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JD
Im sorry about the bad patch. YOur postings have motivated me to learn more about TA, and I've always appreciated your honesty and optimism. Stay well.
What you're saying doesn't make sense. Freto makes his money in small amounts over many trades, based on his estimation of overcorrection in a stock's value. He doesn't have a mechanism to pump the stock, because the only people who know of him are the people on his board, and the stocks he invests in don't trade very heavily anyway. He did a pretty good job of calling the bottom on cor's value. As long as he gets that right, he has no need to pump anything.
For sure, $2-$3 beats $0.50, but in the context of the potential upside for this stock, $2-$3 is very much at the low end of that. This disappointment will sharpen if the company that buys out COR makes tons of money on the purchased IP.
Absolutely, but at these prices, 20K chunks dom't communicate much as a bullish signal, or bring in wealth if the company is sold at a SP that leaves most of the options underwater. After all the blood, sweat and tears they've been through, selling this company in the $2-$3 range would be as dissapointing to them as it will be to us.
If hedging against a $2-$3 buyout explains Stoll's purchases, then he should buy a bunch more. He can get 100 K shares for about $60K. If he were to do that, he'd make a few million in the event of a garage/fire-sale. He can buy a decent car for what his recent shares would bring in.
I've been bothered by the size and the timing of Stoll's purchases. It smacks of damning with faint praise: the guy is sitting on boatloads of options. If he is confident that the stock is going to do well, he has increased his wealth hardly at all. Both the timing and the size lead me to feel that this is just to prop up confidence in the stock. Based on the size of the symbolic jesture, it does the opposite. If he buys 5-100K in 10K increments over the next days, then that's a different story. If this is the end of it, I think it reflects badly on Stoll. If he's sure he can make it back, he should buy more. If the RD study works out, this may be the bottom.
I went to the Abstract where this compound is described:
-)-(1R,2R)-3-(3-dimethylamino-1-ethyl-2-methyl-propyl)-phenol hydrochloride (tapentadol HCl): a novel mu-opioid receptor agonist/norepinephrine reuptake inhibitor with broad-spectrum analgesic properties.
Tzschentke TM, Christoph T, Kögel B, Schiene K, Hennies HH, Englberger W, Haurand M, Jahnel U, Cremers TI, Friderichs E, De Vry J.
ABSTRACT
()-(1R,2R)-3-(3-Dimethylamino-1-ethyl-2-methyl-propyl)-phenol
hydrochloride (tapentadol HCl) is a novel -opioid receptor
(MOR) agonist (Ki 0.1 M; relative efficacy compared with
morphine 88% in a [35S]guanosine 5-3-O-(thio)triphosphate
binding assay) and NE reuptake inhibitor (Ki 0.5 M for
synaptosomal reuptake inhibition). In vivo intracerebral microdialysis
showed that tapentadol, in contrast to morphine, produces
large increases in extracellular levels of NE (450% at
10 mg/kg i.p.). Tapentadol exhibited analgesic effects in a wide
range of animal models of acute and chronic pain [hot plate,
tail-flick, writhing, Randall-Selitto, mustard oil colitis, chronic
constriction injury (CCI), and spinal nerve ligation (SNL)], with
ED50 values ranging from 8.2 to 13 mg/kg after i.p. administration
in rats. Despite a 50-fold lower binding affinity to MOR, the
analgesic potency of tapentadol was only two to three times
lower than that of morphine, suggesting that the dual mode of
action of tapentadol may result in an opiate-sparing effect. A
role of NE in the analgesic efficacy of tapentadol was directly
demonstrated in the SNL model, where the analgesic effect of
tapentadol was strongly reduced by the 2-adrenoceptor antagonist
yohimbine but only moderately attenuated by the MOR
antagonist naloxone, whereas the opposite was seen for morphine.
Tolerance development to the analgesic effect of tapentadol
in the CCI model was twice as slow as that of morphine.
It is suggested that the broad analgesic profile of tapentadol
and its relative resistance to tolerance development may be
due to a dual mode of action consisting of both MOR activation
and NE reuptake inhibition.
