BOSTON (TheStreet) --Vertex Pharmaceuticals (VRTX) will release results from the first phase III study of its experimental hepatitis C drug telaprevir sometime this quarter. I'm starting to get a bunch of email about expectations for the telaprevir data, including this message from Sanjin M., who asks:" Any guesses on what to expect from Vertex Pharmaceuticals when it announces phase III hepatitis C test results? Will the stock go higher if the data are positive?"
Michael M. writes, " Adam, I saw on Briefing.com that an analyst, I think MKM Partners, talked about Gilead Sciences (GILD) having an interest in buying InterMune (ITMN). Any thoughts?" Gilead could buy InterMune. Or Gilead could buy Pharmasset ( VRUS). How about Vertex or United Therapeutics ( UTHR)? I've heard mergers-and-acquisition conjecture connecting Gilead to all of these companies (conjecture being the operative word). All could have a strategic fit within Gilead, although there are equally as forceful arguments to be made against any of these rumored deals. Gilead's M&A track record to date is mixed. The acquisition of Triangle Pharmaceuticals in 2002 was brilliant because it brought the company the HIV drug Emtrvia, which Gilead then combined with its own HIV drug Viread to form the blockbuster combo-pill Truvada. Later deals acquiring Myogen and CV Therapeutics, however, have not yielded comparably positive returns for the company or shareholders to date, which leaves a lot of investors with a queasy feeling when thinking about Gilead possibly venturing forth to gobble up another company. Sanford Bernstein biotech analyst Geoff Porges (one of the smartest, most thoughtful biotech analysts in the business, by the way) says managing a growing cash stash is something Gilead management must address in the near term. The company net cash balance is expected to rise from $2.9 billion last year to more than $22 billion in 2015, Porges says.
Moving on. An email from Duncan P.: " In a recent press release from Adventrx Pharmaceuticals (ANX), it was stated that the company will meet with the FDA in the last week of April to review the rejection of the ANX-530 New Drug Application. Do you foresee this meeting having any impact on the stock price, positive or negative?" Adventrx shares took a hit on March 1, when the company received a "refuse to file" letter from the FDA, turning away Adventrx's approval application for the chemotherapy drug ANX-530. In the letter, the FDA said drug stability data from the third-party commercial manufacturer of ANX-520 was insufficient. As Duncan points out, Adventrx is meeting with the FDA in the last week of this month to determine what sort of (and how much) drug stability data on ANX-530 is needed for the agency to accept the application for review. Adventrx CEO Brian Culley has already said the company is planning for a "worst-case" scenario in which the FDA will require 12 months of stability data on ANX-530 that comes from the actual manufacturing facility to be used for the commercial supply of the drug. If this is what the FDA asks for during April's meeting, Culley has said Adventrx could resubmit the ANX-520 application in six or seven months because the needed drug stability testing of ANX-530 is already underway. In round figures, let's just say this scenario has Adventrx re-filing ANX-530 in December, so all in, the drug is delayed by a year. Getting back to Duncan's main question, if Adventrx can emerge from its FDA meeting with a requirement of less than 12 months of new stability testing of ANX-530, then Adventrx may be able to re-file sooner. That should be good for the stock. Whether or not Culley and his team can convince the FDA to lower its manufacturing requirements won't be known until Adventrx updates investors after the meeting. For the record, I'm not too high on the commercial prospects for ANX-530, as I've stated in previous Mailbags.
One more time... "BioZombie" writes, " I wanted to ask you something that seems to get (annoyingly) brought up on every message board for a stock you mention. Could you please address the masses regarding positions that your co-workers, friends, family, etc. may hold in stocks that you write about? It seems every time you write something negative (which does seem to be most of time, since MOST drugs, if history is any indicator, are doomed to fail) the boards scream that pals of yours must hold a short position in the underlying stock. Does TheStreet or any person you know have prior knowledge of your writings, and if they do, are they able to take a position based on an article you are about to publish? I think if this were clearly answered (and I'm sure it has been in the past) the rest of us could limit some of the crybabies shouting conspiracy theory every time you write something negative." I don't expect to convince the haters and conspiracy nuts, but once again, I point everyone to TheStreet's conflict of interest policy for editorial employees like myself. This is one of the most restrictive conflict of interest policies for financial reporters and editors you will find anywhere, and in fact, the policy was quite radical when instituted by Jim Cramer when he founded TheStreet a decade or so ago. As a reporter/columnist for TheStreet, I cannot own any individual stocks, nor can I short any stocks. (The only permissible exception is owning stock in TheStreet.) I am prohibited from investing in investment partnerships like hedge funds. I am allowed to own mutual funds, which I do through my company-sponsored 401(k). (Although I'd be hard-pressed to tell you which mutual funds I own.) The only compensation I receive for my work is a paycheck from TheStreet. I have no Swiss bank account. I have no friends, relatives or hedge funds holding my investments in secret trading accounts. Manila envelopes filled with cash are not being delivered to my door. Lastly, I don't tell anyone about stories I'm writing in advance of publication. Now, let's be clear on this last point. A big part of my job involves speaking to a wide swath of sources, many of whom are professional investors -- including biotech hedge fund managers. This is a common practice for all financial journalists, and in fact, it would be impossible to do my job well without my Wall Street sources. How do I know that these hedge fund sources aren't taking positions in stocks in advance of any story I write? By never telling them when I plan on publishing a story, or even what information or viewpoint will be contained in the story. That's the best I can do and still perform my job. Let's be realistic here. Hedge fund managers aren't stupid, so if I call someone and we have a conversation about stock XYZ, Mr. Hedge Fund doesn't have to exert too much brainpower to deduce that I might be planning on writing about stock XYZ. But will he know what I plan on writing? No. Will he know when I plan to publish? No. And let's not forget, I'm usually quizzing Mr. Hedge Fund about stock XYZ because I know he already has a long or short position. Most of my Wall Street sources have been in my Rolodex for years. I trust these people because their track record with me is golden. They know how to pick stocks, they know how to pick apart clinical data and they have finely honed bull#$%% detectors. If someone betrays that trust, he (or she) is gone. Lastly, I'm not naïve. I've been a business journalist for 20 years. I know that everyone has an angle, everyone talks his book, so I don't just blindly believe everything I'm told.
Finally, via Twitter @ywsr snarks, "Hi Adam, I am thinking of suing u for a gazillion bazillion dollars. I hurt my finger when I opened your tweet." You want to sue me? Get in line, buster. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.