Biotech Values

[tinkershaw]

http://www.marketrap.com/article/view_article/91118/howard-schers-campaign-against-dendreon

For those who want a background on this Dr. Scher and his involvement with Provenge and DNDN.

I don't know Dr. Scher, but I remember him very well. Some have called him a scumbag and worse. I have no fond memories of him. I had no problem if his complaints and issues were legitimate, but they were not. Looking at the totality of his behavior in the Provenge saga, he was motivated primarily by financial and personal interests and was not objectively advocating against Provenge in any good-faith manner.

What that means for Exel, I don't know. But Dr. Scher has a history of being a promoter and not someone who would give me any confidence in regard to anything he may represent, as what he is going to represent will only be consistent with his own interests and not that of a concerned doctor and developer of oncological treatments.

As for the other doctors on the panel, it is not unusual in high money drugs for such doctors to be involved in this sort of fashion. If this drug works (and durability is the key element missing, and that element may only be months away from revealing itself) the share price apears to be on the low side.

Check out VRTX's chart from say mid-2004 going forward. In 2005 (if memory serves) the shares started their spike from around $10-$11 into the $30s and low $40s based upon phase I data of the drug that would become known as telaprevir. I waited until $13 as I wanted some more confirmation on the drug. With some durability evidence EXEL may follow a similar pattern. Whether or not the returns hold long-term is another matter. But as you may also see from VRTX, once the shares peaked in the $30s and low $40s all the great returns were then squeezed out except if you traded in and out of the multiple subsequent fear realted troughs. I was fortunate in doing so with their largest drop back into the teens.

Point being, I think you really have to be in earlier rather than later with a drug like this as the Street will start to project the share price to maturity if the drug really starts to look like a winner, and it will start to do so very quicly. After that all the returns, except for trading on steep troughs may be gone.

However, it is usually worthwhile to wait until you know the drug really works, and you know the drug works well. The problem in this case, once the durability evidence comes out the shares are likely to spike before one could start buying. VRTX gave a great opportunity to start buying very cheapl ased upon the fact that telaprevir worked very well, and you knew it. I don't know if EXEL will give us that chance to buy cheaply if you wait until durability data is makde known - which does create some issues if you want to minimize your risk factor. But who knows how it will come out in the end in regard to share price behavior.

That is my experience in situations like this. I look forward to reviewing the slides and listening to the conference and judging for myself. 19/20 bone scans. The numbers are bigger from the usual miracle cancer drug (except for one that I remember from this company who was buying up Cuban drugs, but their numbers were not on pre-defined end points and involved some intense data mining, and the follow up phase III busted, can't recall the stock and drug now, but we have discussed the company on this board in the past).

Tinker