Two reasons institutional investors shy away from Cyclacel Pharmaceuticals ( CYCC), which sports a puny enterprise value despite a cancer drug, sapacitabine, in a phase III trial for acute myeloid leukemia. 1. Poor leadership: Cyclacel CEO Spiro Rombotis has a reputation for being stubborn, combative and dismissive -- personality traits that don't exactly endear him to investors. Warm and cuddly are not prerequisites for attracting the Wall Street crowd -- see Harvey Berger at Ariad Pharmaceuticals -- but Cyclacel doesn't have drugs nearly as compelling and valuable as Ariad does, so it's harder to overlook Rombotis as a risk. Lest I be criticized for focusing too much on Rombotis' personality, I'll also note that his CEO tenure has also been marked by drug development delays, poorly executed financings, a reverse stock split and a messy capital/governance structure. 2. Sapacitabine stands a good chance of failing in the phase III study: Cyclacel's SEAMLESS study enrolls elderly patients with newly diagnosed AML who are not candidates for intensive chemotherapy. The patients are randomized to one of two treatments: Sapacitabine plus Dacogen or Dacogen alone. The primary endpoint of the study is overall survival. Dacogen is not approved in the U.S. for the treatment of AML. Dacogen is approved for myelodysplastic syndrome but an FDA panel rejected the drug for AML earlier this year. In the clinical trial that failed to impress FDA or its outside experts, elderly AML patients treated with Dacogen reported a median overall survival of 7.7 months compared to 5 months for patients treated with best supportive care, including cytarabine. After starting the SEAMLESS phase III study, Cyclacel reported results from a single-arm phase I/II study of sapacitabine plus Dacogen in elderly AML patients. The median overall survival reported for the sapacitabine/Dacogen combination was 7.7 months. Small differences in the two separate studies aside, equivalent survival of 7.7 months for Dacogen alone and the sapacitabine/Dacogen combination doesn't inspire confidence in the outcome of the ongoing SEAMLESS study. The rosiest thing I can say about Cyclacel now is that the stock's current market value prices in sapacitabine's failure. That leaves way more upside in the stock if the phase III study does come out positive relative to the downside risk if the study fails.
Regarding Vivus ( VVUS) and its newly launched obesity pill, Robert S. writes, "Thanks for the news on the Qysmia launch date. Will you be tracking the sales/prescriptions and share with your readers?" I'll do my best. Tracking the Qsymia launch through third-party data services like IMS Health and Wolters Kluwer is made more difficult because Vivus is only selling the obesity pill through mail order pharmacies. Investors will be watching the Qsymia launch very closely -- as they will Arena Pharma's Belviq launch as soon as it takes place. I'll definitely pass along any information I can get my hands on.
Mick Waters asks a follow-up question to my discussion of Celsion ( CLSN) in last week's Mailbag: "Regarding the Feuerstein-Ratain rule, is the $300 million market cap measured the day prior to the phase III results being announced? Based on your rule, you would call the Celsion HEAT study to fail with the market cap under $200 million right now?" We used four months prior to data announcement as the time point for the Feuerstein-Ratain rule. If you assume (guess) HEAT study results are coming in November or December, we'd look at Celsion's sub-$300 million market cap in July-August and predict Thermodox failure. The rest of the Feuerstein-Ratain goes like this: Companies with market caps of $1 billion or more was the best predictor of phase III cancer drug success -- 78% of studies analyzed positive. The results for companies with markets caps greater than $300 million but less than $1 billion was mixed -- 18% success rate. "Bear at Night" responded to the same Celsion discussion, questioning whether the Feuerstein-Ratain rule should apply to Thermodox. "Not sure the Feuerstein-Ratain rule should apply, since you studied companies with new drugs rather than drug delivery systems. Thermodox is just a way of releasing in high concentrations a drug