I think most people assume this is not going to hit some oimutlandish number on day 1 of published results. Obviously most assumptions on valuation have as a condition that it will be approved.
As PFS is actually a “surrogate” and not really what everyone wants, which is longer OS, And given that a part of the trial is understanding how new treatments like this work, and the inflammation and dead tumor and disappearance of tumors for many patients is also a part of the observed mechanism, I don’t really have a problem with how the market possibly could misperceive that result. I love market misperception. That’s what I look for as an investor. Give me a portfolio of all stocks that the market misperceives, and I’ll ultimately be a very rich man.
The fact is, in your scenario, they ultimately are approved. I believe the revenue tables Abeta has created look fairly reasonable, though I’ve not gone through them exhaustively and I won’t claim to have vetted them in any way that anyone else should rely upon. Everyone needs to do their own vetting.
But, given that scenario, and assuming they avoid a cheap buyout, which to me is always actually a huge risk factor, I would enjoy that ride as revenues begin to coke in and market perception is changed by reality... granted, assuming approval.
So nothing you wrote there particularly troubles me. I think you put a bit more emphasis on negativity, but that’s what lawyers are always trained to do anyway. To get a client to trust you, and part with their money, a lawyer has to convince a client that things look baaad.
From Wikipedia: “In clinical trials, a surrogate endpoint (or surrogate marker) is a measure of effect of a specific treatment that may correlate with a real clinical endpoint but does not necessarily have a guaranteed relationship.”
I’d argue that the Reliability of PFS generally, not just in this trial, is in question for brain tumors. If doctors have never really known what was going on, and just assumed they did, and this trial brought out that fact, but OS is the gold standard and PFS was just a surrogate for OS, then OS it is...
I think they will ultimately not only validate the PFS measure though, but show the medical community how that measure actually needs to be taken to be reliable. And that will be the new standard, going forward for measuring PFS.
Just my opinion. Otherwise, I don’t disagree that the market and shorts and hedge funds could actively create a misperception. I think it is unlikely to be successful, but, as I said, market misperception is where the money is, in fact.
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