Biotech Stock Mailbag: Cyclacel Fallout, the Skinny on Vivus, Celldex's Crash

BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag is for readers who use email instead of Twitter: Check out my the Twitter-centric Mailbags from earlier this week here and here.

Andy S. writes, "My question to you is in response to Dacogen and its relation to sapacitabine developed by Cyclacel Pharmaceuticals (CYCC). Could you please explain whether Dacogen's approval/disapproval will impact sapacitabine's Phase III trial? Thanks!"

Some background: On Feb. 9, an FDA advisory panel voted not to recommend an expanded approval for Astex Pharmaceutical's ( ASTX) cancer drug Dacogen to cover treatment for elderly adults with acute myelogenous leukemia (AML). The FDA's decision date for Dacogen in AML is Tuesday, March 6, but given the negative panel vote, an approval isn't likely.

If FDA doesn't approve Dacogen for AML, this poses a problem for Cyclacel Pharmaceuticals, which is testing its drug sapacitabine in combination with Dacogen as a potential new AML therapy. A phase III study comparing sapacitabine plus Dacogen versus Dacogen is ongoing.

The short answer is "no" -- Cyclacel's phase III study should remain unaffected if FDA rejects Dacogen in AML. I asked Michael Becker of MD Becker Partners and a paid consultant to Cyclacel for help explaining why:

1. The sapacitabine phase III study was designed with a Special Protocol Assessment in which FDA agreed to the use of Dacogen despite the drug not being approved for AML. Dacogen is approved as a treatment for myelodysplastic syndrome (MDS), another blood-related cancer.

2. In its briefing documents for Dacogen, FDA notes that "clinical trial" is a commonly accepted treatment option for elderly AML patients. In other words, says Becker, unapproved drugs can be used as control drugs in a phase III trial of AML.

3. Even if FDA rejects Dacogen, it's still an available therapy for AML in the U.S. (where Cyclacel is conducting the sapacitabine study) and insurers pay for it, says Becker.

4. If FDA approves Dacogen, then Cyclacel is also fine, except, of course, the phase III study still has to demonstrate that sapacitabine plus Dacogen is better than Dacogen alone.

Chris L. asks, "What's your take on the top brass at Vivus (VVUS) dumping their shares in the past week?"

Smart. Opportunistic. Expected.

If you own stock or options with a cost basis of $4 per share and their value rises suddenly to $22 per share, wouldn't you be selling too?

I hope so.

I'm not sure if this matters, but the investors who gobbled up shares of Vivus in this week's financing didn't seem to be bothered by the insider selling.

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