BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag is open.Larry P. asks, "What do you think about Ampio Pharmaceuticals ( AMPE) and its Australian approval filing for Zertane to treat premature ejaculation." I always find it a bit bizarre and worrisome when U.S.-based companies like Ampio travel to far-flung corners of the globe seeking drug approvals. If you have a viable and commercially lucrative therapy, why not seek approval first in the big markets of the U.S. or Europe? I suspect the answer is that small, inconsequential drug makers like Ampio venture to Australia more for stock promotion back home than real business interest.
Props to ImmunoGen ( IMGN) CEO Dan Junius for calling me Tuesday to debate his side of the valuation argument I articulated last Friday. Junius believes I'm undervaluing the royalty stream that will flow directly to ImmunoGen's bottom line (and cash flow) if/when the breast cancer drug T-DM1 is approved. We agreed to disagree, but I'm glad he reached out to make his views known. Junius also made the point that ImmunoGen's drug pipeline, outside of T-DM1, deserves more credit. Again, his point is well taken, except my sense speaking to various investors is that ImmunoGen is still very much a T-DM1 story. The pipeline is too early stage and not moving forward fast enough to generate much interest. ImmunoGen's most advanced internal drug candidate is IMGN1901, only just starting a randomized, controlled phase II study in small cell lung cancer. Results aren't likely to be ready for another 18 months. In terms of partnered drugs, Sanofi ( SNY) is moving SAR3419 into a phase II study in lymphoma.
Shal60 takes issue with my contention that Keryx Pharmaceuticals' ( KERX) phosphate binder Zerenex won't sell well even if approved because dialysis providers operating under the cost constrictions of a "bundled" Medicare reimbursement system will flock to cheaper, generic phosphate binders. Writes Shal60: "The bundling you describe relates to services (dialysis) and injection meds (i.e. Procrit, Venofer), but not oral meds, which are gotten through the individual's prescription plan. The providers don't get any reimbursement for oral meds, so generic versus brand name doesn't really affect the dialysis center/provider. However, with generics available, the insurance co/prescription plans will likely cover the generic, but charge a copay for brand drug."
Frank J. asks, "I've read a number of your articles on Cel-Sci ( CVM). Like most others, I was sucked in to all the hype of their 'breakthrough' drug Multikine. However, the more information I read, the more I'm starting to think it's just a scam to reel in retail investors. With all your history on drug stocks, can you please share your knowledge with all of us on whether this is a blockbuster or a bust? Thank you." I've lost track of how many times I've counseled biotech investors to run screaming from Cel-Sci, which isn't a drug company as much as it's an efficient cash-transfer mechanism from retail investors to the pockets of Cel-Sci's top executives. President Max de Clara made $645,000 in total compensation last year; CEO Geert Kersten cleared $744,000. Multikine is a bust. If you're new to the Cel-Sci story, I suggest reading my two-part dismemberment of the Multikine phase II study. Part I covers the misleading response rate reported in the study; part II demonstrates the absurdity of a purported Multikine survival benefit, as Cel-Sci still claims to this day.
I had the following instant conversation chat with an institutional biotech trader this week. The subject: Vivus ( VVUS) and the upcoming FDA approval decision for the weight-loss drug Qnexa. Trader: I think a very good risk of a REMS-like delay.
Me: Possible, but what does the stock do on that?
Trader: Stock dips, then buy the
Me: At what point do you turn and short?
Trader: Two hours later? Maybe 10 minutes.
Referring to Threshold Pharmaceuticals ( THLD), @holdiday613 asks, "Any opinions on the TH-302 data?" The phase II data presented this week on Threshold's pancreatic cancer drug TH-302 were essentially in line with results pre-announced in February: A two-month benefit in progression-free survival from 5.6 months in the TH-302+gemcitabine arm compared to 3.6 months in the gemcitabine-alone arm. It was good see a positive dose response in the trial; better still will be an overall survival benefit, but we need to wait for later in the year for that data to mature. Relatively few patients in the gemcitabine arm crossed over to take TH-302, which may bode well for the survival analysis. Risks to a survival benefit: Some imbalances between the patient groups in the study, including performance status, which may have skewed the PFS benefit in TH-302's favor. Median overall survival for TH-302 in the 10-month range would be viewed positively. Threshold shares sold off this week, but that's not unexpected given the huge gains since the initial TH-302 results were announced in February. Threshold was the top-performing biotech stock in the first quarter. Looking ahead, watch to see if Threshold can convince FDA allow an approval filing based on this phase II study. It's a long shot, so I wouldn't count on it happening, but still, an early filing in pancreatic cancer without the need for a larger phase III trial would definitely send Threshold shares higher.