A biotech investor on Twitter compared buying Mast Therapeutics (MSTX) stock to a Powerball ticket.

It's a good analogy. Everyone knows the odds of winning a $400 million Powerball jackpot are beyond astronomical, but you still plunk down $2 for a ticket because... why the hell not?

Likewise, buying Mast at its current price of 31 cents per share is a relatively inexpensive but longshot bet on a potential treatment for sickle cell disease.

Very few people expect Mast's compound vepoloxamer to become the first, new drug for sickle cell disease in almost 20 years. That's exactly why Mast carries a miniscule $60 million market value heading into results from a phase III study due in a few weeks.

The odds of Mast and vepoloxamer achieving positive results from the phase III study might not be as small as Leicester City winning the English Premier League, but they're close. That's the message being sent by the market.

Sickle cell disease is an inherited disorder in which a mutated gene produces misshapen red blood cells. The disease gets its name because the deformed red blood cells looks like sickles or crescents. These sickled red blood cells are inflexible and sticky. When they clump together in blood vessels, sickle cell disease patients experience a vaso-occlusive "crisis" which can last for days and cause extreme pain and organ damage.

Vepoloxamer is designed to act like a hematological lubricant, preventing sickled red blood cells from clumping together and blocking arteries. The goal of Mast's ongoing phase III study is to demonstrate that sickle cell patients treated with vepoloxamer have shorter and less painful crises than patients treated with a placebo.

If approved, vepoloxamer will be used to ameliorate the most damaging symptom of sickle cell disease. The drug will not modify or cure the disease, like BlueBird Bio  (BLUE - Get Report) is attempting to do with its gene therapy. Still, there's hasn't been a new drug approved for sickle cell patients since hydroxyurea was approved in the late 1990s, so new treatments are definitely needed.

Investors' lack of confidence in Mast's sickle cell disease program stems from vepoloxamer's long and troubled history. The drug's provenance dates back to the 1980s with the founding of Cytrx. In the 1990s, Cytrx licensed an older version of vepoloxamer to Burroughs Wellcome (now GlaxoSmithKline) which tried to develop the drug to treat heart attacks. Burroughs/Glaxo abandoned the program because the drug caused unacceptable kidney toxicity.

CytRx then developed a purified version of the drug aimed at reducing the risk of kidney toxicity. This "new" drug became poloxamer 188. CytRx conducted a phase III study of poloxamer 188 in sickle cell patients but the results were disappointing. Treatment with poloxamer 188 shortened the duration of painful crises by nine hours compared to a placebo, but the difference was not statistically significant. A review of the phase III study published in JAMA in November 2001 described poloxamer 188's effect as "modest."

Following the failed phase III study, CytRx divested poloxamer 188 to a small private company, SynthRx, in 2004. For the next six years, nothing happened with poloxamer 188. In 2010, SynthRx was acquired by Adventrx Pharma for about $6 million in stock. AdventRx had stumbled badly trying to develop improved version of old cancer chemotherapies, so buying SynthRx and poloxamer 188 on the cheap was a way to turn the page and start fresh.

Under AdventRx's control, poloxamer 188 became ANX-188. Later, Adventrx became Mast Therapeutics and ANX-188 became vepoloxamer. That's where we stand today.

Mast blames vepoloxamer's previous failures on poorly designed studies and not because the drug is ineffective. The current phase III study is designed, specifically, to leverage what Mast believes were encouraging signs of efficacy seen in two subgroups of patients treated with vepoloxamer from the previous phase III study. Children 15 and younger saw a 21-hour reduction in painful crises, while patients of all ages treated concurrently with hydroxyurea saw the duration of their crises fall by an average of 16 hours.

The graphs below depict Kaplan-Meier curves from the original phase III study published in JAMA comparing the proportion of sickle cell patients in crisis over time. Figure A shows the modest and statistically insignificant effect of vepoloxamer which caused the study to fail. Figures B and C show the stronger drug effect observed in children and patients on concurrent hydroxyurea.

Mast is hoping to replicate the treatment effect seen in Figures B and C with its phase III study. Almost 400 sickle cell disease patients were enrolled, randomized to treatment with either vepoloxamer or a placebo. A majority of the patients will be under 18 years old and on treatment with hydroxyurea.

Mast designed the study with statistical power sufficient to be successful if vepoloxamer reduces the duration of painful crises by 16 hours compared to placebo.

A 16-20 hour reduction in the duration of sickle cell crises is a borderline clinically meaningful outcome for patients and may not lead to widespread use of vepoloxamer, if approved, according to Joe McCann of Slingshot Insights, summarizing the view of a sickle cell disease expert he interviewed recently for investor clients. Shortening episodes of sickle cell crises by 24-30 hours or more would be viewed much more favorably and lead to widespread use, the same doctor said, according to McCann.

Slingshot also held calls with two other sickle cell doctors to discuss vepoloxamer and both were more comfortable using vepoloxamer even if the drug's effect on crisis reduction was more modest, McCann said. He adds that all three doctors believe vepoloxamer is clinically active against sickle cell disease, although the drug's potency won't be known until the phase III study results are disclosed.

Of course, there's a counter argument against Mast and vepoloxamer. I spoke with an investor source who believes Mast's study will fail because vepoloxamer actually shows very weak or no efficacy at all in the old phase III study. He makes his point against Mast using the same vepoloxamer data depicted in the figures above.

The treatment difference between vepoloxamer and placebo only starts to become apparent after 80-120 hours. My investor source views this delayed response as an insurmountable problem because vepoloxamer is administered only for the first 48 hours of the study. The drug's half life is 4-6 hours. Mast's study also doses vepoloxamer for 48 hours.

As depicted in all three graphs above, there is no difference at all between vepoloxamer and placebo during this 48-hour period when patients are exposed to the drug (even accounting for the drug's half life.)

There's simply no way vepoloxamer could be responsible for the separation of the treatment curves at 80-120 hours given the exposure profile of the drug, my investor source believes.

He predicts Mast's phase III study will fail but he's not short Mast because of the already low price of the stock. He has no position in the company.

We'll know if Mast is the biotech Leicester City or just another shattered Powerball fantasy before the end of the second quarter.


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.