This abstract suggests that the risk of RD is attenuated because much of the analgesic effect is mediated by NE receptor activation, which is corroborated by the slower rate of tolerance development.
My hope is that this compound will at best claim the chronic pain management market, without affecting cor's prospects in post-operative RD. Still for me it is a real wake-up call, in that I hadn't considered the possibility that cor might get scooped. Certainly, if this drug is approved for chronic use, the manufacturer shouldn't have too hard a time expanding its use to the post-operative arena.
It seems to me that this drug may at least mitigate the RD associated with opiates. Below is the abstract of the following ms:
Norepinephrine differentially modulates different types of respiratory pacemaker and nonpacemaker neurons.
Viemari JC, Ramirez JM.
Pacemakers are found throughout the mammalian CNS. Yet, it remains largely unknown how these neurons contribute to network activity. Here we show that for the respiratory network isolated in transverse slices of mice, different functions can be assigned to different types of pacemakers and nonpacemakers. This difference becomes evident in response to norepinephrine (NE). Although NE depolarized 88% of synaptically isolated inspiratory neurons, this neuromodulator had differential effects on different neuron types. NE increased in cadmium-insensitive pacemakers burst frequency, not burst area and duration, and it increased in cadmium-sensitive pacemakers burst duration and area, but not frequency. NE also differentially modulated nonpacemakers. Two types of nonpacemakers were identified: "silent nonpacemakers" stop spiking, whereas "active nonpacemakers" spontaneously spike when isolated from the network. NE selectively induced cadmium-sensitive pacemaker properties in active, but not silent, nonpacemakers. Flufenamic acid (FFA), a blocker of ICAN, blocked the induction as well as modulation of cadmium-sensitive pacemaker activity, and blocked at the network level the NE-induced increase in burst area and duration of inspiratory network activity; the frequency modulation (FM) was unaffected. We therefore propose that modulation of cadmium-sensitive pacemaker activity contributes at the network level to changes in burst shape, not frequency. Riluzole blocked the FM of isolated cadmium-insensitive pacemakers. In the presence of riluzole, NE caused disorganized network activity, suggesting that cadmium-insensitive pacemakers are critical for rhythm generation. We conclude that different types of nonpacemaker and pacemaker neurons differentially control different aspects of the respiratory rhythm.
This in vitro study shows that NE overall increased drive from pacemakers in the PreBotC, and increased their number. Insofar as pacemakers are causal to respiratory rhythm generation, increasing their activity would seem to increase respiratory drive, which should counteract the the depressive effects of opioids. These in vitro data need to be taken with a pinch of salt, because it's not always the case that respiratory network behavior in vivo responds in the same way to pharmacological manipulations as the highly reduced preparation used here, but it looks to me like this drug should reduce the risk of RD while maintaining analgesia.
Hillary made the climb days later and had the luck of good weather.
I guess what I don't understand is exactly what the consultants do for a submission like the one made to Psychiatry. My sense from the FDA website is that they favor an interactive process when putting together and IND. While we don't know what Laughren was thinking exactly, the decision made wrt COR fits with what appears to be a very conservative policy at the FDA. In the context of such a policy, the FDA could have communicated to COR that any such submission would be held to very high standards.
Arguing this point is pretty futile now. I would be grateful though, if someone could clarify what consultants would do in this kind of a situation, other than assess risk.
I don't really like arguing by analogy, because analogies rarely fit very well (this one doesn't), but in the analogy you chose, my bet is they'd turn around (I heard on the radio, on the occasion of Edmund Hillary's death, that that's exactly what a climbing party preceding Hillary did: they got to within 300 feet and turned around because of the weather). Discretion is the better part of valor. Especially with my money.
Back to cortex. My sense was that psychiatry was unwilling to approve CX-717, regardless of the source of the anomaly that led to the hold. That kind of absolutist position is what I would hire a consultant to find out about. If Laughren had made up his mind without even looking in the 6' box, then the odds weren't anywhere close to 50-50. It's possible that they were suckered by the FDA, but then a whole host of more paranoid and sinister interpretations need to come into play.
