Welcome back to the Mailbag, which unfortunately was closed most of the week because I was in New York at the UBS Global Life Sciences Conference.
I'll return to your emails next week, but in the meantime, here are some reports and updates from the conference. This week:
- Sangamo BioSciences (SGMO) - Get Report
- Medarex( MEDX)
- Dendreon (DNDN)
- Telik (TELK)
- Encysive Pharmaceuticals( ENCY)
Two institutional investor friends of mine brought up Sangamo this week in separate conversations. On the same day, my BlackBerry buzzed with an email from a retail investor and InvestorVillage.com message board poster informing me that he had "upgraded" Sangamo to "possibly the next
, but definitely the next
I haven't thought much about Sangamo since writing about the company in early August, so I looked at the chart and was surprised to see the stock's move from $10 to $14.
Memo to James Altucher: Sangamo is a
All kidding aside, Sangamo does have an interesting story to tell. As I described back in August, the company is engineering protein "switches" called
zinc fingers that can turn genes on or off. It's similar to the work being done with RNA interference, or RNAi, with one big difference: RNAi can only turn genes off while zinc finger proteins have the ability to turn genes on and off.
Investors have been hot for RNAi stock plays, so I think there's now a segment of momentum investors who see Sangamo as super-RNAi. That makes it hot with a bullet.
It shouldn't surprise anyone to learn that there is scant clinical data to support the efficacy or safety of zinc fingers -- yet. There should be phase II data from a study in patients with diabetic neuropathy available next year. The company is also holding an investor day in New York on Dec. 5.
In the meantime, momentum traders will give Sangamo a nice ride. They're getting help from Cannacord Adams analyst Joe Pantginis, who raised his price target on the stock this week from $13 to $20, citing "increasingly strong fundamentals and positive data and collaborative news flow..."
Translation: "Sangamo was at my price target already so I better move it up so my firm has a good shot at raising money for these guys."
I know, that's a snarky comment, but c'mon, you know it's true.
I had a chance to see Dendreon's revamped investor presentation Thursday, and it's a good one. CEO Mitch Gold gave a very concise and easily understood breakdown of the immunotherapeutic technology behind Provenge. He highlighted, of course, the prostate cancer survival data that almost got Provenge approved in the spring, and talked in detail about the ongoing phase III trial that the company hopes will finally push Provenge across the finish line.
That trial -- dubbed Impact -- has enrolled 490 of a planned 500 patients, so expect an announcement soon about the enrollment completion. There have been concerns that prostate cancer patients enrolling in Impact might be sicker at the study's entry than in previous Provenge studies, thereby making it harder for the vaccine to have its desired effect.
Not so, Gold said. The health status of Impact trial enrollees at entry is tracking in line with prior studies; in fact, Impact patients appear to be slightly healthier.
Gold didn't change previous guidance calling for an interim analysis of the Impact study in the second half of next year. This will be the next defining event for Dendreon, and as I've said before, it's a very risky one. Interim survival analyses in cancer trials are very high hurdles to clear. Gold believes Dendreon has designed Impact to do just that. We'll know fairly soon if he's right.
I get the sense that Medarex is getting a bit frustrated about all the investor attention paid to its melanoma drug MDX-010, also know as ipilimumab. The company's presentation Wednesday spent a good amount of time on other drugs in the company's impressively deep pipeline.
Yet during the 30-minute breakout session with investors, every single question concerned MDX-010 and the highly anticipated release of data from a trio of phase III monotherapy studies in patients with second-line metastatic melanoma.
At the end of the Q&A session, Medarex CFO Chris Schade made a pitch for non-MDX-010 questions. There were no takers.
If there were table-pounding believers in the MDX-010 monotherapy melanoma trial story present at the UBS breakout session, they didn't make themselves heard. Most of the questions were tinged with skepticism, which wasn't too surprising.
Interestingly, however, that skepticism over the upcoming MDX-010 data isn't necessarily translating into big short positions in Medarex, at least from the skeptics that I hung out with before the UBS Medarex breakout session (and yes, they almost all work for biotech hedge funds).
These guys don't expect the stock to fall much below $10-$12 on negative MDX-010 data, mainly because the company's deep pipeline is a sturdy buffer against total blowup. Medarex at $18 might have been a good starting point to short, but with the stock at $14.16 -- not so much, with the downside now limited.
In fact, they say that a sharp drop in the stock on a negative result from MDX-010 will likely be a reason to buy for many investors.
This was a point I made in my original Medarex
column, when I wrote: "If MDX-010 fails in melanoma, Medarex has a lot to fall back on -- that's important because while the stock could suffer in the short term, there are ample opportunities later for Medarex to succeed."
The funniest moment in the Telik breakout session Wednesday came when Chief Medical Officer Gail Brown told the four or five people gathered (yes, attendance was that sparse) that doctors were "impressed" with the recent Telcyta survival data because it demonstrated the importance of treating third-line ovarian cancer patients.
Of course, what Brown neglected to say was that the clinical data showed doctors that they should treat these ovarian cancer patients with
Telcyta, unless of course, doctors want their patients to
die a lot faster than they should.
Telik CEO Michael Wick is still talking about finding a partner to fund further development of Telcyta. I wish him all the luck in the world. I'll be very curious to learn which company wants to develop a drug that has failed three phase III studies. And let's not forget that in two of those, Telcyta patients died faster than patients in the control arms.
Encysive Pharmaceuticals has decided to stop fighting the FDA and move ahead with plans to conduct another phase III study of its pulmonary arterial hypertension drug Thelin.
Smart move, but unfortunately, probably a bit too late.
Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
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