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PGS, For modest blood loss, saline may be fine, but for really massive blood loss, PolyHeme would still play a vital role. Volume replacement with saline doesn't replenish the oxygenation function of the missing hemoglobin, so in cases of really massive blood loss, the patient dies anyway. So PolyHeme could ultimately be approved by the FDA for use in severe blood loss cases. Then it would be up to paramedics to decide whether to also use it "off-label" in less serious blood loss situations, though then as you said, cost/reimbursement would be a bigger factor. The market for PolyHeme may not be as large as hoped, but it does fill a gaping hole in the available treatment of massive blood loss, so a favorable view of PolyHeme by the FDA might not be that surprising. As we know, the military needs it also.
OT - KG, We'll see what they have to say in the conf call. I still think they have an interesting idea, but I haven't done enough DD on the company to be able to evaluate their chances in the Phase 3. Even if the Phase 3 study design isn't able to show the required 30 day survival benefit, as long as the safety is OK, I would still rather have the product available than no replacement blood at all (in ambulances, or on the battlefield for example).
One added advantage to their approach is that it removes any viruses present, which is something you can't say about the regular blood supply. The big advantages are the lack of incompatibility problems, so you can just start blood replacement immediately at the trauma site, and the long shelf life (over 12 months vrs 42 days). Bottom line is that if I had lost a huge amount of blood in a car wreck, I would rather have an immediate replacement with PolyHeme than no replacememt at all until reaching the hospital, because you would probably just die before getting there.
OT - Looks like it's nail biting time for Northfield investors (blood substitute program). Their Phase 3 results are due, and today they issued a press release announcing a conf call for 5:00. The stock is currently down around 20%, but is there a leak, is it a headfake, or just a lot of nervous nellies out there? It's great fun watching these binary events from the sidelines, almost like watching Sean Connery attempting to dismantle the nuclear bomb at the end of "Goldfinger". This is what it's all about folks, kamakazee bio-gambling at its best. Brings back memories of PARS, CTIC -- great entertainment value, at least for non-participants :o)
Thanks Neuro. Yes, it sure was a surprise. BTW, do you have any guesses as to the non-Ampakine in-licensed programs that might conceivably be on the short list being considered? At the Montreal Conf, Dr. Stoll said they had 4 term sheets out and a 5th program being studied. It sounded like he plans on in-licensing several. Thanks.
That said, here's my virtual/imaginary long term bio portfolio, updated for 2007 -
Acorda
Bio-Imaging Technologies
Biomarin
Barr Labs
Celgene
Cortex
Covance
Cubist
Durect
Exelixis
Genzyme
Gilead
Henry Schein
Idenix
Medarex
MGI Pharma
Myriad
Novamed
PDL Biopharma
Senomyx
Spectrum
Stericycle
Teva
Vertex
To round things out I've included a few non-bio names in the above list, though these companies are still medically related (Bio-Imaging, Covance, Henry Schein, Stericycle, Novamed), plus several generics companies (Teva, Barr). I'm currently evaluating/reevaluating some of Dew's ideas (Allergan, Cerus, GTCB, Maxygen, Momenta, Surmodics), plus am checking out a few others like Epix, Hana Bioscience, Northfield, Pharmion.
Would welcome any additional ideas from the board.
OT - This is the first year since 2003 that I'm actually up for the year. And I owe it all to being out of bio stock "investing", yippee :o)
Any thoughts on the timing of the shelf offering? I was figuring by year end or in January. Looking at alternate timetables -
1) Dr. Stoll could conceivably try to wait for the completion of the new tox data analysis, and the go/no go decision on CX-717. At the Montreal Conf, Dr. Stoll said that that should occur by the end of Feb/early March. However, with only $9 mil in cash remaining, I doubt if he wants to wait that long. Another factor against waiting is the looming non-Ampakine in-license. At the Montreal Conf, Dr. Stoll said "we know that we're going to get our first in-licensed compound sometime in the first quarter of 2007", so one would think he'd have to get the financing done well in advance of that.
2) Another possibility would be doing the global Neurodegenerative/high impacts deal in early '07. That would provide some funds (guesstimates ranging from $5-10 mil in upfronts). However, it might be difficult to put such a deal together that quickly. Plus with cash running so low, Cortex would be in an unfavorable bargaining position with the pharma. Also, Cortex may want to include CX-717 into such a deal, so we'd first need to determine the fate of that compound, which gets us back to end of Feb/early March.
So as I see it, the most likely scenario is still a shelf offering by year end, or in January. I kind of wish they'd get it over with.
Neuro, I had several questions concerning Servier -
1) I still don't understand how Cortex could get back the ex-N.Amer rights for "free". I always assumed Cortex or a BP would have had to buy back those rights from Servier. Could there have been a clause in the original Cortex/Servier partnership by which the rights revert back to Cortex if Servier failed to show a certain amount of progress with an in-licensed compound? Cortex terminated the R+D collaboration early, but why would that also terminate the entire partnership? One would have expected Servier to at least want something in return.
