Much has been said about whether this news is good or bad and how it will effect things further out. I have been a LONG for sometime (full disclosure). Here is my take:
1. NEOP likely did NOT know about this approval. That is because the company is a private one, and did not have to file the NDA openly with FDA. (NEOP could also file under the radar, but I cannot think of any public comopany who would do so. The FDA does not post NDA's on their website. My prior posts go into this further.) Second, they performed a meta-analysis. That means they looked at all the literature and then narrowed it down to the BEST criteria to see if SC was significantly better than VBD. I could do the same thing by just spending a good amount of time on pubmed. So the fact that this comes as a surprise to NEOP IS UNDERSTANDABLE. (Although in retrospect, what would you do if you had a product that was the current standard of care, but may become obsolete if SEEK is approved? You'd try to make that more marketable wouldn't you. Hence Pharma's tactic.)
2. There's nothing on FDA or pharma site that says that it was approved. So what? No one says they have to update things immediately. Until proven otherwise, we can only speculate; but it seems prudent that the FDA WOULD approve an agent with so much success in the literature, that is the current standard of care DESPITE having some serious complications/side effects, including anaphylactic shock.
3. This is good news for NEOP. Yes and No. The good is that in some ways it validates their Phase III study. But in other ways it is bad. There will be people supporting Shrkeli's thesis that they should compare seek to VBD and SC, now that both are approved, especially since VBD and SC were standard of care even before yesterday's announcement. Second, that means that a new trial MAY be wanted by FDA. If you can't see this, then you must now, having seen the stock drop to 2.40. This is the REAL CRUX OF THE PROBLEM FOR NEOP. If seek gets pushed out this could really kill the stock short term.
4. Management sucks. No, prior management sucked. Current IS getting things done. They listed on amex and will shortly file NDA. If they responded to Shrkeli--rare to see any company answer a short's petition--you can bet they will put out a PR Monday about this.
5. Doesn't matter, seek will be approved. Not so fast. FDA is FDA. No one knows what these guys will do. If it does approve, CAH will still have to make others realize this is the better way to go. While they can say it's more efficacious and has less side effects, it will be a harder sell since doctors can now stay with current standard of care and get reimbursed better. So superiority really does come into play. We'll see how it goes...
6. Nothing has changed. False. Everything has changed. The stock has gone from $5.48 to $2.40 in less than two months. Now there is a chance FDA may want another study (although I think unlikely). They are now competing with something (SC) that also is approved by FDA. NDA still not submitted yet. Retail investors may be gone for good. This last point is important. Those hurt from stock crashes in 1999-2000 and 2007-2008 have not returned. Do you think NEOP investors will return? They all see this as dead money. And it may be for now. Or.............
NDA is submitted and citizen's petition is thrown out. FDA accepts NDA and gives PDUFA. That could help stock out.
RIGS partnership announced, helping neop longs.
CAH decides that now that stock is so depressed, it may be feasible to buy company out for $5 and take the gamble on seek themselves. Unlikely but plausible.
So to conclude. Much HAS changed. In the end, if seek is vindicated and approved, we go much higher. But the analysts estimates will still have problems achieving their heights. Why? Because if it is approved, shorts will move back in. The next argument will be that doctors won't want to switch to seek when VBD and SC are working out fine and both are FDA approved.
So they will argue seek will get revenue for NEOP but maybe only $100 million or $50 million. Only time will tell. I bought 1000 shares at $2.41 Monday, because I do believe this was overdone. But I also do believe we could go lower. But I'lll leave the prognosticating to others---there's no shortage of people willing to comply, especially on YHOO MB.
Anyway, things aren't as rosy. But I still believe the end result will be good. It will be harder to get there without the retail investor. But look for institutions to get on board now that the price got cheaper. And look for a Monday PR from company. But now I realize again, that nothing is ever a slam dunk. Hope neop is speaking to FDA Monday in the hopes of getting this moving quicker to our ultimate goal. Hope the company does some damage control. They need to. And even if this approval was only for breast cancer, it doesn't change the fact that it's now all about whether Martin was right---if another trial is needed, watch out. If not, load up the truck.
GLTA
