mailbag.

@dsobek tweets,

"I've missed the whole $VRUS owing royalties to $IDIX for nucs. Is there a background to this?"

During my

Biotech Stock Live Chat

Thursday, I mentioned that a less-discussed reason for investor interest in

Idenix Pharmaceuticals


is the speculation that it might (emphasize, might) be in a position to demand a royalty from



based on intellectual property covering drugs known as nucleoside polymerase inhibitors (nucs) to treat hepatitis C.

Pharmasset'S PSI-7977 is an experimental nuc, still in mid-stage testing, that is generating a ton of excitement for its potency against the Hep C virus. The drug is the primary contributor to Pharmasset's $6 billion market value.

Idenix doesn't say much publicly about its patent estate around nucs in general and has not made any public statement specifically about Pharmasset's drugs. But the Wall Street biotech buzz is that if Pharmasset's PSI-7977 is ever approved, Idenix may be able to assert its IP rights to demand and receive a royalty on sales of PSI-7977. You can probably assume that Pharmasset would fight any efforts by Idenix to extract a piece of PSI-7977, which means it may end up the courts. Legal issues around patent rights can be enormously complicated.

That's about all I know for now, which isn't much, admittedly. What I do know for sure is that the Idenix's IP around nucs is a focus of interest and research for biotech investment pros who pay attention to the rapidly changing Hep C drug market.

Marc W. asks,

"Do you believe the rumors that GlaxoSmithKline (GSK) - Get Report is going to buy Human Genome Sciences( HGSI)?"

Better than ask what I think, here's what biotech buyside investors believe, courtesy of a recent poll conducted by ISI Group biotech analyst Mark Schoenebaum.

He asked, "Do you think there is a greater than 50% chance someone will buy HGSI in the next 12 months?"

Twenty-four percent of respondents said yes. 76% said no.


Thursday's Live Chat

, I asked the same question to my viewers/readers, who I assume represent a more retail-oriented audience. The response: 68% said yes, 32% said no.

If you don't mind me interjecting my two cents into the debate, I favor the Schoenebaum buy-side position for two reasons: First, rumors like this rarely ever pan out, particularly frequently repeated rumors such as Glaxo buying Human Genome Sciences. Second, Glaxo has little incentive to buy Human Genome until it gains more confidence in the lupus drug Benlysta growing into a blockbuster drug.

Sure, Glaxo could buy Human Genome today on the cheap because shares are beaten down. But as Zacks' drug analyst Jason Napodano pointed out the other day on Twitter, Big Pharma is generally less interested in making acquisitions based on deeply discounted value and more interested in paying more for minimized risk.

It's a good point worth repeating. What Napodano means is that, generally, Big Pharma would prefer to pay up for a proven asset with less risk. This is what

Eli Lilly

(LLY) - Get Report

did when it bought


after it became clear that the erectile dysfunction drug Cialis was going to be a commercial hit. This means Glaxo is more likely to wait on a decision to buy or not buy Human Genome until it knows better how Benlysta pans out commercially.

Ray H. emails,

"Hello Mr. Feuerstein. Cardium Therapeutics (CXM) just received 510(k) approval for their Excellagen wound healing product. The price almost tripled the day of the announcement, but at the end of the day on Monday, we still only saw about 41 cents per share on the close, roughly the same price it was a year ago (although there was some dilution during this time.) Is this about all we can hope for? I would like your opinion on this company from a fresh perspective since you had previously been skeptical on the clearance. Thanks sir!"

Avoid using the word "approval" when it comes to Excellagen. What Cardium received from FDA was "clearance" to sell Excellagen as a simple medical device used in the treatment of diabetic foot ulcers, or wounds. The regulatory threshold for a 501(k) medical device clearance is considerably less than what drug developers or certain medical device makers need to receive FDA "approval."

Excellagen is a cow-derived collagen gel that doctors apply to a diabetic foot ulcer once the wound has been surgically cleaned. Cardium says Excellagen is intended to "support a favorable wound healing environment." Notice Cardium doesn't say Excellagen actually heals diabetic foot ulcers or is in any way superior to competing products used by doctors to manage diabetic wounds. With FDA clearance as a 510(k) device, Cardium can't make such medical claims.

When I wrote about

Cardium one year ago

, I expressed doubts about FDA clearance of Excellagen mainly because the study run by the company wasn't designed originally to study Excellagen. Instead, the study -- know as Matrix -- was set up to test the efficacy and safety of a different product, Excellerate, which combined a gene therapy-like drug with the collagen gel found in Excellagen. The study found that Excellagen (the gel) worked better than Excellerate (the drug plus the gel.)

Kudos to Cardium for convincing FDA to grant clearance to Excellagen gel. Making money by selling Excellagen is the real challenge, especially for a company short on cash and which remains at risk of getting booted off the NYSE Amex and on to the bulletin boards.

Harriette G. emails,

"As a small shareholder in Neoprobe (NEOP) but of longstanding, thank you for saying that Mr. Shkreli has been proved wrong. His behavior has been atrocious... I hope he has lost a lot of money, but unfortunately this is unlikely!..."

I think you're being a bit too harsh on Martin Shkreli, the investment manager who, indeed, was proven wrong this week when FDA accepted Neoprobe's application to review the lymph-node mapping agent Lymphoseek. Shkreli was up front and public with his short thesis on Neoprobe, which was based partially on his belief that FDA would issue a refuse-to-file (RTF) letter on Lymphoseek, i.e., refuse to accept the application for review.

Shkreli and I debated this issue on Twitter Thursday because he denies predicting an RTF letter. That's spin, I told him. We'll agree to disagree. Being wrong is fine and I wish Shkreli would just acknowledge his wrongness and move on. If FDA rejects Lymphoseek next year, Shkreli can rightly claim victory.

A lot of the anger directed toward Shkreli Thursday comes from his rather unusual and controversial act last June of filing a

citizen petition with FDA seeking to prevent the agency from reviewing Lymphoseek


Filing the citizen petition while shorting Neoprobe's stock was bold, unusual and perhaps ethically questionable, but it's also legal. Shkreli deserves credit for going public with this short thesis on Neoprobe. He wasn't hiding, wasn't spreading anonymous rumors, which to me, is refreshingly honest. I wish more short-selling hedge funds were as transparent.

Now, if I could only convince Shkreli to admit he was wrong about Neoprobe.

--Written 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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