The Biotech Stock Mailbag is open.

Randall H. writes, "You recently did an article on rheumatoid arthritis. Have you looked at the drugs coming out from Chelsea Therapeutics ( CHTP)? They have two drugs, CH1504 and CH4051 that are similar to methotrexate, but without the liver toxicity due to them being metabolically inert. Do you feel either of these drugs have a shot?"

Methotrexate is a standard and widely used treatment for rheumatoid arthritis. The drug is also generic. All these factors present a challenge for any drugmaker seeking to develop a methotrexate alternative.

Chelsea's CH1504 is in phase II studies, while CH4051 recently completed a phase I study. Safety data from both drugs suggest better tolerability and less toxicity than methotrexate; it's still a bit early to determine whether either drug has superior efficacy. (Only CH1504 has early efficacy data collected.)

I think both drugs have potential, and one or both will probably be partner-worthy at some point. A concern I'd have is apathy. As I said, methotrexate is generic and widely used, so any drug seeking to replace it will have to demonstrate a significant advantage in either safety or efficacy, perhaps even both.

Chelsea shares have moved sharply higher since April, from $1 to more than $4. Some of that is probably tied to CH1504 and CH4051, but I'd think investors would be more focused on the coming phase III results from the company's lead drug droxidopa.

Results are expected this quarter from the first of two phase III studies of droxidopa in patients with orthostatic hypotension, a condition in which blood pressure drops when a patient stands up, causing dizziness and other symptoms.

This study was included in the clinical trials calendar I wrote recently.


Next, an email from Joseph V., who writes, "What are your thoughts today on Generex Biotechnology ( GNBT)? I have many people asking me about it lately. I tried to do some research and found your negative answers. It seems that this product is being consumed in a few countries. Please look into this."

I'm as skeptical about Generex today as I was back in April 2008 when I first wrote about the company and its insulin spray for diabetes. The product, which patients spray onto the linings of their mouths, is approved and apparently used in India and Ecuador, but I haven't heard any legitimate or respected diabetes experts in the U.S. or Europe legitimize the Generex technology, which would give me pause as an investor.

It's also hard to take Generex seriously knowing that the company sells a weight-loss spray called CraveNX and BABOOM!, an energy spray, at convenience stores across the U.S. and Canada.

Generex shares, priced at more than a buck back in April 2008, now trade for around 50 cents.


Dan M. writes, "Adam, what's up with AMAG Pharmaceuticals' ( AMAG) stock price? It seems to be doing the opposite of what it should be doing (which is of course, go up so I can make money). The stock seems to be getting hit hard given recent approval, ample buyout speculation, pricing which appears to be above and beyond expectations and low float. Is this just a sell the news thing or is there something more to it?"

AMAG's stock price has sunk into the high $40s after reaching the high $50s just a week ago on the Feraheme approval.

I'm hearing everything and nothing as explanations. I hear there was disappointment that Feraheme pricing -- higher than expected -- wasn't high enough. I hear rumors of a follow-on stock offering coming soon. I hear worries about the pending Feraheme launch and the negative effects of Medicare bunding in 2011. And finally, I hear that Amgen ( AMGN) was all set to buy AMAG, but pulled the plug on a deal because of the positive results for bone drug denosumab.

I'm not surprised to see some selling in AMAG after approval and said as much in a column last week. I've also learned to be patient with this stock and to avoid being distracted by all the near-term noise, most of which means nothing fundamentally.

Yes, I'm a bit surprised to see AMAG in the high $40s, but I see that as an opportunity to buy the stock, not a reason to panic and sell.


An email from Rich R. asks, "What are your thoughts on the current price of Anadys Pharmaceuticals ( ANDS) after the news you reported on awhile back about financing? Looks like the stock is getting cheap here if the drug gets FDA approval for Phase III."

I fear Anadys is dead money until the company can collect more data on its hepatitis C drug ANA598. A phase II study testing the drug in combination with standard hep C therapy will start soon. A phase III study is still a ways off.

Recall that Anadys released phase I data on ANA598 in April, demonstrating the drug's antiviral activity at three different doses, but patient dropouts due to rash raised concerns about the drug's safety and sent Anadys shares tumbling.

The selloff took another leg down last month when the company raised money on its own instead of signing a promised partnership for ANA598.

All of this has cast a shadow over ANA598. New data confirming the drug's efficacy and, more important, alleviating concerns about its safety, is something I want to see before getting positive on the stock again.


David D. writes, "I just read your article on the CEO of Elan ( ELN) and the transaction with Johnson & Johnson ( JNJ). I bought Elan at $8 during the recent activities. Is the J&J buyout a positive or no affect on Elan? I understand it will help reduce their debt and help the overall balance sheet but is this stock an eventual winner?"

The pop in Elan's stock price caused by the J&J deal announcement on July 2 was modest and short-lived. Elan shares have now fallen below the level seen before the announcement.

The cash infusion from J&J certainly helps strengthen Elan's balance sheet and will help the company pay off some of its debt. Good stuff, for sure. But Elan remains a work in progress because of real concerns about its multiple sclerosis drug Tysabri as well as the risks involved with its Alzheimer's drug development program.

For Elan's stock to move appreciably higher, I think you need to see a significant and sustained uptick in Tysabri sales (i.e. a re-acceleration of revenue growth) or a major clinical success from the Alzheimer's program (perhaps fantastic phase II data from the ELND005, the drug partnered with Transition Therapeutics ( TTHI), or positive results from the phase III bapineuzumab studies).


Finally, to conclude with a chuckle, some of Geron's ( GERN) investors continue to rage at me with a demonstration of their intelligence. From Josh H., I received the following (I bleeped out Josh's cursing but left his spelling and grammar mistakes intact):

" Bleeping dumb looking idiot i hope you and your ugly face and you bleeping family for that matter loose all your money and your possessions and i hope that god takes your right to breath away bleeping bleep . you look like a little bleep you bleeping geek i bet u got picked on in school to too bad thoese kids didn't bleeping whoop your bleep to a coma in fifth grade."

"Loose" again! For the millionth time, people, it's "l-o-s-e" not "l-o-o-s-e."

As I was putting this Mailbag to bed Thursday night, Geron filed a shelf registration statement with the Securities and Exchange Commission, seeking permission to sell up to $250 million in stock and debt.

Is Geron setting itself up to raise more money, perhaps after the stock pops on the announcement of the first patient enrolled in its stem cell trial later this summer? Time will tell, but it certainly fits the Geron playbook of using hype to sell more stock.
Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.