- Biogen Idec (BIIB - Get Report)
- Neurocrine Biosciences (NBIX - Get Report)
- Vion Pharmaceuticals /LI>
- Panacos Pharmaceuticals (PANC)
- Discovery Labs (DSCO).
John C. writes: "Is Biogen Idec a good buy right now? It's up over 34% for the year. Do you think it will keep trending upward? I don't see a lot of insider buying." Biogen Idec has had a rock-star year. As I write this, with shares trading at $65.66, the stock is up 33% year to date, up 53% from its March low. No other big-cap biotech stock has performed as well in 2007. Gilead Sciences ( GILD - Get Report) and Celgene ( CELG - Get Report) have done very well, but they only take the silver and bronze; Biogen Idec is the gold medalist.
Next up, this email from Theodor L.: "I would like your take on the probability of FDA approval of Neurocrine BioSciences' insomnia drug indiplon. According to its CEO, the FDA did not request any additional trials." After getting kicked to the curb by the Food and Drug Administration the first time around -- and losing its dance partner Pfizer ( PFE) -- you'd expect (hope) that Neurocrine has gotten its act together enough to get indiplon approved. The FDA action date on the indiplon approval decision is Dec. 12. So, yeah, I guess the odds are in Neurocrine's favor, but frankly, I don't think it matters much. As I've written before, the insomnia drug market is very competitive and indiplon will enter with many disadvantages. My sense is that investors won't give Neurocrine much credit for an indiplon approval until the company lines up a strong marketing partner and/or proves it can actually sell the drug. I did sit in on Neurocrine CEO Gary Lyons' presentation at the UBS biotech conference last week and came away puzzled. Lyons' major take-away message was that indiplon will be the drug of choice for people who wake up in the middle of the night and can't go back to sleep. He showed off results from a company-sponsored marketing survey that found that this "middle-of-the-night" niche is problem No. 1 for insomniacs.
Next is Manuel E, who asks for my opinion on Panacos Pharmaceuticals. How can I say this politely: Panacos is a mess! CFO Peyton Marshall resigned Sept. 24 to "pursue other opportunities and outside personal interests." That's not a good sign, especially since Marshall was previously the company's interim CEO after then-CEO Skip Ackerman died suddenly in June 2006. The company's effort to develop its HIV drug beviramat has been saddled with setbacks and delays. A tablet formulation of the drug was shelved last year, forcing the company to work with a liquid formulation while it tries to come up with a way to make a new tablet dosage work. A phase II study of liquid beviramat continues, but again, new data has been delayed. (And no, a liquid drug for HIV is not commercially viable.) I think beviramat has potential and it's definitely an interesting and novel anti-HIV target (a first-in-class maturation inhibitor) but why mess with this stock until Panacos proves it can actually do something right for a change?
Brian writes: "Can I get your views on Vion Pharmaceuticals?" Another winner. (Yes, that's me leaning on the snark-o-meter again.) You can pick up a share of Vion for 71 cents. That's not a good thing. One of the lessons I relearned from the Sonus Pharma debacle is that I'm no longer going to try to be the smartest guy in the room. The Vion chart is screaming "Stay Away!!" It's not saying, "I'm cheap -- I'm a hidden gem because investors are missing something!" Vion's lead drug, cloretazine, is being developed for some blood cancers but has run into trouble. A phase III study in acute myelogenous leukemia was put on clinical hold because of high on-study mortality. Another trial, this one in elderly, high-risk AML patients is ongoing with data expected at the American Society of Hematology meeting in December. I don't see any reason to own the stock going into that data. If cloretazine can dig itself out of its current hole, fantastic, but there's too much risk here. Go spend your 72 cents on some other biotech stock. Or a candy bar.
Let's end with the best letter of the week, from Cary L.: "When Discovery Labs got its FDA approval letter pending solving the stability issue, I took a 'country-boy' whupping in the stock! With the stability issue pending and new 12-month results in October, should I put myself into another situation of preparing for another 'whupping,' or stay away from Discovery? I'm seriously thinking about taking a small position with hopes that the whupping will be done with a small belt, as opposed to the large belt the last time." Oy, this Mailbag is chock-full of quality stocks. (Snarks-ville, again.) Cary, it sounds like you like whupping a bit too much. There are therapists you can see about that. I kid! I kid! Seriously, stay away from Discovery. For those unfamiliar with the story, it's real simple: Discovery developed a drug, Surfaxin, to treat infants with respiratory distress syndrome. The drug seems to work OK, but Discovery can't manufacture it. The FDA has refused to approve Surfaxin twice now because of manufacturing and stability issues. Discovery says it's making progress solving the manufacturing issues, but let's just say management has credibility issues that make it hard to take their statements at full face value. Cary, I'd try wearing your belt instead of getting slapped on the you-know-what by it.