lol. I was talking per dose. I guarantee if the patient refuses the first one, the doc won't order the 2nd or 3rd!

More seriously, it is important to note docs are not charged for the total treatment. Only for doses actually delivered. If it gets lost in delivery or arrives past the 18-expiry, That's DNDN's loss. Same with inbound apheresis material since DNDN absorbs all those costs in their effort to avoid the BEXXAR nightmare.

As near as I can tell, this is the first time a Medicare drug has created this much expense this close to the first prescription. Medicare does not provide for pre-approved reimbursements like private insurers do, so docs are in the dark as to whether they will get paid.

With other drugs of simlar therapy cost, the therapy is spaced out over months. For example, before it was generic Taxotere therapy and the associated supportive meds was comparably expensive. That expense was doled out every three weeks over 200+ days. If a doc prescribed Tax on day 0 and got a reimbursement denial on day 45, he was out a couple of doses.

IF a doc doses Provenge on day 0 and gets a reimbursement denial on day 45, then he's out the total cost or $93,000 plus his practice costs to administer.

This makes Provenge different, something we called "uniquely expensive" and Dendreon calls "cost density".

The doctor if the patient flatly refuses, who then tries to collect from the patient via the contracts the patient signs.

Once the doc accepts delivery, they are on the hook for the $31,000

Just quoting what management told me.

156 patients will be excluded from the final analysis. These are patients with 6 months of treatment at the time of halt.

That's how rolling review was intended, but every company we've spoken with (n=dozen or so) has said they received nothing from the FDA except for an acknowledgement the file/truck o' paper was received. A couple of companies said they were notified the materials appeared to be complete, "subject to detailed review", but most didn't receive that.

It could be with our small sample size I'm getting the wrong impression, but I don't think so. The FDA has apparently indicated they don't want to waste scarce review time until the app is complete and, importantly, finalized. They don't want to review a submitted piece that might be changed later when the whole app is finalized. they also don't want to waste review time on an app that might never be complete.

I'd go so far as to say any company who makes a big deal about the BLA/NDA being "rolling" -- i.e. constantly harping on what an advantage it gives them, how the company has such a close working relationship with the FDA the FDA is "allowing" a rolling BLA/NDA, and/or how it will speed review -- should be looked at with suspicion.

Either they are trying to hype things or they are so naive they don't realize any Fast Track app explicitly allows rolling submission.

FYI, the FDA doesn't begin review or the review clock until the final segment of the application is in. Many new biotech investors don't understand this point and some shady companies imply otherwise.

You assume both the stock postion and the option position are new, which I did not. I assumed an existing stock position.

My comment on buying calls dealt more with the reality most investors buy calls that are out of the money and stay out of the money, expiring worthless.

OK. Show the math.

eh?

$1000 value for 100 shares of a $10 stock.
$50 for a put option at $7.50.

Stock goes to $5. You have $700.
Stock stays at $10. You have $950.
Stock goes to $15. You have $1450.

$50 for a $10 call (being generous on the price, here)
Stock goes to $5. You have zero.
Stock stays at $10. You have zero
Stock goes to $15. You have $1450.

Not I.

Which is why I've often said it takes no intelligence to short biotech, only strong money management skills.

It is nothing like buying a naked call because after expiration you still have a position.

If you were shorted DNDN at noon the day before the 2007 panel, you were underwater by 30-something percent by the time I was done talking on CNBC that afternoon. By the time the market opened two days later, your $3 short turned into a $19 cover.

IF your broker was inept or particularly kind, you might have been able to hold on a little while and cover in the $12-13 range -- but even professional investors were not extended that courtesy. The huge $19/share premarket block was a broker forcibly buying in a hedge fund position and putting that fund out of business before the opening bell.

Now DNDN in 2007 was an aberration because of the options market forces at the time. That was not the mother of all short squeezes strictly from the equity side but more a function of the short stock, short calls trade one particular hedge fund had convinced everyone was the "right" play.

There is another subtle difference with shorting in that losses on short sales require you to come up with more money. Losses on long position simply leave you with less money than you had.

Shorting a stock is inherently more risky. Always.

As far as options are concerned, I agree with you when it comes to buying calls. Selling calls and buying puts are transactions all biotech investors should work to become expers at because they can significantly add to annual performance.

This not accurate.

Short a 100 shares at $10 and you spend $1,000, but you do not know your risk. Shorting stocks is an undefined risk transaction.

The stock goes from $10 to $20. You now have to pay into your account another $1,000 to cover the stock. It goes to $30. You have to put in another $1,000. You;ve now lost $2,000 on your original $1,000 investment.

