The Biotech Mailbag opens this week with an email from Dean M.

"Any thoughts about NeurogesX's ( NGSX) positive phase III data for post-herpetic neuralgia and their pending applications in Europe and the U.S.?"

NeurogesX is a tiny drugmaker with a pain patch, NGX-4010, that applies a synthetic form of capsaicin (yes, the hot stuff from chili peppers) directly to the site of pain. NGX-4010 provides longer-lasting relief than other pain patches and creams, and it does so without significant side effects.

The company is seeking Food and Drug Administration approval for NGX-4010 as a treatment for post-herpetic neuralgia, or nerve pain associated with shingles. The company filed a new drug application Oct. 22 and hasn't yet announced whether the agency has accepted the filing. The FDA has 60 days to accept or reject a new drug application filing, so NeurogesX should have something more to say toward the end of December.

NGX-4010 is also under review by European regulators, with an approval decision expected in the first half of next year.

All of this seems good, yet NeurogesX shares, at $1.60, are barely above the company's cash on hand. So what gives?

Well, NeurogesX is going to have to raise some money fairly soon, which in this market is a black mark. And there are questions about how the company plans to commercialize the pain patch if approved here or in Europe. A domestic sales force is going to cost money to build (hence the need to raise cash or find a co-promote partner here) while across the pond, NeurogesX definitely needs to find a partner.

The commercial market for pain patches, pills and ointments can be tricky. The space holds some big competitors, like Pfizer ( PFE) and many smaller ones, like Endo Pharmaceuticals ( ENDP). How well will tiny NeurogesX compete, especially if NGX-4010's label is restricted, at least initially, to treating shingles-related nerve pain?

The best thing that could happen to NeurogesX is to be gobbled up by a larger drugmaker with an existing pain drug franchise. Absent that, my sense is that investors in this market will be gun-shy with this stock until they see tangible results. Don't forget that the FDA is a fickle place these days when it comes to new drug approvals, and the pain-drug area is notorious for delays.

That said, with the stock trading near cash, it's not a bad speculative investment.

Regarding my story on the re-pricing of executive stock options at United Therapeutics ( UTHR - Get Report), Simon E. had this to say:

"Another interesting aspect to this story is the substantial program of option sales in the 5-6 month run up to the announcement. This seemed to coincide with some very bullish language being used in presentations to the investment community.

"The senior management team made tens of millions of dollars in profit in that period. Martine Rothblatt United Therapeutics' CEO being the biggest winner followed by President Roger Jeffs.

"It would seem that having made money prior to the crash, they are trying to profit in the downturn. Interestingly, I haven't noticed any of them buying up stock recently, so is the crash in price really a buying opportunity? What does this set of behaviors suggest for the level of confidence of the senior management team in the long-term prospects of the business?"

Simon makes an excellent point, one that could be a reason investors aren't rushing to snatch up United Therapeutics shares at this point. Perhaps the time to buy will come when company management starts buying stock instead of selling it.

Onward, David J. asks, "Is it time for a second look at Delcath Systems ( DCTH)?"

David reminds me that it's been a bit more than a year since I wrote about Delcath and its Percutaneous Hepatic Perfusion (PHP) system that delivers tumor-killing drugs directly to cancers in the liver while at the same limiting exposure of healthy organs and tissue to the toxic drugs.

It's a neat technology, but at the time of my last posting, I basically said it was too early to consider an investment in Delcath. The company was still trying to drum up interest from cancer hospitals to participate in a phase III study, and there really wasn't a ton of clinical data to prove that PHP was going to work.

Since then, Delcath has been able to get more cancer centers to sign up for the phase III study. Enrollment is about halfway there, with completion expected next year. That's good news.

I may disappoint David, but I'm still not ready to recommend Delcath. The stock has fallen from $2 a share to $1 a share in the past year, and I see no compelling reason to jump in right now. It's still too early, and to be honest, I don't yet understand the compelling commercial case for the PHP technology. Can anyone out there explain it to me? Why will oncologists care about this technology in big enough numbers to make a dent in the cancer treatment market?

I'm keeping an open mind, so I'll make a note to check back on Delcath in six months or so.