Exactly what did COR pay their consultants to do, if not provide an accurate assessment of the FDA's predisposition to the IND? I don't think these consultants operate via clairvoyance, I think they use the phone. Either they were lousy consultants, or it was a bad call on COR's part.
>>4) Stoll handled the whole artifact process very well, in terms of using consultants to go through every permutation of possible FDA questions they could, in order to anticipate them and have responses ready. At the time, no one knew that Psychiatry was shutting down new drugs in treated disorders. Cortex turned out to be the canary in the mineshaft that was the alarm signal.
It could be argued that the resubmission of an ADHD IND (9/11/07) was a mistake. After the hold was lifted (July 07), and neurology had approved the PET scan study, CX-717 was (rightly) perceived as a clean compound. I think that at that point it would have made more sense to focus on life-threatening and/or orphan indications, such as paliative treatment for AZ, or for the dyspnea seen in Rett Syndrome. There are many things that remain very murky about the inactivation of the IND, but even if one accepts the most charitable interpretation, that the FDA killed the IND because the eventual target population was kids, because there were other drugs already approved, and because there was a hint (and nothing more than a hint) of a problem with CX-717, it begs the question of why the consultants hired by COR couldn't have gleaned psychiatry's intransigent position prior to the IND submission. My understanding is that the FDA stresses an interactive approach to developing INDs, so I still can't figure out how COR could have been so blind-sided by the outcome.
It can be argued that this is all 20-20 hindsight, but the problems with COR's approach were obvious: ampakines are a new class of compounds, and clinical trials simply can't pick out the 1/100000 that may respond badly to this new compound. Coming off the Vioxx debacle, the FDA's response seems to me to have been foreseeable. I fault management for not having recognized this.
Would it follow from this that appropriate mGluR antagonsits might be appropriate inlicencing candidates?
Iggs,
I was thinking about this the other day: if you think RD is a scam, why don't you get out of COR now? Management's options are such that there is no way that they would be able to find a buyer (prior to RD) willing to pay what management would settle for. If RD fails, SP is going to really go to nothing, and then we all will have a considerably harder time talking about "paper losses", since the company's survival would be questionable.
I'm still in because I think there is a good chance the RD result will be positive. If I didn't, I'd be gone.
PS Write Stoll directly -- it'll be more satisfying than venting here, and you might even get a response.
I hope I never see that day. Stoll in an orange jump suit means cor, and my savings are gone. The only thing I'm concerned about is that these guys get SP above $3, and their interest is congruent with mine. If they can cash out 200K shares at a profit of $0.75, they're not going to be happy either.
The real money will be made by the company that buys up cor's IP. I just hope cor shareholders get a some small part of it in the sale.
I apologize for the confusion. I won't make the same mistake. The issue of options don't really change anything. For me it's a non-event.
t least this reduces the incentive to swing for the fences. The options are at $0.54, and can't be exercised before 1/09.
At least if we get hosed, we'll have the satisfaction of knowing they get hosed with us.
Tran 50K 1.18.08
http://www.sec.gov/Archives/edgar/data/849636/000118143108004681/xslF345X02/rrd190909.xml
Varney 200K
http://www.sec.gov/Archives/edgar/data/849636/000118143108004679/xslF345X02/rrd190905.xml
Stoll 200K
http://www.sec.gov/Archives/edgar/data/849636/000118143108004678/xslF345X02/rrd190903.xml
Messinger 100K
http://www.sec.gov/Archives/edgar/data/849636/000118143108004677/xslF345X02/rrd190901.xml
Johnson 100K
http://www.sec.gov/Archives/edgar/data/849636/000118143108004675/xslF345X02/rrd190899.xml
Coleman 100K
http://www.sec.gov/Archives/edgar/data/849636/000118143108004671/xslF345X02/rrd190886.xml
This is either Jonestown investing, or we're going to be alright.
This is very good news. Depending on the amounts, it's a more bullish sign than the contractually required buying we saw in the last month.
Gfp
Why are you skittish about RD?