The more the position goes against you, the higher your loss. If the stock goes up to infinity, your risk is infinity.

If you are long, the worst that can happen is you lose 100% of your money if the stock goes to zero. This is not true for a short. Your los could be ewual to 200%, 300% or more of your original investment.

This is why puts are more attractive than shorting, IMO. There is an absolute defined loss (the cost of the put).

If you are shorting against the box (sell to open in an account with an existing long position), then the calculations are different. As long as you don't short more shares than you are long then you can cover with the shares in your account. Shorting against the box is rare these days as most biotech company option chains offer reasonable liquidity and spread (an unappreciated side effect of the 2007 Dendreon CTGT panel meeting).

The authors called the analysis by stage "posthoc" in the 2005 JCO paper (second sentence, second paragraph of the discussion section), so Sally is correct. The fact patients were stratified by stage at randomization is better than nothing, but does not make up for the post-hoc nature of the analysis.

Introgen, CTIC, and Genta were the ones that came to mind.

I think if the P2b trial is randomized, then yes. This is not what's going on with Stimuvax, of course. They created a massive P3 program on a P2b subgroup analysis.

I was feeling stupid all day fpor shelling out $140 to FDALive.com instead of the free FDA feed, especially since I ended up useing the FDA feed most of the afternoon due to better sound quality and lack of dropped slides. Then the audio bailed so I was able to switch back to the FDALive.com feed.

At least we'll have higher quality video communications from the FDA.

Dr. Richard Chin - Top Ten Intellectual Optical Illusions in Clinical Research

I hope this is not too promotional (Dew, no hard feelings if you delete it for being so), but I believe the content of the interview with Dr. Chin is high enough quality to be worthwhile to the board.

http://www.youtube.com/user/BiotechStockResearch

Richard Chin is the CEO of The Institute for OneWorld Health, a non-profit biotech that develops medicines for treating diseases afflicting the developing world.

Dr. Chin has overseen over 45 Investigational New Drug (IND) Applications for new molecular entities and new indications, as well as eleven drug registrations.

He was the Senior VP and Head of Global Development at Elan Corporation, where he had worldwide responsibility for Clinical Development, Regulatory, Biostatistics, CMC, QA/Compliance, Safety and Medical Affairs. Dr. Chin has also held various clinical and scientific roles for Genentech, Inc. including Head of Clinical Research for the Biotherapeutics Unit, overseeing approximately half of the drugs at Genentech. He began his career at Procter and Gamble Pharmaceuticals, where he served as Associate Medical Director.

Dr. Chin holds the equivalent of a J.D. with honors from Oxford University in England under a Rhodes Scholarship. Dr. Chin holds a Medical Degree from Harvard Medical School and is licensed to practice medicine in California.

This is very rarely seen in dev-stage biotech. Often, they underestimate (conservatively) what they saw in a non-randomized P2 trial. This is very common in combo situations. This rarely works out.



The key word is "assume" in all these situations. We were just looking for "different or not" as the primary measure. Once we had that answer, we attempted to answer the +/- question. All answers were 100% dependent on the assumptions we used. While we could statistically verify the outcome of our assumptions, this didn't prove our assumptions to be true.

Smart bio investors make this mistake more than any other, IMO. they forget all that pretty biostatistical math is 100% dependent on the assumptions they plugged in. It is very, very rare when doing biostatistical models of trial data can get you an answer that is better than your model. That's not to say modeling can't inform your risk assessment. It can and often does.

It just rarely, if ever, provides you an answer whether the trial is positive or negative.

David

I keep reading this too, often using the 2:1 randomization as a supporting variable. The logic is wrong.

Such delays indicate one of two things, neither of which is specific to EXEL:

1. Management gave too aggressive a timeline to satisfy Wall Street's hunger for near-term events.
2. The modeling management did when setting up the trial is flawed.

The first is clearly negative. The second is certainly not positive.

We went through this with CTIC's Xyotax and YMI's tesmilifene.

CTI flat out said on call after call the delay was positive, even showing sample KM curves. This was a lie. There is no way to tell from unblinded data what's going on. Docs told us, memorably, "Xyotax is either the best drug in the history of the disease or they aren't studying what they think they are studying." That was an easy one for us to choose.

YM's tesmilifene trial didn't necessarily miss trigger timelines, it is just that the trigger should have happened sooner if the second Phase III trial was following the subgroup from the first trial. We worked with Wachovia and together hired a biostats guy to analyze the maddeningly complex adaptive design.

