Fisking Ray Dirks on Medgenics and Shaming Seeking Alpha

BOSTON ( TheStreet) -- Ray Dirks posted a screed against Idenix Pharmaceuticals ( IDIX) and other hepatitis C drug companies on Seeking Alpha Monday night riddled with factual errors and misstatements. Idenix and other stocks were the foil Dirks used to promote Medgenics ( MDGN) and its interferon "biopumps." Instead, he embarrassed himself with his fundamental ignorance about hepatitis C.

As for Seeking Alpha, one has to ask if the web site has any competent editing and fact-checking capabilities at all.

A proper fisking of Dirks' column follows:

Dirks writes: Unstoppable Medgenics has gotten closer to crushing the competition for a better hepatitis C drug and moving to the front of a $16.5 billion market. Just as the first patient is being treated with INFRADURE, Idenix Pharmaceuticals -- trying valiantly to seek a cure for the insidious virus -- finally admitted its failure in coming up with a better drug.

Medgenics unstoppable? Other than a brief spike to $15 per share last summer, Medgenics has been unable to escape the $4-5 per share trading range since its U.S. public equity debut in April 2011 -- an offering done only with the healthy dose of warrant sweeteners, by the way. Medgenics has a tiny 11% institutional ownership.

Dirks: Imagine you're a doctor. You have a patient in pain with a disease that has no cure and who looks to you for help avoiding a future that could only be brightened by a liver transplant. Now imagine the single drug you can prescribe has well-documented side effects so heinous that 50% of patients stop taking it. If you find yourself in this position, then you have a patient with hepatitis C.

Hepatitis C is a serious, life-threatening disease. It's also curable. Vertex Pharmaceutical's ( VRTX) Incivek combined with long-acting (pegylated) interferon and ribavirin cures 70-80% of patients with the most common form of hepatitis C. Merck's ( MRK) Victrelis is similarly effective in curing hepatitis C in combination therapy.

Dirks: Much has been written on PEG-interferon alpha, the once-touted wonder drug for hepatitis C that later drew side effects ranging from lupus and diabetes to suicide. After more than 20 years with nothing new, scientists finally came up with a potential blockbuster -- the NS5B inhibitors that could stop the virus in its DNA tracks and dramatically change the scarred landscape of hepatitis treatments. One problem: They tend to kill people.

Whoa. NS5B inhibitors -- more commonly known as nucleotide/nucleoside polymerase inhibitors or "nucs" -- are an emerging and potent class of oral, direct-acting antivirals against hepatitis C but only one of these drugs has been linked to a patient death

Dirks: Last August, global giant Bristol-Myers Squibb (BMY) was forced by the FDA to stop all clinical trials of its NS5B after the death of a patient. And as a testament to the herd mentality of Big Pharma's cutthroat greed that competes to be the first, other firms joined the NS5B contest to replace interferon while analysts gushed over a potential $20 billion market for the new drugs.

Wrong. Bristol halted a clinical trial of its guanosine-based nuc BMS-096084 after a patient died of heart failure. Additional patient suffered serious heart-related side effects.

The "other firms" in the race to develop a potent Hep C nuc include Gilead Sciences ( GILD). Gilead's sofosbuvir is the most effective Hep C pill in clinical development today and will be filed for U.S. and European approval later this year. The drug has not been linked at all to significant toxicity, let alone patient deaths. If Medgenics is "unstoppable," how best to describe Gilead's stock performance? It's more than doubled in the past two years.

Dirks: With Bristol Myers knocked out of the picture, others companies such as Gilead Sciences and Achillion Pharmaceuticals rallied on. I think it's only a matter of time before they all wise up and realize this drug is not only useless but dangerous. Thankfully for Americans, the FDA is doing something right by seriously questioning whether clinical trials of the NS5Bs should go on.

Wrong. FDA is concerned with guanosine-based nucs and placed two such drugs from Idenix and one from Biocryst Pharmaceuticals ( BCRX) on clinical hold. The safety of uridine-based nucs under development by Gilead, Vertex, Idenix and others have not been questioned and FDA has not placed these drugs on clinical hold.

Dirks: In September, Idenix was notified by the FDA that its clinical trials were being scrutinized after its NS5B caused deaths in preclinical trials -- we're talking about rats here. So why did it take five months for the company to finally admit its failure and throw in the towel? In the misguided eyes of Idenix, all is not lost. It will partner with Janssen, a Johnson & Johnson (JNJ) company, to develop another drug for hepatitis C that is related to the faulty NS5Bs. I can only scratch my head in wonder as to how Janssen, basically a marketer of old Johnson & Johnson drugs like Procrit and Remicade, suddenly becomes a cutting-edge force in a brand new compound for an epidemic virus.

What? Idenix' lead nuc IDX184 was well into phase II studies in humans without any significant toxicity or safety issues when FDA placed the drug on clinical hold due to the problems discovered with Bristol's drug. IDX184 did not kill rats.

Idenix entered into a partnership with J&J to develop IDX719, an NS5A inhibitor, which is an entirely different class of Hep C drug.

Dirks: What Medgenics will be offering the medical community is a safe, biologically engineered alternative to treating hepatitis using the highly effective interferon, only not in its over-processed pegylated form that's the cause of so many problems. Israel, which is advanced in promoting innovative therapy, moved quickly to allow Medgenics to not only conduct clinical trials of INFRADURE, but also to do them in the most efficient way possible -- smaller and quicker -- to bring the treatment to market as soon as possible.

Finally, we get to the reason for Dirks' error-strewn column. He's promoting Medgenics! I wrote about the company and its biopump" technology last week.

A phase I study of Infradure being conducted in Israel -- the technology's first experience in humans -- only began January. Medgenics has yet to obtain permission from the FDA to begin human testing of the product in the U.S.

Even if you assume generously that Medgenics' technology has merit, Infradure will be obsolete next year when interferon in any form is eliminated from the standard of care for hepatitis C. Nucs and other next-generation direct antivirals -- the drugs Dirks derides and doesn't understand -- won't require interferon to cure hepatitis C.

Dirks implies Medgenics' interferon pumps will cure hepatitis C on their own. That's nonsense. Interferon is not an effective cure for hepatitis C without additional drugs on board to assist -- ribavirin or direct-acting antivirals. Medgenics is a developing a hopelessly late, me-too version of interferon, which is why the company struggles for recognition and investor interest.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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