DUBLIN, Ohio ( TheStreet) -- As Neoprobe ( NEOP) prepares to seek U.S. approval for its lymph node mapping agent, a New York hedge fund manager has shorted the stock and is taking an unusual step to prevent the company from getting a review by regulators.

Martin Shkreli of MSMB Capital Management filed a citizen petition with the U.S. Food and Drug Administration last week requesting Neoprobe's Lymphoseek be denied a review due to "severe deficiencies and flaws" in the conduct of two phase III clinical trials.

Betting against FDA drug approvals is a well-worn (and often profitable) strategy in Wall Street's biotech trading canon. Shkreli, however, is pushing new boundaries by seeking to directly influence the FDA review process in his favor.

"I'm protecting my interests using whatever means are available to me… I think investors filing citizen petitions should be done more," says Shkreli.

Neoprobe shareholders have taken to various stock message boards accusing Shkreli of using the citizen petition to manipulate the company's stock price unfairly, or perhaps even illegally. Neoprobe share at Friday's close of $3.75 are down 32% since the stock reached a 12-year high of $5.48 on May 31.

Healthcare attorney and regulatory expert Peter Safir says Shkreli is within his rights to lobby FDA in this way.

"The first word is citizen and that means citizen petitions are open to anybody, including investors with a financial interest in the companies involved," says Safir, a partner and co-chairman of the food and drug practice group at Covington & Burling in Washington, D.C. Safir does not represent Shkreli or Neoprobe.

Citizen petitions are rarely if ever filed for altruistic reasons. For example, Teva ( TEVA - Get Report) is financially motivated to keep a competitive version of Copaxone developed by Momenta Pharmaceuticals ( MNTA - Get Report) off pharmacy shelves, so the Israeli drug maker has filed three citizens petitions with FDA seeking to delay or derail the agency's review. FDA rejected all of Teva's citizen petitions but has not yet made an approval decision on Momenta's version of Copaxone.

Is what Shkreli is doing with respect to Neoprobe any different than what Teva sought to do against Momenta?

"It's unusual," says Safir, referring to Shkreli's decision to file a citizen petition. Most are filed by companies, organizations or their representative law firms. "No one files a citizen petition when it is not in their competitive advantage to do so," he adds.

Shkreli openly disclosed his short position in Neoprobe as part of his citizen petition -- a gesture of full disclosure that isn't required and is therefore often lacking from other FDA citizen petitioners, adds Safir.

"We do believe the rationale behind the filing is incorrect," says Neoprobe president Mark Pykett, who adds the company isn't disputing Shkreli's right to file a citizen petition against Lymphoseek.

Neoprobe also believes FDA will approve Lymphoseek as a new lymph node detection agent based on efficacy and safety data from two phase III trials that compared Lymphoseek to vital blue dye, the only such agent currently approved by the FDA.

These two studies meet FDA's regulatory standard that will enable the agency to approve Lymphoseek with a label that indicates the agent's use for the "anatomic delineation of the lymphatic system" in patients with melanoma and breast cancer, says Pykett. This is the same FDA-approved indication for vital blue dye, which is why Neoprobe designed its registration studies using blue dye as the comparator.

Neoprobe expects to file Lymphoseek with the FDA in the third quarter.

Neoprobe critics claim FDA won't approve Lymphoseek based on these clinical studies because doctors use a combination of vital blue dye and a sulfur colloid agent to map out the lymph node system of cancer patients, even though sulfur colloids are not FDA approved for this use. In other words, Neoprobe didn't compare Lymphoseek to the current standard of care for lymph-node mapping, therefore FDA will find the clinical data lacking.

"The FDA has long held the standard of 'best current care' as a control group," writes Shkreli in his citizen petition. "This policy secures the agency's public health mandate by assuring newly approved drugs and diagnostics are attractive treatment options…License status of control group is not relevant to FDA. There are many examples where the FDA has requested control groups with off-label or non-approved agents. A 'physician'schoice' control group for a sentinel lymph node biopsy study would likely result in the majority of investigators using a combination of radioactive colloid and blue dye. The FDA should not allow Lymphoseek be compared to a marginalized regimen."

Dr. Michael Sabel of the University of Michigan critiqued the Lymphoseek clinical trials during a session at the American Society of Clinical Oncology (ASCO) annual meeting last week. He called Lymphoseek a "good first step" but raised questions about the use of vital blue dye as the comparator in the two phase III studies, noting that the standard of care in lymph node mapping is vital blue dye plus a sulfur colloid agent.

Neoprobe's Pykett says Shkreli and other critics are making a fundamental mistake because the company is not seeking Lymphoseek approval (at least initially) for sentinel lymph node biopsy -- a procedure in which doctors map the lymphatic system to find the first lymph node closest to the primary tumor. Finding the sentinel node is important because it's the point at which cancer spreads, or metastasizes, throughout the body.

"Sentinel lymph node biopsy has a specific meaning and requires a higher burden of proof," says Pykett. Neoprobe is conducting a third phase III study in head and neck cancer patients which compares Lymphoseek to regional nodal dissection, a current standard of care in that type of cancer. If the study is positive, Neoprobe will seek expanded approval for Lymphoseek for the detection of sentinel lymph nodes.

Pykett says the decision to move ahead with Lymphoseek's initial approval filing based on studies comparing Lymphoseek to vital blue dye alone came after "at length" discussions with FDA in which the agency made a clear distinction between a lymph node mapping indication similar to vital blue dye and sentinel lymph node detection.

"I think the FDA will appreciate that the two are the same," responds Shkreli. "Neoprobe is trying to make the distinction that anatomic delineation of the lymphatic system doesn't imply that they're selecting the sentinel node. However, the only reason blue dye is used is to identify the sentinel node. So in essence, they're trying to piggyback on something that needs to be clinically validated, which the regulators won't like."

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.