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Feuerstein's Biotech-Stock Mailbag

This week: Pipex, Hythiam, Amgen and Isis.

BOSTON -- The Biotech Mailbag marches on, even with a Thanksgiving turkey hangover.

This week:

Pipex Pharmaceuticals





(AMGN) - Get Amgen Inc. Report

Isis Pharmaceuticals



Anand J. writes to ask about

Pipex Pharmaceuticals


"Any thoughts on this company with several late-stage drugs? Their lead drug Coprexa is very close to an

FDA filing. Also, management holds a lot of the company stock and runs a tight ship, which is always a good sign."

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Regular readers know that I place a lot of emphasis (perhaps too much) on the quality and trustworthiness of management. This is especially important in small-cap, thinly traded biotech stocks like Pipex.

Steve Kanzer runs Pipex and is the largest shareholder, owning just under half the company. This is a

photo montage



that includes a shot of Kanzer taken last May during an FDA advisory panel meeting convened to discuss a drug from

Dor BioPharma


, where Kanzer was vice chairman at the time. He has since resigned from Dor's board.

Scroll to photo No. 4 to see Kanzer being physically restrained and forcibly removed from the meeting. Perhaps he had too much coffee that day. I hope so, but I have my doubts. Suffice to say, he's not exactly high-quality biotech management material in my book.

Kanzer factored into another old

story of mine on Dor, which also makes me feel uneasy about his leadership.

Pipex is developing Coprexa to treat Wilson's disease, a very rare genetic disease that prevents the liver from ridding the body of copper. This causes an excessive buildup of copper in the bloodstream, leading to neurological impairment and in some cases, death.

Pipex also believes Coprexa may be used to treat Alzheimer's disease and other ailments, but let's leave that for another column.

Coprexa studies appear to show the drug is effective in treating Wilson's disease patients, who number in the low-single-thousands. Kanzer has said Pipex will seek FDA approval by November, with an approval possible in mid-2008. His track record with drugs and the FDA, at least with respect to Dor Biopharma, isn't all that great.

Is there reason now to think Kanzer will do better at Pipex?


column on


provoked a lot of email from both sides of the debate. Geoff G. disagreed with my description of Hythian's Prometa drug addiction treatment as modern-day "snake oil."

He writes, "I thought your recent article on Hythiam was very shallow as I know this stock well and several of my institutional clients were on the latest conference call. Methinks you will be eating crow in a year on this stock."

Sonny M. thought I was on the money, writing, "Boy, have you got it pegged! Prometa is nothing more than three old drugs wrapped up with a pretty bow called The Prometa Protocol. It's about $35 worth of drugs Hythiam is peddling for $15,000. Hythiam has somehow convinced investors (so far) that Prometa is the second coming in addiction treatment."

To bring you up to speed, auditors working for Pierce County, Wash., have issued an update to their original report questioning the effectiveness of the Prometa treatment program in helping drug-court offenders kick their habit. The original October audit prompted Pierce County officials to

cut off funding for Prometa.

That's a problem for Hythiam, which has pointed to this program as one of its key government customers.

You can download both the original and updated audits from this Pierce County

Web site

. It's a great read, and the auditors responsible for the work deserve kudos for doing a tremendous job of getting to the truth about Prometa.

They show clearly and convincingly that Hythiam and its Prometa enablers alter statistics, change definitions and manipulate data to make Prometa appear more effective than it really is.

It's the same kind of flim-flam that Hythiam and its clinical investigators have used to gussy up suspect Prometa clinical trials.

I just wish that Wall Street analysts who shower Hythiam with buy and outperform ratings would do a fraction of the due diligence that the Pierce County auditors have done. They haven't. Instead, the analysts from UBS, Brean Murray, RBC Capital and William Blair all tout Hythiam stock to investors. All except RBC Capital are paid investment banking fees by Hythiam.

Surprise, surprise.

Bill takes issue with my



"Hey, ever thought of talking to Amgen bulls as well? Never

read someone as biased and one sided as yourself. I hope the stock will shoot back to $72 like Lehman

Brothers said it will this morning so you and bear pals can look like damn fools."

I talk to a lot of Amgen bulls. In fact, I used to count myself as part of their crew. Not anymore, and not until the current situation improves or the stock gets even cheaper.

Finally, Paul S. writes to comment on my

Isis column:

"Isis Pharmaceuticals announced trials that could get mipomersen approved in the rare genetic disease. A study of both kinds of familial hypercholesterolemia could be completed and filed with the FDA some time next year."

Paul may have misunderstood one of the points I made last week, or I wasn't entirely clear. I wrote that Isis intends to develop mipomersen for patients with familial hypercholesterolemia (the rare genetic disease)


for "ordinary" patients with stubbornly high cholesterol at high risk for a heart attack.

It's the latter category of patients for which Isis CEO Stanley Crooke is seeking a partnership (and big bucks, if you listen to his investor spiel).

One of the concerns I have with this strategy is pricing. Isis can't price mipomersen high enough to make it worth treating the relatively small number of familial hypercholesterolemia patients if it also wants to develop the drug for the much broader population of "ordinary" high-cholesterol patients, where pricing will have to be more constrained in order to get reimbursement.

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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