BOSTON (TheStreet) -- Welcome back to the Biotech Stock Mailbag. 

The bull thesis on Puma Biotechnology (PBYI - Get Report) is simple. CEO Alan Auerbach will sell the company (which consists of a single asset, the cancer drug neratinib) to a Big Pharma suitor needing a drug to plug a revenue hole. Last October, I explained how one institutional investor got to a $7 billion valuation for Puma. I've been skeptical about a Puma takeout mainly because 1) neratinib faces significant competition, particularly in its lead breast cancer indication; and 2) the drug causes a lot of diarrhea, which will make it unpopular with patients.

Now that AbbVie (ABBV) is paying $21 billion to acquire Pharmacyclics (PCYC) for half of the cancer drug Imbruvica, you'd be crazy not to re-assess. Big Pharma seems willing to pay any price necessary to acquire biotech assets necessary in an effort to plug revenue holes and fuel potential future growth. The prices being paid may never be recouped but that isn't stopping Big Pharma from writing big checks first and worrying about the consequences later.

So, yes, Puma could find a buyer willing to take on the risk of neratinib -- and pay a hefty premium to do so. Puma is presenting important neratinib data from a study in the adjuvant breast cancer setting at the American Society of Clinical Oncology annual meeting in late May.

Logic tells me Medivation (MDVN) should be a more likely takeout candidate because its prostate cancer drug Xtandi is already approved (less risk) and is kicking butt commercially. Astellas already owns a piece of Xtandi, so why not own the rest? If not Astellas, why not someone else? Buying half a blockbuster cancer drug didn't deter AbbVie.

Sticking with cancer, throw Clovis Oncology (CLVS) into the "could be acquired" bucket for its lung cancer drug rociletinib and ovarian cancer drug rucaparib. More possible targets: Agios Pharma (AGIO), Juno Therapeutics (JUNO) and Kite Pharma (KITE). As with Puma, buying any of these companies requires taking on development risk. Is that too much of a deterrent or will the desperate need to replenish pipeline overcome any fears?

The second interim analysis from the HyperAcute Pancreas vaccine (HAP, or algenpantucel-L) phase III study is due sometime between now and the end of the second quarter, NewLink executives said on the company's last quarterly conference call.

The first planned look at the pivotal study, which NewLink calls "IMPRESS," occurred one year ago. The independent monitors told NewLink to continue the HAP study with no changes. At that time, I explained why this "non-outcome" was a disappointment for NewLink. The underlying assumptions used by the company to design the HAP study were incorrect, which raised the risk that the study would ultimately fail, or at best, demonstrate a small, clinically meaningless benefit for pancreatic cancer patients.

The second interim analysis is important for NewLink, but I can't help think the company is already prepping investors for more bad news. On the last conference call, NewLink Chief Medical Officer Nicholas Vahanian said "alternative statistical methods" might be used to analyze the overall survival results from the IMPRESS study.

You should be concerned when a company says it's making significant alterations to a study mid-stream, even if the changes are made while data are still under lock. Stellar cancer drugs do not rely on statistical gimmicks to demonstrate superior efficacy. When you look at results from the most successful clinical trials, the benefit is crystal clear.

"Alternative statistical methods" sounds like rationalization for mediocre results.

NewLink is a different company today than it was one year ago. Investors give the company credit for its ebola therapy partnered with Merck (MRK) and the early-stage IDO inhibitor immunotherapy program partnered with Roche (RHHBY). If HAP blows up, the impact on NewLink's stock price is likely be more muted.


 

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.