The ultimate conclusion was that we could not say whether the "delay" was positive or negative. What we could say was that the trial was different -- i.e. not a repeat of the prior positive subgroup data. This increased the risk, in BSR's view, since it was no longer "merely" a repeat of a prior trial but essential a brand new trial with its own behaviors. We backed off our weighting in the Model Portfolio and added puts to hedge this risk. As many know, the trial turned out negative.

My gut tells me such things happen more often when there are no randomized Phase II data and/or when the pivotal is designed off a small subgroup analysis of a prior randomized trial. The former is closest to what is going on with EXEL.

It's not a amtter of right or wrong. It is a matter of what level of risk you think there is in a positive outcome. Objectively, the pivotal trial has higher risk than if the company ran a randomized Phase II trial first.

We don't recommend stocks. We provide research and leave it up to clients and their financial advisors to figure out what size position, if any, matches their risk profile and investment goals. If you want someone to tell you what to do there are lots of those services out there.

We've covered ONCy for a number of years and continue to do so.

You're right. We're going to have to agree it disagree on this one.

When treating patients with a new drug in combination with existing drugs, how do you separate the new drug's treatment effect? Management teams will point to historical data, but that is NOTORIOUSLY unreliable for either powering a pivotal trial or determining whether a new drug added to some existing drug has clinical efficacy.

The way you figure this out is to run randomized trials. When I say "no randomized experience" I mean no experience in a randomized trial to know for sure the magnitude of difference in efficacy, if any, between the existing drug and the new drug in combination with the existing drug.

Without randomized trials, management teams (and shareholders) are only guessing at the magnitude of benefit when powering their pivotal trial. This leads to underpowered trials that fail.

It has nothing to do with trusting management or the clinicians. It has to do with the right way and the wrong way to conduct a clinical program to maximize success.

David

This isn't accurate.

Adaptive designs are not a synonym for "we make it up as we go along" (see CTIC). Adaptive designs are rigorously studied and tested by FDA statisticians before they agree to their use in SPA-governed trials. Such designs get far more attention in the SPa process than "normal" statistical approaches. I'd argue a SPA on an adaptive design is less likely to run into trouble on technical statistical grounds because the FDA spends more time on them up front.

FDA stats people encourage companies to attempt adaptive designs, so this is also not a situation where companies go hat-in-hand to try and "convince" the FDA to do something. Most companies refuse because they find it hard to explain the designs to investors. Most management teams can't get their heads around adaptive clinical trial designs and there are only a handful of competent biostatisticians around who can both create the design and explain it in terms management teams (and therefore investors) can understand.

Adaptive designs are designed to only enroll as many patients as necessary to acheive a pre-determined statistical significance corresponding to a clinical benefit (hazard ratio) seen as suitable by clinicians. To approve an adaptive trial design, therefore, the FDA has to agree with how the design controls alpha spend and pre-determine a demonstrated benefit is clinically relevant. Whether adaptive designs are beneficial to the company is largley a function of how the particular design handles alpha spend. While most designers of these trials will tell you there really is no alpha spend, in my experience that is never completely accurate. Whether the threshold HR goes down the more looks you get or the implied p-value goes down, there is some sort of penalty for multiple looks.

In general, however, the adaptive designs allow more looks at a smaller alpha penalty than a traditional design with multiple interim looks. Provided there are controls in place satisfying the FDA the implied interims that are part of every adpative design cannot reasonably result in practice changes or trial conduct changes, they are willing to approve the adaptive design.

The chief worry on the ONCY trial is not the adaptive design. It is the fact they entered a combination Phase III with zero randomized experience with the combination in this disease and very few patients at all treated with this combination in this disease stage.

I would never invest in a company with an adaptive design not blessed by a SPA because there are simply too many assumptions in an adaptive design the FDA could pick apart after the fact. You want all those assumptions agreed upon up front. However, an adaptive design under a SPA gets no special favors -- surprise side effects and/or poor trial conduct are still penalized.

But it's inaccurate to suggest a SPA on an adaptive design is less meaningful than a SPA on a traditional design.

If they don't know enough about the cancer immunotherapy space to get basic facts straight, why should investors trust them to know what they are buying?

Just a matter of time before they go from "undevalued" to "devalued"

From the Tweet I did April 29:

$DNDN $JNJ and $SNY drugs extend median M+ CRPC #prostate pts life from ~18mo in 2003 to ~32mo in 2011, a 78% increase.

You are overly cynical about biotech entrepreneurs. If they found the cure they'd be the happiest person in the world. The economics would take care of themselves because while the prevalence would go to zero, the incidence refreshes every year.




