DMT36 emails, "You were pretty harsh on Xoma (XOMA) on Twitter Monday when they announced the Servier partnership deal for XOMA 052. Don't you think your comments were a bit too negative? The stock was up big which made you look foolish." I was harsh on Xoma. For those who don't follow me on Twitter (and why wouldn't you?), I called Tuesday's Xoma- Servier deal "idiotic," which "reinforced XOMA management's reputation as a bunch of incompetents." I also said the partnership was "bad fundamentally and doesn't validate XOMA 052's potential." Upon further reflection and away from the pressure of snap judgments, I was too critical. DMT36 is right, and I appreciate him pointing out my overreach. I still believe the Servier partnership is less than ideal, but it's probably the best deal Xoma could manage, given its troubles, including a dwindling cash account that threatened to derail the company. This is probably more true now after Xoma on Thursday night released the highly anticipated interim results from the phase IIa study of Xoma 052 in Type 2 diabetes. Disappointing and underwhelming would be the two words I'd use to describe the phase IIa data. Xoma 052 is no longer looking like a potential blockbuster diabetes drug, which probably explains why Xoma was forced to marry up on modest terms with a smallish, private French drugmaker like Servier instead of negotiating a lucrative deal with a larger and stronger partner. Mark Guterman, a thoughtful and active Xoma shareholder, helped me step back from the ledge and see the value in the Servier deal more clearly. "This is clearly not the best deal, but it does get Xoma out of the penalty box and on to the junior varsity team," Guterman told me. Xoma's many missteps have scared off institutional investors, which now make up only 10% of the company's shareholder base, down from 60%," says Guterman. What he likes most about the Servier partnership is that it solves Xoma's cash problem by requiring Servier to pay for much of XOMA 052's development costs. Xoma also has the option to buy back U.S. and Japan rights to diabetes and cardiovascular disease indications. That's why the upfront payment to Xoma, just $35 million and most of that in the form of a loan, is so small, he adds. Guterman acknowledges that the phase IIa diabetes data released Thursday weren't encouraging, but he wants to see results from the larger phase IIb diabetes study later this quarter before reaching any definitive conclusions. "I'm still positive on the company given minimal cash burn and the ability to move preclinical assets through the pipeline," he added. Makes sense to me, although I think Thursday's disappointing Xoma 052 diabetes data puts a new overhang on Xoma's stock, which will take a lot to clear away. Xoma closed Thursday at $6.78 but fell 11% to $6.04 in the after-hours session upon release of the diabetes data. The bottom-line data from the study -- a blood glucose (HbA1c) reduction of just 0.2% for Xoma 052-treated patients compared to an HbA1c reduction of 0.1% for placebo patients -- fell well below expectations. On a more positive note, Xoma 052 did demonstrate a 49% reduction in C-reactive protein, a key marker of inflammation, compared with a 2% reduction in placebo. This finding may bode well for future studies in cardiovascular indications, but this phase IIa study was about diabetes, so the lousy HbA1c reduction is the headline.
Paul K. asks, "Opexa Therapeutics (OPXA). What do you make of this huge move in the stock?" Wednesday's 54% surge in Opexa's stock price (86% at the intraday peak) was great if you're a nimble biotech trader, especially someone who likes to churn through small-float, momentum-driven stocks (and knows when to sell and bank profits.) If you're a biotech investor -- more of a fundamentals oriented, buy-and-hold type -- Wednesday's action was totally unjustified and potentially ruinous if you decided to buy in at the top. I'm a fundamentals guy, so I've followed Opexa and the development of its multiple sclerosis drug Tovaxin for quite some time. I know that the main Tovaxin phase II study failed to demonstrate any benefit for MS patients -- tanking Opexa's stock price in 2008 when the data were released. Since that time, Opexa has been reanalyzing subsets of patient data from that failed study in order to find something positive to say. The company has also, since 2008, been telling investors about plans to meet with FDA to discuss possible phase III studies and of potential partnering interest in Tovaxin from other drug companies.
Via Twitter, @jrock452 asks, "Your take why Amarin raised cash when
@crusadernz tweets, "Would you have expected at least some efficacy data to be released after 1st look into phase 3 Stimuvax $ONTY?" On Dec. 22, Oncothyreon ( ONTY) filed an 8-K stating an independent data monitoring committee recommended the continuation of the phase III "START" study of Stimuvax in non-small cell lung cancer. This study is being run by Oncothyreon's Stimuvax development partner, the German drug firm Merck KGaA. The "START" study is double blinded and placebo controlled, which means participating patients and doctors do not know who is being treated with Stimuvax or a placebo. As a result, it's not unusual at all for efficacy data to remain blinded and undisclosed during the course of the trial. In fact, that's the way studies like these are supposed to work. Phase III studies like "START" are designed with independent data monitors, who are charged with insuring that patients are not harmed. They're the only people who are supposed to have access to unblinded data until the study is done and ready to be analyzed. Data monitors also can stop studies early if an experimental drug demonstrates a profound benefit for patients. Typically, however, the statistical hurdle is very high for early stoppage due to efficacy, so again, it's not unusual that at the first look, the data monitors recommended the continuation of the Stimuvax study.