NewLink's Pancreatic Cancer Vaccine and the Feuerstein-Ratain Rule

Amidst the stock-rocket phenomenon that is NewLink Genetics (NLNK), I've seen several fans of the company invoke the Feuerstein-Ratain Rule to support their prediction of a positive outcome from the ongoing phase III study of HyperAcute Pancreas (HAP), NewLink's experimental pancreatic cancer vaccine.

Let's work through the math to see if NewLink bulls are right to be optimistic.

The data crunched to derive the Feuerstein-Ratain Rule found an 80% success rate for phase III cancer drug clinical trials conducted by companies with market values greater than $1 billion.

NewLink's stock price has been nothing short of incredible this year, doubling in value to Tuesday's close of $50.40. The company's market cap now tops $1.3 billion, which explains why I'm seeing tweets from bulls abundantly confident in the outcome of the HAP phase III study in pancreatic cancer, which the company dubs "IMPRESS."

Not so fast. The market caps used in the Feuerstein-Ratain Rule are measured four months prior to announcement of top-line study results. Moreover, the F-R Rule was not created with interim analyses in mind, which for obvious reasons, have a higher efficacy hurdle than the analysis used to determine final study results.

NewLink has told investors the first interim analysis of the IMPRESS study will be conducted in the second quarter. Technically, the F-R Rule doesn't apply, but I'm willing to bend the rules in the interest of speculation. Besides, there seem to be many NewLink bulls who believe the HAP vaccine is so effective that it will show a statistically significant benefit for pancreatic cancer patients at the first interim look.

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