Replies to post #106600 on Biotech Values

[mcbio]

Re: Medwell/Spectral

At the outset, let me say you can make a good living by refusing to invest in sepsis trials. :)

LOL Very true.

That said, on a risk/reward basis making a small investment here would not be crazy in my view. (I haven't reviewed their financing or their IP though, and I don't own any myself). The stock is cheap enough so that if you give the trial a 20% chance of success you still stand to make money on an expected basis. The previous trial was somewhat convincing although it certainly has been criticized for small numbers and lack of blinding. The current trial is a bit small for my liking - there is just so much randomness in any sepsis trial given how sick some of the patients are.

Risk/reward may be reasonable given the huge opportunity an effective drug for sepsis offers and the ~$30M market cap for Spectral (DIAGF on the Pink Sheets). The other question would be which of the two ways would someone play this: the direct way via an investment in Spectral or the indirect way via an investment in Medwell (BOMSF on the Pink Sheets). All told, the only way I would ever play this opportunity (and I likely never will given other bios I'm interested in) would be as a trading opportunity before Phase 3 results are released as I imagine the odds of actual success are low. I.e., is there a reasonable chance Spectral's market cap could go up to some degree from the tiny $30M given the opportunity in anticipation of the Phase 3 results before that huge binary event? Possibly.

As more evidence to my increasing doubts about this drug/diagnostic working, I'll point to this PR from Spectral (http://www.spectraldx.com/rls-12.17.09.pdf ) that includes the following language about the pivotal trial for the drug/diagnostic combo: "The anticipated US pivotal trial will use Spectral’s EAA™ to identify patients with severe sepsis who have elevated endotoxin in the blood and will most likely benefit from treatment with Toraymyxin™."

Doesn't the reference to "severe sepsis" point to Spectral going after the later stages of sepsis, which the prior article posted by flo (#msg-55163258) indicates may not be an optimal approach given that in later stages it's the immune system reaction and not the actual endotoxins that are now the issue? I would think the drug/diagnostic would have a better chance of success going after the earlier stages of sepsis before "severe sepsis."