2) Could you elaborate on Servier still being able to use several of the compounds from the R+D collaboration with Cortex? You mentioned this previously, but I don't understand how Servier could still do this if the ex-N.Amer rights are now out of their hands.
3) Any idea on the timetable for Cortex "officially" getting back the Servier rights so they can be included in a global Neurodegenerative/high impact BP deal (immediately, several months, etc)?
Thanks Neuro.
Another banner year - Sixteen companies that declined by >=75% during 2006 to date (in descending order) are:
DOVP -98%
PRW -88%
NBIX -85%
ICGN -85%
VLTS -84%
VSGN -84%
NTMD -82%
AVNR -80%
RNVS -80%
THLD -80%
INHX -79%
NEOL -77%
CORT -76%
COR -75%
GENR -75%
OCCX -75%
Aiming, One solution to your dilemma is to just hold a sensible amount of Cortex and let it ride. Balance, diversification, moderation - that's the key to success (and survival) in this sector IMO.
BTW, After listening to a recent PTIE presentation, I've really soured on that company (it was up 7% today, figures) :o) Their foray into cancer looks ridiculous, and Oxytrex's future doesn't look all that great. Barbier really sounded like an idiot when he tried to explain their cancer program. It's obvious that he knows very little about the armed MAB area. Remoxy is the only thing I like in their pipeline, plus the 2nd abuse resistant pain program. To participate with those I'm going to go with Durect, the creator/licensor of that technology. Durect also has numerous other promising programs (especially long acting Bupivacaine which just got a nice partnering deal).
Fearfrost, I would say don't do it, unless you have so much money that you won't miss it when it's gone. The risk level with that stock is off the charts, and binary events are risky enough without jumping into a stock you don't know well. If you manage to win this time, you'll just do it again on a larger scale and lose. That's the nature of a 50/50 bet, and the seductive allure of biotech. Save yourself a lot of grief and stick to a diversified portfolio of good bio stocks that you know.
However, if you've decided to roll the dice anyway, you should at least go over to Dew's I-Hub Biotech Values thread and ask them about the stock. They've apparently had some previous discussions on it, and can direct you to those posts. If Dew is familiar with Northview, his analysis would be very helpful. Also, try to get hold of several Wall Street analyst's reports, especially if you can find one that is bearish. You might also want to get a few opinions over on the Silicon Investor Bio Valuation thread, where many bright bio guys hang out.
I just stumbled onto that stock since they had a presentation at the recent Montreal Conference. It sounded like a cool idea, but I have no idea of its chances. The general impression I get is that so far the blood substitute area has been a bio graveyard. Be extremely careful. If you're smart, you'll just skip the whole "bet the farm" stage that most bio investors unfortunately go through.
Valeant used to be called ICN Pharma - a real turkey when it was headed by former CEO Milan Panic, but he was eventually ousted. They did develop Ribavirin, which has been one of the standard Hep-C drugs for years. I owned stock in one of their subsidiaries (Viratek) when Ribavirin was being hyped as a cure for AIDS. Milan Panic developed a reputation as one of the bigger crooks in the pharma world, and it took many years of class action suits and shareholder maneuvering to finally get him out of the company.
Bladerunner, OT - I thought I remembered you from over there - I followed that dog too. Cruising by the Raging Bull thread a while back, I found the same old sad faces still there. I couldn't believe it - Skitahoe, Larry Macc, Patience, it was all like a bad dream.. Unfortunately, I can see a similar phenomenon happening here with Cortex, with Neuro, Daviddal, and myself in similar roles on this board. Some people just can't get off a sinking ship I guess :o) Like Immunogen, Cortex has become a soap opera -- cool science but increasingly long odds.
Dew, This disclosure was actually via an 8-K filing, as opposed to a regular press release, but either way, I guess the ongoing Cortex "malaise" continues..
Things can change rapidly with these stocks however. I remember being thoroughly disillusioned with Biomarin after their disastrous Orapred acquisition and the clinical failure of their Neutralase program. The CEO was fired, and the stock collapsed to around $4. But lo and behold, they gradually built a new team, got an approval, and recovered to the current $18-19 range. Epix was another company that was seemingly being lowered into its grave, only to turn things around via a desperate acquisition and subsequent big pharma deal. So what looks awful now can sometimes be turned around. Then again, what looks awful can actually be awful, and stay awful. Sometimes it just comes down to some good or bad luck at a critical time. The FDA suddenly getting irrationally hypercritical of ADHD drugs at the exact time that Cortex discovers potentially the best ADHD drug ever, that would qualify as some of the worst luck ever. The fat lady hasn't finished singing yet though.