Moving to a big-cap stock, J.R.A asks, "Isn't Amgen ( AMGN - Get Report) attractive at these levels and would you consider adding this to your model portfolio or any portfolio at this price level? They seem to have one of the strongest pipelines and their CEO even called it a blockbuster pipeline."

Yes. I'm probably more amenable to Amgen in the high $40s to low $50s, but the stock has a few good things going for it: 1) the big commercial potential for denosumab, the company's long-acting osteoporosis drug; 2) phase III clinical data coming soon for denosumab in various oncology indications; and 3) the company's low price-to-earnings (P/E) multiple, currently around 11 to 12 times expected 2009 earnings, which is a discount to the big-cap biotech group.

On the negative side of the Amgen ledger, I'd worry about how a prolonged recession coupled with a health care reform agenda that values generics over brand-name drugs might crimp the commercial launch of denosumab to treat osteoporosis. Will consumers cutting back on discretionary spending shell out a premium for d-mab when lower-priced generics are available?

Amgen hasn't yet seen the stabilization of its core anemia drug franchise, and there's still room for declining sales there. And perhaps more than any other big-cap biotech firm, Amgen is vulnerable to biogeneric competition if -- but more likely when -- these lower-cost "biotech" drugs become available here.

I'd concede that investors are more likely to look on the bright side when it comes to Amgen and brush aside the worries until they really matter -- whenever that is.

I've thought about adding Amgen to the Biotech Select model portfolio, and I may still do so, but I haven't yet mainly because I have three big-cap biotechs in there already -- Genentech ( DNA), Gilead Sciences ( GILD - Get Report) and Celgene ( CELG). Amgen's low P/E and the d-mab data in cancer coming soon are tempting reasons for a swap, I will admit.

Sammy D. writes, "Did you see what Introgen Therapeutics ( INGN - Get Report) pulled the day before Thanksgiving?"

Ha! Yes, I did. Introgen's three stooges -- CEO David Nance, regulatory chief Max Talbott and head science guy Bob Sobol -- all resigned. Another round of layoffs was implemented, leaving the company with just 15 employees focused mainly on becoming a contract drug manufacturer even though the cash is running out.

And to top it all off, Introgen announced these latest moves in a press release on the afternoon of Wed., Nov. 26, right before the start of the Thanksgiving break. Classic.

More hilarity came late Wednesday, when Introgen filed for voluntary Chapter 11 bankruptcy. The company seeks to reorganize, possibly sell off some assets and emerge from bankruptcy protection next year.

From an investor perspective, Introgen has been done for a long time, as any reader of mine knows. The company's gene therapy cancer drug Advexin will never see the light of day. If there's a bright side, it's that Nance and his crew are gone. These guys were some of the worst bamboozlers in the biotech world. Let's hope they stay gone for good. If any of them do happen to pop back up at another drug or biotech firm, that company becomes an instant short-sale candidate.

AMAG Pharmaceuticals ( AMAG) is on the mind of Quinn G.

"In your article about the FDA news on AMAG, you mentioned that there are maybe some profits taken following the news. However, the stock keeps falling, and the volume going up. Do you think some insiders are selling? I'd really appreciate if you could comment on this."

Let's see, AMAG shares jumped from $18 to $37 on Nov. 13, the day that the FDA granted a two-month review cycle for the company's iron replacement therapy ferumoxytol. Then the stock fell to $24 before running up again to $33.

Nice volatility.

That's this market in a nutshell. Honestly, I can't look at the daily gyrations of this stock anymore. I get nauseated when I do. Instead, I keep my eyes firmly planted on Dec. 30, when I expect AMAG to announce full approval of ferumoxytol.

Lastly, a note about the Biotech Mailbag: This column has been a weekly fixture for the past two years, but in recent months my new workload on the Biotech Select newsletter has made it difficult for me to commit the time necessary to keep the Mailbag going with such frequency.

I really enjoy the interaction that comes from answering your emails, and I hope you're getting something out of my responses. But moving forward, I'll be writing the Mailbag on an every-two-week schedule. So, look for the next Mailbag on Dec. 19 and then every two weeks after that.

At the time of publication, Feuerstein's Biotech Select model portfolio was long AMAG Pharmaceuticals, Genentech, Celgene and Gilead Sciences.

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; click here to send him an email.