It seems that the consensus here is "never complain, never explain". Well and good, but Stoll stated in the last CC that he fully expects a written explanation, so at the very least if such a letter were to arrive, we should be informed of it. So far, nothing. Maybe he'll upload a video of him crawling under his desk, looking for it there, like someone else we don't need to mention.
I have to say that I have problems trusting Stoll. JerryDylan recently wrote that Stoll was planning on buying more shares. I'd like to see those purchases go through. If they don't happen, I want to see a deal or other relevant news that would make such a purchase impossible.
I've made this point as well, but I think that in the context of RD, it's a bit beside the point. As studies go, this is about as small and simple as it gets, and a positive result would increase COR's valuation. So wrt the RD trial, I think it makes sense to go ahead and do it.
The eventual conflict between management's interests and our interests will more likely kick in after the RD trial. If the result is negative, I don't think buyout offers would be particularly attractive to anyone, so it could be that we're all swinging for the fences together. In the event of a positive outcome, there are all kinds of stupid things that can be done, but anyone looking for an exit at ~$1.50 should be able to get out in that price range.
This casts CX-717 in a very different light. It is not a flawed compound. Rather, for a risk-averse regulatory agency, ADHD was an indication for which extraordinarily high standards were being set.
Ombow follows COR as closely as anyone, and his take is that CX-717 may not be approvable for anything, based on psychiatry's decision:
>>The lead compound, CX717, was rejected by the FDA's Dept. of Psychiatry, leaving in doubt whether it will ever be approved for RD.
If you are right about how the whole thing went down, this inference is too strong, and it is in COR's interest that the ADHD debacle not be misunderstood in this way. The investment community should not have to rely on a phrase in a conference call to understand what happened.
That doesn't preclude COR providing enough detail to lay this to rest, without providing their competitors with proprietary information. Something along the lines of "the FDA was unconvinced by our explanation of histological anomalies as post-mortem artifact of the fixation process" vs "the FDA determined that CX-717 induced histological changes that could not be accounted for as artifacts of the fixation process".
In the former case, one could read: "we tried to convince them that there wasn't a problem, but they didn't buy it" vs "there really was a problem". Obviously, it would be better if it just boiled down to the FDA covering its ass, but I also feel that COR would benefit from a frank admission that there were problems with CX-717, because that would at least account for the decision, and thereby contain the damage (i.e., specific to CX-717).
Right now, I think the perception is that COR is a failing company with a tainted platform. The ADHD IND could not have gone worse, but the fallout perhaps could have been handled better.
CX-717 wasn't rejected. The IND was inactivated by COR. We still don't know what happened there. According to others who are more knowledgeable about the regulatory process(and the FDA's own website), this outcome was anomalous: typically there is a back-and-forth between the FDA and the company about dosage and trial duration, which can extend the deadline for approval. In the case of CX-717, the axe fell exactly on the deadline, all on the basis of a phone-call which led to the inactivation.
As has repeatedly been discussed here, the anomalous process and the complete lack of transparency is subject to multiple interpretations. I think your view represents the consensus: that CX-717 is a flawed compound and was duly rejected by the FDA. To the extent that this is true, it raises issues about Stoll's credibility, since in the time leading up to the IND, we were told (at times explicitly), that cor had fully addressed the FDA's concerns (the famous 6' box). If the FDA found grounds to outright reject CX-717, how could cor have been unaware of the problems?
The alternative is that the process at the FDA was completely flawed. Supporting this argument is the lack of any documentation from the FDA regarding its decision. As the ombudsman at the FDA informed me though, an inactivation obviates the need for a written accounting.
Stoll has stated that he fully expects something in writing from the FDA. It is hard for me to imagine that the facts could be worse than the inference we're all making.
I keep going back to this issue because it highlights two issues that undercut the promise of the ampakine platform: questions about the company's own credibility, and the competence/honesty of the FDA.
COR should make every effort to get a written accounting from the FDA, and/or to be forthcoming about the problems with CX-717 that explain the inactivation.
I think your estimate of what the RD upfront would be is low. Although the focus of the study in question is for an acute indication, it is not lost on anyone that if ampakines rescue breathing in the acute indication, they are good candidates to mitigate the risk of opiate-induced RD in the context of chronic pain management. This is a much bigger market.