Bladerunner, OT - did you used to follow Immunogen by any chance?
Neuro, Considering all the recent clinical setbacks for Cortex, a more logical conclusion is that with CX-717 in serious trouble, and the high impacts soon to be outlicensed, Mansbach just doesn't see his future role at Cortex being all that attractive. He may not care much for the orphan in-licensing idea either. These would seem like the most obvious reasons, though I guess we won't know without talking to him personally. As you said, he may also figure Varney is destined to be Stoll's successor. Assuming he gets to keep his existing Cortex options, Mansbach can still participate in any future upside, while making a lot more money somewhere else, and with more interesting programs to work on.
It'll be interesting to see if anyone else decides to bail out. Varney could probably land a really great job somewhere else, but it's still too early to conclude that an "abandon ship" mentality has taken over at Cortex.
Bladerunner, Yes, that's probably true. I wonder what Varney's thoughts are about now? He left a good job at Sepracor to join Cortex, and got a ton of options (600,000 as I recall). I wonder if Mansbach gets to keep all his options?
Here's the filing from Edgar Online (see below).
Dreaming up a few far out conspiracy theories, perhaps Mansbach's former employer Glaxo is about to do a BP deal or buyout of Cortex, and having previously burned his bridges with Glaxo, Mansbach is preemptively heading for the exits. OK, it's not very likely, but Glaxo is one of the companies challenging Cortex's Euro patent.
>>> 14-Dec-2006
Change in Directors or Principal Officers
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective December 15, 2006, Harry H. Mansbach, M.D., Vice President of Clinical Development, will leave Cortex to pursue another business opportunity. The company plans to re-fill this position in the near future and use the consulting services of one of its board members, Dr. Gary Tollefson, M.D., Ph.D. for support of any near term medical services. <<<
He probably left for greener pastures. Dr. Mansbach was head of Neuroscience at Glaxo previously, and is still young, so he can probably command a much larger salary at a bigger company. The lure of a small outfit like Cortex is in the options, which could be worth millions if the company succeeds. Perhaps he's not overly excited about the prospect of designing non-Ampakine orphan trials, while he draws a subpar salary and his options remain underwater.
Dr. Mansbach was the one who designed the various CX-717 Phase 2a trials. I'm certainly no expert, but all of these trials turned out to have some design problems, though Mansbach can't be held responsible for most of them. In the UK Sleep study for example, Cortex wanted to have a longer period of sleep deprivation, but the British CRO refused, insisting on a shorter period due to concerns about seizures, and some of the subjects failed to achieve sufficient impairment. In the AD PET scan trial, enrollment was/is painfully slow because the Aricept/Namenda combo treatment rapidly took off as the standard, but we didn't have any combo safety studies on the CX-717/Namenda combination, so these patients had to be excluded. Mansbach had no control over the poorly designed DARPA trial. The ADHD trial turned out great in the end, though I still think Cortex was unnecessarily flirting with disaster by not including an intermediate dose cohort.
From the Cortex website -
>>> Harry Mansbach, M.D.
Chief Medical Officer and Vice President, Clinical Development
Dr. Harry "Hank" Mansbach joined Cortex in August 2004. Previously, Dr. Mansbach served as Senior Director of Clinical Development, Neurosciences, at GlaxoSmithKline (GSK) in Research Triangle Park, NC. Dr. Mansbach received his Bachelor’s degree from Yale University and his M.D. degree from Duke University School of Medicine. Dr. Mansbach accomplished his neurology residency at the University of Michigan Health System and completed subspecialty fellowship training in cerebrovascular diseases at the Henry Ford Hospital in Detroit, Michigan. He is board certified in neurology. Dr. Mansbach was a member of the Department of Neurology senior staff in the Henry Ford Health System before joining Glaxo Wellcome (GW) as a Senior Clinical Research Physician. At GW, Dr. Mansbach gained valuable insight into the medical and commercial aspects of the drug life-cycle by working on marketed compounds such as Imitrex® and Lamictal®. In GSK, the successor company to GW, his team was responsible for clinical development input and implementation for a wide variety of compounds ranging from pre-clinical testing through phase III and covering a broad range of neuroscience disease areas. <<<
Thanks Neuro, That'll teach me to listen to too much company spin :o) They said the Phase 2 showed 60% improvement in the occurrence of psychiatric events, 48% improvement in daily living parameters, and 34% improvement in memory and cognitive function.
I was first attracted to Myriad because of their predictive medicine/diagnostics business, which provides over $120 mil/year in reliable revenues to help fund their drug development activities. The steady revenue flow has allowed them to minimize dilution over the years. They have over $200 mil in cash also, and no debt. I figured Flurizan and the rest of their pipeline was a bonus. I still like the company, but I guess it would be wise to first see what happens to Flurizan. Mine is a "virtual" portfolio anyway, though hopefully someday I'll be able to use some real money again :o)
Neuro, I was wondering what you thought of Flurizan's chances? The Phase 3 results won't be out til next Fall, but this looks like a potential blockbuster in the making. It's being tested for early stage AD, and appears to delay progression significantly. The Phase 2 results seemed remarkable. Thanks for any insights.
