We made no effort to include or exclude companies to make the rule work any better. What we observed is undeniable: Micro-cap companies had no success at all with phase III cancer drug clinical trials.

The next logical step is to test this rule prospectively, which is why we've focused on Keryx and perifosine. Keryx fits the pattern of a micro-cap cancer drug stock with phase III trial results coming in approximately four months time. Based on historical precedent, that spells failure for perifosine. We'll learn if the rule holds true once Keryx makes public the results.

@stefbeck34 asks, "What was the success rate of the second strata? Wouldn't Aeterna and Keryx be greater than a $300 million market cap currently?"

There were 21 companies on the list with market values of $300 million or less, with a 0% success rate in phase III cancer drug clinical trials.

The list also contained 11 companies with market caps between $300 million and $1 billion. The clinical trial success rate for this mid-tier or second strata group was 18%. (Two positive clinical trials out of 11.)

Lastly, there were 21 of 27 studies reported by the larger companies analyzed (greater than $1 billion capitalization) that were positive, or a 78% success rate.

Combining Aeterna and Keryx (because they co-own perifosine rights) gets a market value of $350 million. That's large enough to push perifosine into the second strata of our analysis, but even here, the odds for a favorable outcome are very low.

Via Twitter, my friend and fellow biotech scriber Matt Herper from Forbes chimed in: "The implication of @adamfeuerstein's study is that the odds are even longer than you think."

Agreed. We all know that cancer drug development is hard, and harder still for smaller companies. In that regard, what Ratain and I are saying is not new. What is new, however, is that we've illustrated numerically just how challenging it can be for micro-cap cancer drug companies to succeed.

@claudeclement asks, "Why not put that article out a couple months ago when KERX's market cap was above $300M and saying it will succeed?"

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