Although the regulatory hurdles facing ampakines in a chronic indication are different from those in an acute indication, I nonetheless think that for companies in the lucrative opioid analgesia market, ampakines would be of considerable interest, particularly in the absence of analgesia-sparing alternatives. Because there is more than one company in this market, they will be bidding against each other.
I have no idea at all what is going to happen to COR over the next year. It is worth noting though that when this board reaches a consensus based on echo rather than news, the consensus is reliably wrong.
What is the timeline on delisting? In earlier discussions of this possibility, the likelihood of this was put low.
I didn't see that post. It must have been pulled. It makes the board's decision understandable.
I think that's a mistake. He provided a useful contrarian voice, and usually provided data to back his arguments. I have no idea why he insisted on being shrill and antagonistic, but I don't think those attributes merit censorhip.
Naked, RD isn't a figment of the imagination, and the data in rats are pretty convincing. I think this acute indication is the perfect foot-in-the-door vehicle to get a new compound past the FDA.
Also, what's in it for Stoll to bury this company (and me) 6' under?
GFP, the fact that ampakines have no effect on breathing under baseline conditions is irrelevant: during normal breathing, AMPA receptor activation is saturating, so you have a ceiling effect. What is at issue is whether these compounds reverse opiate-induced respiratory depression: under these conditions, AMPAergic drive to PBC neurons is shunted by mu-opiate receptor activation, and the ampakine-induced upregulation of AMPAergic transmission could bring AMPAergic drive back closer to baseline.
Because brainstem respiratory networks are highly conserved across the mammalian lineage, and because the brainstem is the "oldest" part of the brain, what we know about the system would suggest that pharmacological effects on autonomic breathing in rodents should be replicated in humans. It doesn't mean we aren't all in for a big surprise, but based on what's known, it looks more reasonable than to assume the contrary.
Further, the effect of ampakines on RD is a direct effect on a rather narrow pharmacological perturbation. The other disease states you mention (AD, ADHD)and sleep are much more complicated processes, in which the effects of ampakines are more difficult to foresee. So here again, I find it hard to argue that success with RD has a lower probability of success than in these other cases, since we have so little understanding of its mechanism of efficacy in the indications you mentioned.
All in all, I'm cautiously optimistic. I may be way off base in my interpretation of the literature, but at least there is a basis for forming an opinion. I am much more skittish about regulatory binary events, where the process is completely opaque, and where there are plenty of reasons to be suspicious about the process.
I think you have raised a valid point, and it would be interesting to read Stoll's response. EPIX's outcome flies in the face of what Stoll wrote, and might lead him to reconsider his position. If he doesn't want to answer he won't but if he does, we might learn something.
Implicit in Stoll's response is the downside risk: if the trial is too short, cor could be stuck with a false negative. Still, I think it is worth raising the issue with him, particularly if the PET trials are positive.
Write him and send him the press release. We need to make some money here.
I think there still is a pretty high-volume of tax-loss selling. I bet after the 31st, SP will drift upwards.
I think that the RD outcome is much more dependent on the science than the regulatory beaurocracy, because the drug would only be used for a brief period, and because it protects post-op patients from a potentially lethal complication. We've seen CX-717 approved for one-time PET studies, and the short-acting CX-516 might be effective as well, and has cleared the tox hurdles. POC in April with more than one compound that could be suitable should generate some BP interest, because irrespective of whether Neuro is jumping the gun regarding the likelihood of all this, the need is there and the numbers aren't unreasonable.
I think we've been so traumatized by the last 18 months that we've come to expect unexpected bad news, and can't imagine a simple break in our favor. I think that RD is the ideal indication to introduce ampakines into the clinic. Dumb luck.
Have a great trip.
I've decided to be optimistic about this. I understand the biology behind RD as well as anyone, and I think odds are very good that RD will be reversed by ampakines, although I don't know whether analgesia will be fully retained. It's almost certainly going to be a better ride than naloxone, which removes all analgesia. I don't think there will be regulatory surprises for the acute use in this indication.
We're going to be ok.