Neuro, I guess we must have neglected those prioritization guarantees in the Organon and Servier contracts - "We, Organon, hereby guarantee that we will proceed at a snail's pace, or slower, as we see fit.."
Neuro, As we know, the "fumes" problem has been Cortex's biggest problem from the beginning. Dr. Stoll raised money by diluting the stock bigtime (there was no other choice), and then bet it all on CX-717 (again, no choice). Things just didn't pan out, barring a miracle, so now we're faced with pawning off the family jewels for pennies. It blows.
Well, like you said, at least a large pharma will have the resources to do something with the technology, IF they make it a priority. One thing I've learned, it's to not get overly involved with an underfunded microcap - the odds are bad and the frustration is high.
One factor that would favor the non-Ampakine in-license plan would be if after the in-licensings are done, Wall St suddenly values Cortex at a higher level by virtue of the added Phase 2 programs (in spite of the lack of funds to advance them). In this case, there might be a window of opportunity where the share price moves up enough to accomplish another financing, this time at a more favorable level. If that happened, it would help compensate for having to do the lousy $5-10 mil Neurodegenerative deal.
Thanks Ombow. In the Montreal Conf presentation, he first revealed getting back the ex-N.Amer rights from Servier, and then discussed his expectation to do an out-licensing and development deal for the high impact line with a major BP. So I assume it will be done as a package -- global Neurodegenerative rights along with some high impacts (plus some annual money for continued high impact R+D). It just seems like $5-10 mil for such a deal, if that's what it turns out to be, is chicken feed. Such a deal could be much larger once a high impact is in the clinic. The only reason to do it now rather than later is - 1) Cortex is running on fumes, and 2) Stoll wants to in-license the non-Ampakine programs. We can't do much about #1, but we can completely avoid #2 by simply not doing it now.
The alternate plan -
1) As in the previous plan, a highly dilutive shelf financing for $10-12 mil is done - unfortunately there's no way around this. But instead of pouring this vital money down the non-Ampakine in-licensing drain, use the money for the following -
2) Move CX-701 through Phase 1 and Phase 2a in ADHD as quickly as possible. Once through the phase 2a, do the same type of big outlicensing deal that we had wanted to do with CX-717. This should be a very favorable deal.
3) Concurrent with #2 above, advance the lead high impact into tox and the clinic. Then do the global Neurodegenerative deal, which would be a deal of sufficiently large size to justify losing the company's crown jewels.
This is the course I would favor, instead of a firesale of Cortex's most prized properties (global Neurodegenerative rights, and the high impact platform), with the proceeds to be frittered away on some strange orphan castoffs. We could instead concentrate on our core competency (Ampakines), and maximize the value of the remaining Ampakine properties. Once we accomplish #2 and #3 above, Cortex would then have plenty of money to go after some orphan programs, both Ampakine and non-Ampakine. Doing it the other way around, which is likely what's going to happen, seems ass-backward to me.
There is an obvious alternative to the path we're currently on. First I'll summarize the current path -
1) Do a shelf financing for $10-12 mil. Use the proceeds from this highly dilutive transaction to in-license several non-Ampakine orphan programs.
2) Sell off the global Neurodegenerative rights and the high impact platform for a pittance (actually less than a pittance). This $5-10 mil pays the company's bills for 3-6 months, whoopee.
Using this strategy, Cortex's future looks something like this -
3 clinical programs - the two in-licensed non-Ampakine orphans in Phase 2, and CX-701 in tox --> Phase 1 --> Phase 2 for ADHD.
(continued)
Horselover45, Dr. Tracy came up with the $5 mil figure. He said he hoped for $10 mil but that $5 mil was more likely.
I have an alternate strategy which I'll outline in my next post.
Jerrydylan, The "platform" you speak so highly of is apparently about to be sold off for $5-10 million. That's for the global Neurodegenerative rights plus the high impacts. That blows if you ask me.
MarketFest, I had the same uncanny ability to sell at/near a bottom. Looking back, with my previous "bet the farm" approach, the only thing that saved me from total annihilation was - a) nervously taking profits as soon as I got them, b) nervously staying out prior to binary events, and c) nervously staying in cash most of the time :o) Other than that I would have quickly lost all my money (I still managed to lose a lot outside of the bio sector).
If one looks at how things are currently shaping up -
1) Global Neurodegenerative rights reassembled - On the plus side, Cortex was able to (somehow) reassemble these rights. That's the good part. The bad part is that this key property, what we once called Cortex's "crown jewels", will soon be sold off in a firesale due to Cortex's increasingly desperate need for cash. $5-10 mil for the crown jewels, including the high impact platform, man this wasn't the outcome I expected when I started following Cortex.