Limited resources do exist. Most of the political conversation on healthcare in America the last two years has been around how to deal with those limited resources. And yes, I'd still want a cure if I was running an insurance pool.




You overstate this, too. There were very few innocent bystanders in the real estate market collapse -- no more as a percentage of homeowners than at any other time. Most people didn't factor in economic risk and inflation when making the decision on having a house. They never asked themselves, "What if gasoline goes to $4/gal? Can I afford to make the 60-minute commute from the house I want to buy?" I still feel sorry for many folks, but they aren't blameless. Even (especially) those of us laregely untouched by the recession who saw what was happening in the commodities market, derivatives markets, and etc. early enough to make smart financial decisions. We should have been much more insistent about reforms. Maybe if we would have, it would have been quite so bad or quite so expensive.

But all that's off topic for this Board, so...

The small, incremental increases in survival provided by Provenge, docetaxel, abiraterone, and Jevtana have increased the median survival of a metatstatic, castrate resistant prostate cancer patient by over 78%.

It is the "incremental advancement" you wish to stop that has provided significant hope for cancer patients over the past three decades. We will never cure cancer, only make it into a chronic disease that doesn't much bother the patient.

And none of the companies you mention will provide anything other than one more incremental improvement in survival. But that's OK.

Soft tissue mets would be the biggest group.

That analysis has been pretty much completely discredited elsewhere. A single Phase III trial in a non-orphan indication costs $55M.

Not quite true, for a couple of reasons.

DNDN has never been simple. Thinking CMS was going to do the right thig and it actually doing the right thing are two different scenarios in the battered heads of most DNDN bulls. That's worth 2% at least.

More reasonably, even I didn't think the determination would be this clean. The determination is the label, not the label plus a some other things. If CMS holds very closely to what they published today and issues a NCD, there are patients who will be reimbursed in July who aren't reimbursed today. Not a meaningful amount, but some. The fact I don't have to spend th next three months arguing with some knucklehead about the impact of additional exclusionary criteria is also worth (at least) 2%.

David

Von E's participation in that editorial is particularly ironic given his role in Provenge and turfing the agency's draft of biomarker guidance.

I'm not sure the paperwork would be huge. Most ex-US markets have a single point of purchase/negotiation with the government agency. Companies already are required to disclose cost data. While I would expect them to fight it tooth and nail regardless, I doubt the paperwork burden would be that much different than the intra-US rules we currently have.

Only thing surprising here is they caught them and filed charges.

What Congress did with the MMA is piggyback CMS negotiations on private payors. CMS can't directly negotiate, but it also cannot pay more than the privately available price.

In terms of the OP, pharma is willing to negotiate lower prices with other countries because they know they can make it up in the US market. Effectively what's happening is the ROW gets R&D expense for free.

I've proposed a solution for this based upon the model Congress put forth in the 2002 MMA.

http://www.minyanville.com/businessmarkets/articles/pharmaceutical-pricing-congress-democrats-republicans-pharmaceutical/9/30/2010/id/30328

Interestingly, Pazdur "requires" the confirmatory study be "substantially under way" already, without any Congressional authority to do so.

I don't believe any small biotech company has been granted accelerated approval by Pazdur w/o a confirmatory trial started. One can argue this is more due to problems with the initial application, but it's a coincidence.

Large pharma usually runs all-in-one trials where there is an interim analysis on the surrogate then the trial (theoretically) continues to the survival (co) primary endpoint.

Interestingly, I'm not sure I can recall any of these all-in-one trials that hit the interim actually continued on. Nexavar and Sutent come to mind as both trials allowed crossover after the interim, thereby negating the survival endpoint. Can anyone else think of one of these all-in-one oncology trials that succeeded on the interm surrogate and continue to survival?

I think of all the draft releases BMY did for the ipi decision, the one they didn't do was a broad label one. Probably took them half the night to weed out phrases from the rushed rewrite. Rumors (!) are these edits resulted in last minute deletions of:

"BMY executives were high-fivin' and slappin' some ass upon reading the FDA announcement."

"BMY executives originally promised to shred the compromising pictures of Richard Pazdur, head of the FDA's oncology division, but reconsidered in light of the obvious success of this aspect of their regualtory strategy."

"BMY executives immediately phoned their mistresses (boytoys) and told them to go shopping for something skimpy because 'Daddy (Mommy) is going to get a honkin' bonus for this one.'"

"To prevent confusion among melanoma patients, BMY clarified that they would not be accepting body parts -- particularly, but not limited to, arms and legs -- as partial or complete payment for Yervoy's $120,000 price."

PR is complicated and takes some time to get right, you know...