Osiris Therapeutics ( OSIR) CEO Randall Mills sounded very much like a guy stalling for time. Osiris' adult stem cell therapy Prochymal failed two phase III studies in graft-versus-host disease (GVHD) last September, but ever since then, Mills has insisted the Prochymal data were positive and strong enough for the company to seek approval from the U.S. Food and Drug Administration. Yet Osiris can't seem to actually complete the Prochymal approval filing with FDA, which is why Mills spent a good amount of time on the second quarter conference call explaining how it's taking months to write up statistical analysis plans and schedule meetings with FDA (meetings not yet scheduled or held, by the way) so that, eventually, Osiris will be ready to file Prochymal. Which is pretty much exactly what Mills said on Osiris' first-quarter conference call in February. Of course, Mills doesn't want to hem himself in with an exact date for a Prochymal FDA filing. He knows but won't say that data from two failed studies in GVHD, despite all the post-hoc subgroup analyses aimed at prettying up results, stands very little chance of convincing U.S. drug reviewers to pull out the approval stamp. So, instead, Mills stalls for time and makes excuses. Osiris filed for Prochymal's approval in Canada, where the drug was granted accelerated approval. That's likely to lead to an "accelerated path to rejection," quipped Lazard Capital Markets in a research note that reiterated a sell rating and $2 price target.
Encouraging news from Amarin's ( AMRN - Get Report) second quarter update. Patient enrollment was completed ahead of schedule in the phase III "MARINE" study testing the company's prescription-grade Omega-3 (fish oil) drug AMR101 in patients with very high triglyceride levels. Results from the MARINE study are expected in early 2011.I covered Amarin, AMR101 and the large commercial market opportunity for a prescription Omega-3 drug in a previous Mailbag. Meantime, enrollment in the second AMR101 phase III trial, ANCHOR, is now more than halfway completed. This study, which enrolls patients with high triglyceride levels, is expected to also read out results next year.
The second quarter update from Cyclacel Pharmaceuticals ( CYCC) was less inspiring. The company is still waiting on the U.S. Food and Drug Administration's acceptance of the Special Protocol Assessment (SPA) for the phase III study of sapacitabine in elderly patients with acute myeloid leukemia. Cyclacel and the FDA have been hashing out the details of the SPA since the first quarter. Likewise, Cyclacel is still promising -- but has not yet delivered -- final data from a phase III study of seliciclib in non-small cell lung cancer.
Vanda Pharmaceuticals ( VNDA - Get Report) continues to suffer from the slow and disappointing commercial launch of Fanapt, the company's schizophrenia drug that is marketed by Novartis ( NVS). Second-quarter Fanapt sales were a paltry $700,000 after Novartis filled the inventory channel with almost $21 million of the drug in the first quarter. While Vanda says monthly Fanapt prescriptions reached 4,000 in June from just 500 in February, at approximately $500 per prescription, it's still going to take a long time before demand works through existing inventory. Neither Vanda nor Novartis is providing Fanapt sales guidance and new promotional marketing materials approved by FDA in May have yet to accelerate Fanapt prescriptions. Vanda's valuation is buoyed by $207 million in cash, most of it coming from Novartis' $197 million up-front licensing payment for Fanapt. However, the company is still waiting for a ruling from the Internal Revenue Service over whether or not this Novartis payment is taxable income. Vanda wants to use its large net operating losses to offset any taxes, but if IRS says no (due to ownership changes at Vanda in 2008), the company will need to write a large check to the government. How large? Assuming a standard 35% corporate tax rate, Vanda will owe the U.S. government roughly $69 million. Various state tax implications come into play as well, but suffice to say that a negative IRS ruling will hit Vanda in the pocketbook hard. Vanda's stock will suffer too. The current $7-8 a share valuation floor (buoyed by the cash) gets knocked down to $3-4 a share. Vanda expects a ruling from the IRS in the next couple of months, which makes this a more important near-term event for the company than Fanapt sales.
If there was real institutional investor interest in Afrezza, why did Mannkind choose to raise money with Seaside?Back to Mann and his $250 million in loans: Mann has decided to accept Mannkind stock in matching increments to the Seaside purchases in lieu of cash repayment. Mann will accept stock at market price (undiscounted) and with a $7.15-a-share floor. If Mann "purchases" all 18.2 million shares under the agreement, Mannkind's debt would be reduced by approximately $130 million.
I'm taking a victory lap after Vermillion ( VRML - Get Report) reported disappointing second-quarter sales of its OVA1 ovarian cancer test totaling $45,000. Back in March, I questioned the utility and commercial potential for OVA1 and said Vermillion, at $32 a share, was toppy and should be a source of funds for investors who'd profited from the stock's rise. Vermillion shares were down to $7 intraday Thursday after the company reported paltry OVA1 sales. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.