2) The probable demise of CX-717. I'm starting to figure this into my "most likely" scenario. A resurrection is not impossible, but barring a some sort of miracle, CX-717 is most likely dead for ADHD. The dosing restrictions might give it a shot at partnering for AD, but with the Neurodegenerative rights being dealt away soon anyway, tossing a crippled CX-717 into the deal probably won't improve the terms all that much.
3) Non-Ampakine in-license - Try as I may to warm up to this idea, the bottom line is that going this route morphs the company into something I'm not that interested in. I can find other small bio investments without taking on the huge risks of the neurological sector. For better or worse, my interest in Cortex has always centered on their Ampakine platform.
Daviddal, I'm with you on the Israeli company theme (I figure if you can't beat'em, then join'em) :o) There's actually an Israeli Stock Index fund coming out this week. While it doesn't include the small biotechs that you're looking for, it does provide exposure to Israel's broader technology sector, which is booming. The 15 component stocks in this index are - Teva, Check Point Software, Nice Systems, Ormat Technologies, ECI Telecom, Orbotech, Syneron, Given Imaging, Radvision, Alvarion, Audiocodes, Taro Pharmaceuticals, Radware, Alladin Knowledge, and Orckit Communications.
>>> THE PHILADELPHIA STOCK EXCHANGE (PHLX) AND HAPOALIM SECURITIES USA, INC. ANNOUNCE LAUNCH OF THE HAPOALIM AMERICAN ISRAELI INDEXTM (HAISM)
THE INDEX WILL INCLUDE LEADING ISRAELI HIGH-TECH AND
BIO-PHARMACEUTICAL COMPANIES
For more information, contact Barbara Sorid at 215-496-5200 or by e-mail
Component Issues and Contract Specifications
PHILADELPHIA - December 5, 2006 – The Philadelphia Stock Exchange and Hapoalim Securities USA, Inc. announced today the launch of the Hapoalim American Israeli IndexSM (HAISM). HAI is expected to begin trading on Wednesday, December 13, 2006, and will be launched with an opening bell ceremony at the PHLX on that day.
Hapoalim Securities USA, Inc. is a subsidiary of Bank Hapoalim B.M., Israel’s largest bank, whose assets exceed $60 billion.
The Hapoalim American Israeli Index™ (HAISM) is an equal dollar weighted index consisting of 15 highly capitalized Israeli companies that trade significant volumes of ordinary shares or American Depository Receipts (ADR) in the U.S. HAI contains companies that have significant market capitalization and are actively traded and include technology and bio-pharmaceutical companies which account for a major portion of international trade.
Susquehanna Investment Group (SIG) will act as the specialist.
“We are pleased to partner with Hapoalim Securities USA, Inc. on the launch of this important new sector index that reflects the growth prospects of the Israeli economy," said Daniel R. Carrigan, PHLX’s vice president of new product development. “HAI demonstrates PHLX’s international reach for retail and institutional investors who seek multiple asset classes traded on one platform.”
Zvi Furman, manager of Bank Hapoalim’s U.S. operations, said: “The Hapoalim American Israeli Index represents an exciting new way for investors to take part in the ongoing success of Israel’s leading high-tech and bio-pharmaceutical industries. Israeli companies have long been represented on U.S. stock exchanges. Bank Hapoalim is now proud to offer this unique Index, providing investors with the opportunity to gain additional access to the leading sectors of the Israeli economy.”
In addition to being Israel’s largest bank, Hapoalim operates globally and is active in major financial centers in Europe, North America and Latin America, focusing on private banking and trade, corporate and syndicated financing. Bank Hapoalim USA has been serving corporate and private lients in the United States for 30 years.
The Philadelphia Stock Exchange was founded in 1790. The PHLX trades more than 7,000 stocks, 2,308 equity options, 16 sectors index options and currency options. For more information about the PHLX and its products, visit www.phlx.com. <<<
FWIW, I just added 2 more names to my long term virtual bio portfolio, both in the drug development services segment - 1) Covance (CVD), a large player (similar to Quintiles), and 2) Bio-Imaging Technologies (BITI), who provide medical image analysis for clinical trials (analysis of xray, MRI, PET scan images, etc). These guys are still very small, but they are already the world's largest independent/dedicated provider in this rapidly growing area. They also have a medical software business. In Q3 they generated revenues from 223 projects for 100 bio/pharma clients. The FDA is now requiring bio/pharma companies to use a commercial core provider like Bio-Imaging for image analysis, instead of the previously used cooperatives (groups of academic experts). In fact, the FDA recently rejected some Avastin image data because it wasn't analyzed by a commercial core provider like Bio-Imaging. Covance holds an equity position in Bio-Imaging. This looks like a promising area, and one that fits in perfectly with a diversified lower risk "picks and shovels" type approach toward bio investing. The company had a presentation at the recent Montreal Conference.
