BOSTON ( TheStreet) -- Renton L. opens this week's Biotech Stock Mailbag: "Was there anything noteworthy in the AVI BioPharma ( AVII) update announced this week? Are you still optimistic about this drug's chances; maybe the market is getting this drug all wrong?"AVI's eteplirsen is the first drug ever to significantly increase the production of dystrophin in boys with Duchenne muscular dystrophy (DMD). That's pretty darn remarkable, so yes, I believe there is reason for optimism.
Jay continues, "With this feedback from the experts, full data to be released at ASCO in a few weeks, and the stock valued at $450M in market capitalization (including $230M in cash), isn't Aveo wildly undervalued? Is this a major error in value here? Axitinib was just approved with a very modest benefit in PFS -- including nearly no benefit in patients who were Sutent refractory. Tivozanib approval appears to be a slam dunk with an approximate three-month improvement in progression-free survival and the only drug to show head-to-head superiority versus Nexavar in the first-line setting. Your thoughts?" As Jay recounts accurately, Aveo did make the rounds of health-care investor conferences in mid-February (not just RBC Capital's), telling investors that influential kidney cancer doctors (the so-called KOLs) gave tivozanib high marks based on confidential access to phase III safety and tolerability data that will be presented publicly at ASCO in June. Aveo shares were trading around $13 in mid-February. Thursday, the stock closed at $11.29. Something is not right. Instead of running up into ASCO, Aveo has been running down. I talked to several buy-side investor sources and what I heard mostly was the same skepticism and doubts about the tivozanib data and its commercial opportunity first raised when the phase III data were top-lined in January. Tivozanib is good enough to be approved but where it fits into the crowded kidney cancer treatment market is not settled, at least in the minds of investors I spoke with. Aveo believes strongly that tivozanib will compete with Pfizer's ( PFE) Sutent as first-line therapy, mainly on superior safety and tolerability. Obviously, the doubters disagree, especialy since tivozanib wasn't studied head to head against Sutent. Pfizer is running a phase III study of axitinib in front-line kidney cancer, also using Nexavar as a comparator, which adds more risk to the Aveo story. The investor skepticism may change dramatically when the tivozanib data are presented at ASCO. We'll see. It is one of the more important events at the meeting this year, particularly with Aveo trading so weakly.
Jay B. writes, "Spectrum making you look foolish." I'm getting used to saying this: I'm wrong about Spectrum Pharmaceuticals ( SPPI) -- again! First-quarter Fusilev sales of $51 million rocked the house and track almost perfectly with monthly sales data from Wolters Kluwer (WK), which forecasted $56 million for the quarter. Fusilev monthly sales are growing, not shrinking or even remaining stagnant. Growing. Sales from January through March, according to WK: $13.8 million, $18.5 million and $23.3 million. As long as the leucovorin shortage continues, second-quarter Fusilev sales could reach $60 million-plus. With no growth at all, Fusilev sales are on pace for $200 million this year, so it's not inconceivable to see the drug do $250 million-plus. Although I'd like to forget it, I recently opined that Fusilev's growth was finished; the drug would be lucky to grow 10% to 15% this year, I said. Oof. Stupid me. I expected Spectrum shares to trade higher Thursday on optimism about Fusilev's growth, but instead the stock sold off rather hard, down 6% to $10.52. I don't get it, but then, that's been my problem with Spectrum all along. @pharatsis asks, "Any silver lining for $CELG long today?" Not this week. Celgene ( CELG) first-quarter earnings really $%&! the bed. Top- and bottom-line misses; Revlimid sales weak (for the third consecutive quarter!) Ugly. Celgene shares slumped Thursday. The lesson here: Stocks that trade at premium price-to-earnings multiples are not allowed to have bad quarters, lest they be punished with "multiple contraction."
Shudder The silver lining for Celgene depends on your time horizon. The company's long-term growth outlook likely remains unchanged. Short term is where Celgene gets dicey. Revlimid sales estimates for this year and next look to be coming in because European approval for first line/maintenance multiple myeloma (the key growth driver) is taking longer than expected (third quarter instead of second quarter.) Investors are also growing more nervous about EU regulators not granting Celgene the broad first-line label for Revlimid that is expected. If Revlimid's star is tarnished (at least in the short term), Celgene may have to rely on clinical trial catalysts to get investors excited. It's been a long time since Celgene was a clinical trial story, but before the end of the year, the company will be releasing results from phase III studies of apremilast in psoriasis and psoriatic arthritis and a phase 2 study in rheumatoid arthritis. Data from two phase III studies of Abraxane in melanoma and pancreatic cancer are also expected this year.
Clinical trial catalysts also bring added risk, of course. MoeW56 writes, "I don't follow you on Twitter but heard you were on there being positive on Onyx Pharmaceuticals ( ONXX). Can you explain?" The FDA scheduled an advisory panel on June 20, to review Onyx's multiple myeloma drug carfilzomib. That's positive for the stock and the drug. On Twitter Thursday, I predicted a positive panel, meaning the experts will vote to recommend carfilzomib's approval. The Street is generally bearish on carfilzomib approval this summer but I like the contrarian view. So does my colleague Nate Sadeghi, his recent take on Onyx is worth a read. The regulatory bar for blood-based cancer drugs has been set very low after FDA's Oncology Drugs Advisory Committee in March recommended approval for Talon Therapeutics' ( TLON) Marqibo. If that drug can get a positive vote, carfilzomib should be a lock. Gilead Sciences' ( GILD) new corporate slogan: "Profits Over Patients." On its first-quarter conference call Thursday, Gilead executives basically gave the middle finger to hepatitis C patients by offering all manner of lame excuses for not collaborating with Bristol-Myers Squibb ( BMY) to advance the highly promising combination of daclatasvir and GS-7977 into phase III studies. John Martin and his Foster City gang paid $11 billion for Pharmasset and damn it if they're going to give away the biggest slice of Hep C pie. If patients suffer, well, that's too bad. Of course, this is the Biotech "Stock" Mailbag, so Gilead's piggish behavior is great news for shareholders. Let's all high five! Gilead may actually have the superior hepatitis C regimen in GS-7977 and GS-5885. I certain wouldn't begrudge the company from moving forward with this combination therapy as quickly as possible. But c'mon, there is nothing stopping Gilead from combining GS-7977 with Bristol's daclatasvir at the same time. Except naked greed. Some hepatitis C patients have started an online petition seeking to pressure/shame Gilead into doing the right thing. You can view and sign the petition here. --Written by Adam Feuerstein in Boston. >To contact the writer of this article, click here: Adam Feuerstein.