Thanks for clicking on another edition of the Biotech Stock Mailbag.
John T. writes, "Adam, enjoyed reading about you in the STAT article and have followed some of your writing over the years. I respect your work and opinion. I saw a comment you made on Twitter about Intrexon (XON) CEO R.J. Kirk. You said you don't trust what Kirk says. Kirk did well in the past. He often had large stakes in the companies he piloted. He never sold shares prior to the eventual buyout. He demonstrated impressive conviction. Are there examples to support your sentiment? I've tried to dig for reasons not to trust him, but most of his projects seem prescient. Thank you."
I don't trust R.J. Kirk because very few of the claims he makes about any of Intrexon's synthetic biology business ventures are backed with independently verifiable information. It's all promise, no proof. Intrexon is very much like Theranos. I'm not the first person to make this comparison, but it is fitting.
This line from a recent New York Times profile of Kirk and Intrexon stands out as a big red flag:
It is hard to judge the strength of Intrexon's core technology, known as UltraVector, which is a computerized system for putting together modular DNA pieces to make complex genetic circuits. The company, saying it wants to protect its trade secrets, has not published articles about it in scientific literature.
I counted at least eight instances on Intrexon's May 10 quarterly conference call where analysts asked specific questions about the company's various business units and Kirk said he would not provide an answer.
Theranos is a good lesson for anyone who trusts a business or an executive operating without transparency.
We hear from Intrexon and its supporters that Kirk is a scientific genius and the company's technology is just too complicated for ordinary investors and analysts to understand. It's only a matter of time before the Intrexon curtain gets pulled back and investors discover nothing there.
Kirk made his billions by peddling me-too and mediocre drugs to desperate buyers. Let's examine the record. He led a group of investors that took over Scios, which was developing the heart failure drug Natrecor. Kirk sold Scios to Johnson & Johnson (JNJ) for $2.4 billion in 2003, but serious and sometimes deadly safety risks associated with Natrecor, discovered post approval, rendered the drug essentially unusable.
Kirk's next company, New River Pharmaceuticals, developed the attention deficit disorder drug Vyvanse. Shire (SHPG) bought New River for $2.6 billion in 2007 because it was desperate to find a replacement for Adderall XR, which was losing patent protection. Vyvanse is no better and in some ways is worse than Adderall XR, but the only thing that mattered to Shire were the new patents.
Lastly, there's Clinical Data, the Kirk-led company before Intrexon. Back in 2011, Kirk's sycophants were insisting Clinical Data's newly approved depression drug Viibryd was potent enough to deliver $2 billion in peak sales. Kirk sold Clinical Data to Forest Labs for $1.2 billion. Forest is now owned by Allergan (AGN) . Viibryd sales last year were $327 million. Allergan is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.
Kirk is a wheeler dealer. The people telling you he's a scientific genius leading a revolution in synthetic biology are blowing smoke.
Pir M. writes, "You have speculated that Janet Woodcock might be sympathetic to Duchenne muscular dystrophy patients. You indicated that she has been seen mingling with and taking pics with them and urging the FDA panel to be flexible -- and might be willing to approve eteplirsen. Given your speculation, what exactly can she say to justify her action? Make her case for her if you can. Can she cite efficacy? Sympathy? Political support (I hope not), lack of adverse side effects? Thanks for your response via the Mailbag."
There's really nothing much new to say about Sarepta Therapeutics (SRPT) . All the arguments for and against the U.S. approval of eteplirsen have been made. The FDA has until May 26 -- 13 days from today -- to announce its decision.
The justification for granting accelerated approval to eteplirsen can be found in the surprisingly frank and supportive comments made by the FDA's top officials, including Janet Woodcock, made during last month's advisory committee meeting. How do you reconcile these statements -- many essentially arguing for eteplirsen's approval -- with the more negative tone of the agency's medical review team? One explanation is that Woodcock and the other top FDA officials are leaning toward approving eteplirsen, even if that means bending (not breaking) some longstanding agency precedents.
Sarepta bears believe the statements made by Woodcock and her colleagues were only meant to be conciliatory to DMD patients, their families and advocates. Ultimately, they think, the agency is science-based and, therefore, will have no choice but to reject eteplirsen.
Not that it matters what I think, but I'd like to see the FDA approve eteplirsen. Whether that happens or not is a toss-up. I readily acknowledge that approving eteplirsen on the flimsiest of clinical evidence is unusual and in some ways rewards Sarepta for bad behavior. But an accelerated approval coupled with strict requirements for confirmatory data seems like a wise compromise that doesn't also punish DMD patients.
May 26 cannot come soon enough. The denouement of the Sarepta/eteplirsen drama is long overdue.
Terry V. writes, "Please don't tell me you're getting tired in the 10th round against Northwest Biotherapeutics (NWBO) , having punched it out non-stop for the previous nine rounds! If it were an actual fight they would have stopped it, but on Wall Street you have the right to fleece suckers until they throw in the towel. Has Northwest Bio reached the point where there is nothing new to say?"
To use your analogy, Northwest Bio has been pummelled to its knees. The referee looks ready to step in. The bell might save Northwest Bio for another round but everyone knows the fight is over.
Rand Y. writes, "Hey Adam, I find it little odd that you are being little aggressive bashing the stock CytRx (CYTR) lately 1 month before the data due. What is exactly your real motive?"
My motive is to explain, using available clinical data, why the CytRx aldoxorubicin phase III study in soft-tissue sarcoma is likely to fail. With the study results expected in late June, writing about aldoxorubicin now seems perfectly appropriate. It's your choice entirely whether to agree with my analysis or not. I don't make investment decisions for you.
Ken. K. writes, "Thanks for the article on CytRx. I have been investing and following this study for four years. After reading your article, I wish to share this idea. The entire premise of binding albumin to doxorubicin by the researchers at CytRx is to eliminate, or at the very least, reduce the toxicity inherent in doxorubicin-only dosages. It's not that doxorubicin is minimally effective in treating soft tissue sarcoma, but the duration of exposure has been its shortcoming. [Aldoxorubicin] reduces the toxicity and maximizes the cancerous tumors' exposure to doxorubicin and has, so far, demonstrated to be significantly superior and effective to doxorubicin alone."
I understand and agree on the premise of aldoxorubicin: Use the albumin linker to get more cancer cell-killing doxorubicin inside the tumor while minimizing systemic toxicity. Unfortunately, CytRx's own data show the albumin linker is too sticky. The "extra" doxorubicin is not released inside the tumor cell; therefore it can't kill cancer cells.