Ombow, As we know, Lilly and Glaxo both have AMPA upregulation programs (Lilly for many years), so either one of them could logically want to control/have access to the Cortex/UCI broad IP rights. Both companies are challenging the Cortex/UCI broad use patent in Europe (Lilly for a second time). With the Neurodegenerative rights reassembled, a deal would make a lot of sense from either BP's perspective. We now know that Aventis is also sniffing around the AMPA sandbox, based on their recent AMPA upmodulation related patent activity. Also, Cortex's high impacts come from a totally different chemical family, and as we've seen the other 2 main competing families have had toxicity problems.
If a Neurodegenerative deal happened tomorrow, or even a deal to buy all of Cortex, that should really come as no surprise to anyone, since it would only be logical. What is illogical is that Lilly didn't already do it several years ago.
Fearfrost, I only just heard about the company today, so for now I would consider it an entertainment type stock - to watch as it either soars or blows up over the next few weeks. To bet real money, one way is to just wait until after the binary event is over before considering a position. You miss the initial pop, but with the company's future then assured, the stock should theoretically continue to do well over the long haul. In Northfield's case though, even if things go well with the Phase 3, there is still the long wait for FDA approval, which will be another nail biter. IMO as a reformed bio-gambler, binary events should generally be avoided. They're fun to watch though :o)
Dew, board, Northfield -- Here's an interesting play for all you bio gunslingers and crazed bio-kamakazee pilots out there :o) I posted this on the Cortex board but thought it might also generate some discussion over here, since someone mentioned Northfield in a recent post -
Northfield (NFLD) - This company presented at the recent Montreal Conference. They have a blood substitute called PolyHeme which looks interesting (yes this has been a bio graveyard, but it is a critical unmet area), with the Phase 3 results due by the end of the month. A problem with previous approaches is that when naturally occurring hemoglobin tetramers circulate freely through the bloodstream (outside of the red blood cells where they are normally contained), severe organ dysfunction results. What Northfield does is to first lyse/open up the red blood cells, thus allowing the hemoglobin molecules to escape. Then they polymerize the natural small hemoglobin tetramers, forming larger molecules (these larger polymerized hemoglobin groupings do not cause organ dysfunction). Then they go through a purification process which removes the remnants of the lysed red blood cell walls (the part of donated blood that causes not only transfusion incompatibility, but also the short shelf life of donated blood). The purification process also removes any viruses that were in the blood, along with any unpolymerized hemoglobin tetramers.
So PolyHeme consists of polymerized hemoglobin molecules. The shelf life is in excess of a year, vrs 42 days for normal donated blood. And there is no incompatibility problem since the cell walls of the red blood cells aren't present - so PolyHeme can be given immediately to trauma/blood loss patients without having to first test them for blood type (which otherwise takes close to an hour). PolyHeme can be given right at the trauma scene.
The 720 patient Phase 3 is completed, with results by the end of December. They have an SPA which has the unusual aspect of dual primary endpoints - both superiority and non-inferiority, either of which will be sufficient evidence of efficacy to support FDA approval (they have this in writing from the FDA in the SPA). They've done 4 planned interim analyses to evaluate safety, and the FDA allowed the trial to proceed to completion unaltered. So the safety aspect looks promising, which is a large part of the theoretical risk with this approach.
Everyone loves a good binary event, so this will be an interesting one to watch, with the results coming in the next several weeks.
OT - Since it's a slow day, here's an interesting play for all you bio gunslingers and crazed bio-kamakazee pilots out there -
Northfield (NFLD) - This company also presented at the recent Montreal Conference. They have a blood substitute called PolyHeme which looks interesting (yes this has been a bio graveyard, but it is a critical unmet area), with the Phase 3 results due by the end of the month. A problem with previous approaches is that when naturally occurring hemoglobin tetramers circulate freely through the bloodstream (outside of the red blood cells where they are normally contained), severe organ dysfunction results. What Northfield does is to first lyse/open up the red blood cells, thus allowing the hemoglobin molecules to escape. Then they polymerize the natural small hemoglobin tetramers, forming larger molecules (these larger polymerized hemoglobin groupings do not cause organ dysfunction). Then they go through a purification process which removes the remnants of the lysed red blood cell walls (the part of donated blood that causes not only transfusion incompatibility, but also the short shelf life of donated blood). The purification process also removes any viruses that were in the blood, along with any unpolymerized hemoglobin tetramers.
So PolyHeme consists of polymerized hemoglobin molecules. The shelf life is in excess of a year, vrs 42 days for normal donated blood. And there is no incompatibility problem since the cell walls of the red blood cells aren't present - so PolyHeme can be given immediately to trauma/blood loss patients without having to first test them for blood type (which otherwise takes close to an hour). PolyHeme can be given right at the trauma scene.
