Craig P. writes, "I have a question about pharmaceutical phase I and phase II studies. I see a lot of companies completely blow up (see Keryx ( KERX), Pharmos etc.) when their phase III studies completely failed and showed no evidence of efficacy versus placebo. Okay, so how do these studies show promising results and very good efficacy in phase I and phase II trials? Is this a case of the management teams of these companies scamming the investment and scientific community by handpicking patients that only show a response? Basically, my point is this: How is it possible that these drugs fail in phase III when they are so effective in phase II studies?" Craig asks a great question, because there isn't a biotech investor out there -- pro or amateur -- who hasn't been flummoxed when a phase III study they thought was guaranteed to succeed comes up negative instead. Sometimes, all the homework and due diligence in the world can't protect against a drug blowing up unexpectedly. With a few noteworthy exceptions, management teams don't purposefully set out to manipulate early clinical data in order to bamboozle investors. What happens more often is that phase I and phase II studies are poorly designed so that the data collected don't translate into success when pivotal phase III studies are run. The classic example of this phenomenon occurs often in cancer studies, when a company will conduct an uncontrolled or non-randomized study that purports to show some tumor response or a survival benefit. Unfortunately the study doesn't have a control arm, so there is nothing to compare the drug's effect against. More often than not, the benefit seen in the phase II study doesn't translate when a randomized, controlled phase III study is conducted.
John R. is back again with a question about Xoma ( XOMA): "The more I read on XOMA's 052 the more I feel like this has blockbuster written all over it. Monthly or better Diabetes care -- that's almost a cure!! Why am I the only one buying? This has to make them a prime takeover target. What do you say about them? Am I missing something?" The XOMA drug John refers to is XOMA 052 which Xoma is developing in diabetes. I wrote about XOMA 052 in a Sept. 12, 2008 Mailbag, (actually, in response to a question from him), so click here to read that. The Xoma stock chart since September looks downright ugly. A big part of that, of course, is the market meltdown. More recently, Xoma has also been under pressure because of concerns about a slowdown in royalty revenue stemming from Europe's decision to pull Genentech's psoriasis drug Raptiva off the market due to safety issues.
David M. asks, "Regarding Elan ( ELN), any idea when we might hear some updates/news regarding its Alzheimer's drug bapineuzumab, currently in development? I know you were not a big fan of the phase II results last summer. Any thoughts would be appreciated." Elan has submitted the bapineuzumab data from the phase II study for publication in what the company calls a major or top-tier medical journal. I'd expect to see that publication this spring or during the summer. When I met with Elan in January, CEO Kelly Martin said the company planned to schedule a meeting with the FDA to nail down the regulatory endpoints for the phase III studies. I haven't checked back with Elan to see if that FDA meeting took place yet, and if so, what the outcome was.
Alright, now for the fun: a selection of recent hate emails, many of which were sent by aggrieved shareholders of Geron ( GERN). You'll probably have two questions after reading below, so the answers, quickly: 1) yes, this is what a good portion of my inbox looks like on a weekly basis; and 2) no, it doesn't bother me. In my line of work, you grow a very thick skin. Jack T. writes, "if craemer is your guru I understand still having some belief in this pile of crap..hundreds of millions of $$ to develop berivimat..then sell it for 7 million now that investing,,,you are now a qulaified as a BLEEP idiot..imop...or the BLEEP wipes that take your advice are,,,take your pick,,,or maybe you're just an unwitting complicit fool,,now there's a real possibility,,,or just a run of the mill part of the criminal conspiracy with the mgt ?.....fraud will come up sooner or later,,,and they'll find out...here's hoping..welll you know,,,"
From Lawrence S.: "Mr. FartStain It's been awhile, I thought you were charging for your great advise? Hey Dendreon is due out by April 1st, don't forget to bash that before the results. Now you are picking on the Pinkies! I see ACTC is one on your list. Were where you when I was buying that up at .03? Sitting on a half a MILLION of free shares now. I see you are just a useless piece of BLEEP. Some things I guess will never change. Hey I also hold physical Gold & Silver along with Guns & ammo, you may want to slam that too. And lets not forget the stockpile of food I have put together."
Robert M. chimes in: "Yes it's me shorty.There is a special place in Hell for you. I would read Dante's Inferno tonight before you go to bed, if you live that long. You are truly a Cretan Mr. Mensa. I am ashamed to share the same gene pool with you. "
John P. writes, "WHY DONT YOU GO OVERDOSE ON SOMETHING?"
Apparently, John P. felt the need to make a stronger point, so the next day sent this: "hey you bald headed BLEEP. i just turned your wothless BLEEP over the sec. tell me how much money to get from big pharm to trash little companies with competitive drugs? all of your financial records are going to be exposed."
Lastly, an email from Rick B. "Are You implying that if you invest in something you believe in ,that You are Greedy ? Are You BLEEP Nuts ! or just half retarded, notice i gave you only half, when you are probably fully retarded ! go crawl back under the rock you came under from Idiot ! !!! My mother dided because she could not get another kidney that wouldn't reject .BLEEP hole !"