Biotech Values

[DewDiligence]

Taking stock:

In response to GENR’s Rodman & Renchaw presentation last week, I lightened up substantially on my holding in the last few days. I was lucky on the timing because I had no inkling of today’s financing deal.

I have been troubled by GENR’s general posturing of late, especially the continual hyping by Dr. Levitt of the company’s programs in cancer, cystic fibrosis, and obesity. However, I believed that this posturing was a relatively minor issue, far less consequential than the stellar clinical data in AMD from the phase-1/2 trial in Mexico completed a year ago.

Now, however, the quality of GENR’s clinical data has come into play. As I have posted here during the past few days, the tone of the R&R talk last week was quite different from prior presentations, and the 10mg data were unimpressive (#msg-4420204).

Moreover, I consider it a troubling signal that GENR is even interested in testing a 10mg dose when the phase-1/2 Mexican trial used doses of 40-80mg. It may be that there are safety issues at higher doses that the company has not fully disclosed.

Please note that I am not talking about severe safety issues like heart attacks and strokes. We know from GENR’s cancer trials that Squalamine does not cause these kinds of problems even at much higher doses. Moreover, really severe adverse events would probably have led to the safety monitoring board’s recommending a hold on patient recruitment, and GENR would have been required to disclose such an event.

However, relatively minor side effects such as mild QTc-prolongation or sub-acute thrombosis could be occurring in the phase-2 trials at the higher doses without GENR’s being required to report this to investors.

Side effects which are tolerable in cancer may not be tolerable in AMD, and therein lies a possible problem with Squalamine’s dosing. At the FDA advisory panel for Macugen last August, an FDA staffer read a statement on the need to closely monitor any adverse events associated with Macugen’s systemic anti-angiogenesis. What I found remarkable about this was the fact that only 0.01% of a Macugen dose injected into the vitreal chamber escapes into the bloodstream. Hence the FDA was essentially saying that no amount of systemic anti-angiogenesis can be assumed to be safe in the context of a non-life-threatening disease.

The FDA’s super cautiousness on anti-angiogenic safety could well be the impetus for GENR’s trying lower and lower doses of Squalamine. Unfortunately, the data released at R&R show that 10mg is well below the optimal dose for efficacy.

How will all this shake out? I don’t know. In view of the price drop today, if I had not already sold a lot of my holding I would probably have sat tight today, because the lower price provides some compensation for the newfound risks mentioned above.

What I would like to see before buying back aggressively is some solid efficacy data from the phase-2 trials –data that corroborate the ability of Squalamine to actually improve vision the way it did in the Mexican trial. My analysis could well be wrong, of course, and I welcome other viewpoints.