The 720 patient Phase 3 is completed, with results by the end of December. They have an SPA which has the unusual aspect of dual primary endpoints - both superiority and non-inferiority, either of which will be sufficient evidence of efficacy to support FDA approval (they have this in writing from the FDA in the SPA). They've done 4 planned interim analyses to evaluate safety, and the FDA allowed the trial to proceed to completion unaltered. So the safety aspect looks promising, which is a large part of the theoretical risk with this approach.
Everyone loves to watch a good binary event, so this will be an interesting one to watch, with the results coming in the next several weeks.
Epix -- Wow, from the outhouse to the penthouse! The Predix acquisition really paid off, and fast! I used to follow Epix for their diagnostic imaging programs, but after they got royally screwed by the FDA, I stopped following them. I thought the Predix acquisition was likely a futile act of desperation, but Glaxo obviously thought otherwise. Wow, it just goes to show, this sector is full of surprises. Epix rises from the ashes :o)
Thanks Neuro. I was also wondering if you might want to speculate on the various orphan indications Cortex might be considering for their in-licensing strategy? They reportedly have term sheets out for 4 programs, with a fifth also being evaluated. Just curious what a list of possible neurological orphan indications might look like. Thanks.
BTW, As you said, some of Acorda's preclinical orphan programs look very interesting. I wonder if Acorda could be persuaded to part with one of those?
Neuro, Just wondering what you thought of Acorda and their MS drug? Listening to their presentation at the recent Montreal conference, I thought it looked very interesting. The stock has already skyrocketed, but with a year or so to get the results of the 2nd Phase 3, I figure there should be plenty of time to take a position in the stock. Do you think the seizure related side effects will be a problem for approval? Also, how about the potential for heart related effects? Thanks for any insights Neuro. In addition to the MS drug Fampridine, they also have an approved spasticity drug, Zanaflex, that was acquired from Elan, plus some interesting preclinical programs. Here's a recent article on the company -
>>> Motley Fool
Acorda Calls for 2 More Trials
Monday December 11, 12:56 pm ET
By Brian Lawler
When drug developer Acorda Therapeutics (Nasdaq: ACOR - News) released positive phase 3 results for its multiple sclerosis (MS) treatment earlier in the year, shares skyrocketed. They have been up more than 600% since their lows for the year, seen right before the positive trial results.
On Friday, Acorda updated investors on the progress of its MS drug, named Fampridine-SR. As expected, the FDA is requiring another phase 3 trial of the drug before Acorda can file a new drug application for marketing approval. Interestingly enough, despite some worrying adverse events and the chronic nature of MS (which means patients need to be on the drug for the long term), this second phase 3 study is expected to be no longer than the first short, 14-week phase 3 trial in which Fampridine-SR was tested; it also has the same simple objective of improving patients' timed 25-feet walk.
Additionally, a second trial will be run to test Fampridine-SR's effect on the heart's functioning. This safety study should be watched closely, since Fampridine-SR is a potassium channel blocker. Many potassium channel blockers have been associated with adverse effects on the heart, although in trials to date Fampridine-SR has been safe in this regard.
I fully expect Fampridine-SR to show solid efficacy results in this upcoming phase 3 trial. The shorter-acting version of the drug has been tested for its effect on neurological functioning since the 1970s and has shown effectiveness in multiple clinical trials. The question that remains is whether Fampridine-SR will be deemed safe enough to get approval even with positive efficacy results.
Even if approval happens on the first go-round (which I doubt), I envision Fampridine-SR as having a very restrictive label, considering the drug only improves symptoms related to MS and does not inhibit the progression of the disease. Also, it is associated with some bad side effects.
When retail investors hold a high proportion of shares of a small specialty pharma company like Acorda, the stock price is liable to be mighty volatile. With such a long time to wait before any potential approval of Fampridine-SR, I expect this volatility to continue. More risk-adverse investors would be smart to stay away. <<<
New River article -
>>> It's Time to Get Out of the New River
By Marc Lichtenfeld
Senior Columnist
11/2/2006 12:28 PM EST
URL: http://www.thestreet.com/newsanalysis/investing/10319320.html
Just three months ago, I espoused the positives of New River Pharmaceuticals (NRPH) , expecting the stock to jump if its attention deficit hyperactivity disorder drug, NRP104, received approval and if it was granted a schedule III or IV designation by the Drug Enforcement Agency.
After the stock rocketed 82% on an approvable letter from the Food and Drug Administration, I quoted Dr. Harry Tracy, president of NI Research, who compared the mania to the demand for Dutch tulips in 17th century Holland. But the frenzy hasn't abated, as the stock has continued higher in the three weeks since that last column.
