George P. writes in with a bearish view on Vanda Pharmaceuticals ( VNDA - Get Report) after the stock soared last week on the surprise FDA approval of Fanapt, the company's schizophrenia drug. I wrote a column Monday looking at the upside/downside scenarios for Vanda's stock price moving forward. To which George P. replied: "If Vanda Pharmaceuticals is able to find a partner
Rick K. writes, "You should have pulled the trigger on Spectrum Pharmaceuticals ( SPPI - Get Report). Now what?" Rick is referring to a cautious write-up I gave to Spectrum in my biotech newsletter March 11. Spectrum recently purchased 100% rights to a clinically effective but commercially disappointing cancer drug called Zevalin. Three previous drug companies have tried but failed to turn Zevalin into a commercial success, so now it's Spectrum's turn. I'm interested in watching how Spectrum performs, especially if the FDA signs off affirmatively on an expansion of Zevalin's label in July. But I'm also a realist and question whether tiny Spectrum can do any better with Zevalin than its previous owners. With that said, I decided not to add Spectrum to my newsletter's model portfolio on March 11 when the stock was trading at $1.54. On Thursday, Spectrum was closed at $4.07. As Rick points out, clearly I missed the boat on this one. I'm not sure how to explain Spectrum's recent run. Insiders have been buying stock, which helps, as is a more general bump in highly speculative biotech and drug stocks recently. It's still too early to judge Spectrum's success with Zevalin. As for Rick's "Now what?" question, I guess I'd be taking some profits on this recent jump in the stock price but hold onto a position in case the FDA decision on Zevalin in July is positive.
Wayne C. writes, "I am interested in your thoughts on Allos Therapeutics' ( ALTH) new drug application. If I understand it correctly the FDA will make some judgment by May 25. Can you give us semi-new investors the usual process of how a drug comes to market? I think Allos' drug is being fast tracked. What are the differences in policies to do this?" Allos submitted its cancer drug pralatrexate to the FDA on March 25. The next step is for the FDA to accept the pralatrexate application for review, which usually occurs after 60 days. In Allos's case, that's May 25. That's also Memorial Day, so expect an announcement from Allos on May 26. Since pralatrexate is a cancer drug, the FDA probably will grant the application a priority, six-month review time. That puts the final approval decision on Sept. 25, or six months from the filing date. By the way, the FDA typically reviews drugs for non-life threatening diseases on 10-month, standard review cycle. As for my thoughts on pralatrexate, I like the drug. I think it will be approved, and I also think Allos is a prime candidate for a partnership with and/or a takeover by a larger drug company. Allos was a long stock in my newsletter's model portfolio.