$ARIA Can someone remind me of that short thesis again? Favus? Bueller? Anyone?— Colfax (@ColfaxCapital) September 6, 2013I described the Ariad Pharmaceuticals ( ARIA) short thesis in March and it hasn't changed significantly. Shorts continue to believe Iclusig's cardiac and other toxicities will prevent the chronic myeloid leukemia (CML) drug from generating the blockbuster sales already baked into the company's current $4 billion market valuation. Earlier this week, I connected with a couple of institutional investors shorting Ariad for an update. Iclusig total (TRx) script growth is flattening out while new (NRx) scripts are trending down, suggesting Ariad has saturated the T315I CML patient population (third line) and isn't attracting significant numbers of second-line CML patients to Iclusig therapy. Ariad is likely to deliver Iclusig sales this year that meet Street expectations, but next year's consensus sales forecast will come down.
@adamfeuerstein @ceels66 $srpt what's your prediction of SRPT price movement if drisa meets its primary end point with acceptable toxicity?— marketreader (@marketreader8) September 11, 2013I walked through multiple scenarios for how Sarepta Therapeutics' ( SRPT - Get Report) stock price may react to the drisapersen data in this August Mailbag. Moving on.
@adamfeuerstein @Hitthebid01FDA meeting on painkillers today sounded positive for $ZGNX. You listen?— BWallace (@StarfishExplore) September 10, 2013On Tuesday, the FDA announced a safety labeling changes and post-market study requirements for companies that sell long-acting and extended release opioid painkillers. FDA Commissioner Margaret Hamburg said the new safety requirements were meant to "to combat the crisis of misuse, abuse, addiction, overdose, and death from these potent drugs that have harmed too many patients and devastated too many families and communities." The safety crackdown on long-acting opioids comes as FDA is still reviewing Zogenix's ( ZGNX) Zohydro, an extended-release formulation of hydrocodone that doesn't contain acetaminophen. It's important to note that Zohydro has no abuse deterrent technology. Given the FDA's strong actions to crack down on the abuse of long-acting opioids, it seems completely illogical for the agency to reverse course and approve Zohydro. I can't explain why it's taking FDA so long to issue an approval decision on Zohydro. Zogenix has been in limbo since March when FDA delayed a ruling. Most recently, the company said it expected to hear from the FDA by the end of the summer. Well, it's mid-September and still nothing. Last December, an FDA advisory panel voted against recommending Zohydro's approval, mainly for safety reasons. After the negative vote, Zogenix shares sank to around $1.50 as investors essentially wrote off any chance of Zohydro's approval. Zogenix shares were trading at $1.88 on Thursday, suggesting the market already prices in doubts about Zohydro's approval chances.
@adamfeuerstein @AndyBiotech with the end of the summer biotech bull market, what 5 stocks do you see with the most downside for end of '13— aa (@flsxphea1) September 10, 2013I'm not sure the end of the biotech bull market is near. The stamina exemplified in the chart is incredible: ^NBI data by YCharts
Of course, not all biotech and drugs stocks increase in value forever. FDA rejections and failed clinical trials tend to have a depressing effect on share price. With that in mind, here are five stocks which I predict will end 2013 lower than where they trade today: 1. Vanda Pharmaceuticals ( VNDA): I expect the tasimelteon FDA panel on Nov. 14 to end badly for Vanda. 2. Coronado BioSciences ( CNDO): I don't believe in the "hygiene hypothesis" so I predict negative results from the CNDO-201 phase II study in Crohn's disease. The risk: Phase II study results can be fungible, meaning flaws are more easily swept under the rug. 3. Oncolytics Biotech ( ONCY): In my opinion, management has worked hard to delay and hide as much Reolysin data as possible because the experimental cancer-killing virus is incapable of killing cancer at all. The ugly truth about Reolysin can't be hidden forever, however, so I expect the upcoming data from a study in head-and-neck cancer patients will be a total bust. 4. Amarin ( AMRN - Get Report): The stock is beaten up already so the short is less compelling, but I expect the Oct. 16 FDA panel to recommend against approving Vascepa for the so-called "Anchor" patient population. Instead, the panel will tell FDA to wait two years for definitive cardiovascular outcomes data from the ongoing REDUCE-IT study. 5. Vivus ( VVUS - Get Report) and Arena Pharmaceuticals ( ARNA - Get Report): Two stocks but they're related. Their respective obesity drug launches are flailing. Script growth is totally unimpressive and the stocks, while down sharply already, are still over-valued. Samuel R. asks: There have been confusing reports on NewLink Genetics (NLNK - Get Report) and the interim analysis of the pancreatic cancer trial. Can you call the company to see what is really happening. Your help would be most appreciated. It's pretty simple. NewLink CEO Charles Link spoke at a couple of health care investment conferences this week and pushed back the timing on the interim analysis of the algenpantucel-L (a cancer vaccine) phase III pancreatic cancer study. The trigger for the interim analysis is 222 death events in the study. The company first expected the analysis to take place in the middle of the year, then it was pushed back to the second half of the year. When asked for an update at the investor conferences this week, Link said the company is now unsure if the 222nd death in the study will occur this year at all. NewLink spokeswoman Gina Nugent confirmed Link's new guidance for me: "Adam, What Dr. Link said during the Baird and Stifel conferences (webcast available) was that the trigger event for the first of three planned interval analysis, which will occur when 222 death events are recorded, has not yet occurred and that management is not sure that this first trigger event will occur before the end of 2013." What does this delay in the interim analysis mean? NewLink is encouraged, arguing pancreatic patients in the study's control arm are unlikely to be living longer than expected. Therefore, patients being treated with algenpantucel-L might be living longer. The study is blinded so there is no way to know definitively what's going on until the interim analysis is conducted. Skeptics (and yes, I'm in this group) believe the more likely explanation is NewLink messed up the survival assumptions used to design and power the study. All patients -- not just those treated with algenpantucel-L -- are living longer than NewLink expected. We've seen ample examples of phase III studies of cancer drugs in which delays in reporting survival endpoints ended badly -- GlaxoSmithKline (Mage-A3) Vical ( VICL) (Allovectin) and Oncoythreon ( ONTY) (Stimuvax), most recently. NewLink is no different. This delay in the interim analysis increases the risk that the phase III study ultimately fails, not the other way around. With that said, I also believe a lot of time is being wasted by fixating on the outcome of the algenpantucel interim analysis. Even under the most ideal circumstances, the odds that the cancer vaccine works so effectively to stop the study early for efficacy are very small. The most likely outcome is that NewLink continues to enroll patients and we wait for more definitive results next year. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.