Neuro or anyone else with thoughts on this
It seems to me that there are 3 cases (leaving aside the worst case: no efficacy in RD, no change in PET signals):
1. Low-impacts rescue respiration without impacting analgesia, but are approved for acute use only.
2. Low-impacts are approved for acute and chronic use.
3. High impacts are approved for (disease-altering) chronic use.
Is cor viable if acute use indications with low impacts are the only ones they get through?
How about if they are limited to low-impacts only, but for both short- and long-term use?
If 2. and 3. are both true, this whole discussion is moot, because longs will make money.
My sense is that based on what is already known about the low-impacts, if they are effective in treating RD, their approval for the next round of trials is less problematic (acute indication, life-threatening, no alternatives, etc.,...). The clinical results will be available by May, the regulatory decision by end of summer (?).
When will we know if low-impacts have a chance as a chronically administered drug? The uncertainty about whether to go with CX-701 or a newer drug makes this a bit less clear, but taking management at its word, toxicology should be complete by summer (701) or late fall 2008 (new compound). This suggests that the earliest next date for a partnerable clinical trial using low-impacts for chronic use would be in early 2009. Does this sound reasonable?
Finally, when will we have a better sense of how well humans tolerate the high impacts?
So I'm asking two questions:
what are the timelines to these decision points?
How viable is cor (or what might its valuation be) if we end up with:
a. Low impacts / acute use only
b. Low impacts / acute and chronic use
c. Low and high impacts / acute and chronic use
Thanks in advance to anyone with thoughts on these issues.
We still don't know (and may never know) whether the artifact problem was *the* problem. It seems to me that cor believed it had adressed that problem, and that's why everybody was so optimistic last spring/summer.
The FDA may have shut down CX-717 simply because they didn't want to bring a new class of compounds to market for a non-lethal indication that primarily affects young people, and must be taken chronically.
This isn't even so unreasonable of the FDA. For a class of compounds that can be used to treat such a wide range of neurodegenerative/psychiatric diseases, I can't figure out why they lead with ADHD. RD makes much more sense: few alternatives (naloxone); acute use; life-threatening condition. If the April trials are succesful, I think it is less likely we will have an unpleasant surprise from the FDA.
The minute cor gets involved in AZ trials, patient families will be a much more likely (and more powerful) ally: it's currently untreatable, the outcome is fatal, and the social (and emotional) costs are enormous. All this makes me ruminate again about what a bone-headed move it was to go after ADHD.
I'm not sure that the investment community has the attention span to care, but there might also be something in the FDA's letter that would help cor with damage control. The spring/summer surge in cor's sp was based on the high level of confidence expressed by cor's management (Stoll in particular) wrt to cx-717's chances in phIIb for ADHD. The inactivation on 10/11, without any evidence for negotiations (which would have delayed the announcement date), and as a de facto rejection rather than a rejection via infeasably tight constraints on experimental design (which would perhaps have allowed cor to save face and credibility), all raised questions about cor management's competence or (worse still) their trustworthiness.
If the FDA's rejection (as I suspect) was due to nothing more than their unwillingness to approve a trial for a new class of drugs for the chronic treatment of a non-life-threatening pathology affect primarily young adults, then the letter will contain no proprietary information useful to cor's competitors. It's not obvious to me why cor's management would not disseminate this information, since it would lay to rest the doubts raised above, and if the FDA has stewed on this for 6 months, you'd want to believe that they'd be willing to stand by what they've written.
Unfortunately, if we are left in the dark, there is no obvious interpretation. On one hand it might just reflect cor's unwillingness to risk pissing off the FDA; on the other, it could be that the letter is more substantive, and hence contains proprietary inofrmation.
I don't have a feel for how sensitive the FDA is, or how common the practice is of disseminating the contents of these types of letters, so I can't weight these two outcomes. Still, for me no news would be somewhat bad.
On the topic of "piss off the FDA", it may be that communicating with legislators on the eve of a congressional hearing about the FDA's policies might not be a bad thing at all for shareholders to undertake. The ADHD media and politicos may (for five seconds) actually take notice of this story. It pressures the FDA without involving cor.