At these levels I believe the stock price is unsustainable, considering that a schedule II classification, which is what the FDA recommended, essentially means there is little incentive for patients and their doctors to switch from Shire's (SHPGY) Adderall XR to New River's NRP104.
There are many bears on the stock, as evidenced by the 7.4 million shares (27% of the float) that have been sold short. That's up from 5.9 million shares on Oct. 10, but given that that was just one day after the stock's spike, it's possible that some shorts have been unable to take the pain and have covered.
The skeptics generally have a few interrelated main points: Revenue expectations for NRP104 are too high, and Shire has no motivation to promote the drug and may renegotiate the terms of the current deal with New River.
It's All About the Label
If the DEA goes against the FDA's recommendation and gives NRP104 the looser scheduling, break out the noisemakers and confetti -- NRP104 becomes a blockbuster drug. But it is fairly unlikely that the agency is going to go against the FDA's suggestion. What remains to be seen is if NRP104 can make anti-abuse claims on the label if it receives a schedule II. If not, there is nothing to differentiate the drug from Adderall XR, Shire's top-selling product.
So far, Shire's management has been saying all the right things. Spokesman Matt Cabrey says, "We do believe that NRP104 has the potential to be at least as successful as Adderall XR." Some on the Street believe Adderall will be a $1 billion drug this calendar year. Shire CEO Matthew Emmens declares, "We will stop promoting Adderall XR, assuming that the [NRP104's] label is superior."
Shire hopes to gain an important foothold with NRP104 before Adderall's patent expiration on April 1, 2009. But if the label is not superior, it's unlikely that physicians will switch to a new drug with no added benefit. It's also difficult to fathom why Shire would put much marketing muscle behind the drug, considering that it may pocket less than 40% of the profits if certain sales thresholds are met. Meanwhile, the company keeps 100% of the profits of its other ADHD drugs.
One hedge fund manager, who is short New River's stock and asked to remain anonymous, expects that Shire's marketing efforts will result in a new drug launch, not a conversion strategy. That is a possibility because Adderall XR is a mixture of amphetamine salts, while NRP104's active ingredient is d-amphetamine. In some circles, NRP104 is believed to be just like Adderall XR, with an amino acid that makes abuse more difficult.
However, because the two drugs are not exactly alike, the companies will have to educate physicians and their patients to the benefits of NRP104 (if the FDA allows them to market the advantages). Furthermore, a study by Summer Street Research earlier in the year showed that polled physicians indicate that NRP104 could capture 23% of Adderall sales with a schedule II. Interestingly, that number only increases to 43% assuming a looser schedule IV classification.
Let's Make a Deal
According to New River's 8-K filed with the Securities and Exchange Commission in early October, the agreement between New River and Shire calls for New River to retain 25% of the profits from NRP104 for the first two years and 50% of the profits thereafter -- if the drug receives a schedule III or IV. A schedule II ruling means the companies split the profits according to a complex formula.
In the example given in the filing, if NRP104 achieved sales of $312.5 million in 2010, New River would keep 58% of the profits and Shire 42%. But keep in mind, this is a drug that some have said would be a $1 billion seller by 2010 -- in which case, Shire's portion of the profits would be even less.
The manager who is short New River states, "The people at Shire are not dumb." He asks and answers his own question, "Why would Shire structure the deal that way, where they give up more profits as sales go higher? It makes sense if it's a niche drug, not if it's a blockbuster."
In Shire's conference call last week, Emmens defended the deal, saying that at the time the agreement was made, it was believed that generic-drug competition would emerge in 2006, Cephalon's (CEPH) Sparlon for ADHD was expected to be on the market shortly, and all of the data on NRP104 were not yet available. In other words, it was a different environment. Sparlon was rejected by the FDA earlier this year.
Credit Suisse First Boston speculates that Shire may seek to restructure its agreement with New River (and not in New River's favor). On the conference call, Emmens stated, "We look at anything else that might happen every single day in light of other options that we could do to invest in our money and renegotiate things."
When I directly asked Emmens whether he would try to alter the deal with New River, he wouldn't deny or confirm the idea. "Any deal or renegotiation with New River would be balanced against other opportunities that are presented to the company," he said.
Within 18 months, it's possible that Shire will have five ADHD products on the market, including NRP104. If the feds don't allow the companies to market NRP104 with the clear benefit of abuse resistance, it's hard to imagine Shire putting too much effort into marketing the joint venture at the expense of its other solely owned products, especially if it will be a tough sell to doctors.
Unless the DEA rejects the FDA's advice, New River's stock is likely teetering on a precipice. Investors have already ignored the schedule II recommendation, so if NRP104 does receive the schedule II as expected, who knows if that will be enough to send the stock reeling? But the events to follow, such as a renegotiated agreement with Shire and disappointing sales, make New River's shares very risky at these levels. <<<