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Biotech Mailbag: Epix Pharmaceuticals

Adam Feuerstein

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This column originally posted on RealMoney.com at 6:59 a.m. EDT. For more information about subscribing to RealMoney, please click here.

Fresh from a weeklong vacation, the Biotech Mailbag is open once again.

Hadi, an overseas reader, emails to ask about the prospects for Epix Pharmaceuticals (EPIX Quote - Cramer on EPIX - Stock Picks) and its Alzheimer's drug PRX-03140.

The currently available clinical data on PRX-03140 (referred to as PRX for shorthand) is pretty skimpy, so I think it's too early to make any sort of judgment on the drug's prospects.

What we have so far is a small, 80-patient phase IIa study that looked at multiple doses of PRX alone and in combination with Aricept. Treatment duration was short, just two weeks.

In the monotherapy portion of the study, nine patients on the 150 mg dose of PRX reported a 3.6-point improvement in their ADAS-cog score (a test of cognitive function) compared to a 0.9 point drop in the ADAS-cog score for placebo patients. The result was statistically significant.

This positive outcome, however, is confounded by a mistake in the data analysis that forced Epix to restate the results. (The previous data were better, but wrong.) Moreover, with such small numbers of patients, small differences in patient outcomes can dramatically change the results.

Lastly, the data from the combination portion of this study (PRX plus Aricept) were inconclusive, which is a bit of a puzzler. PRX is supposed to work by boosting brain levels of acetylcholine, an important transmitter of nerve impulses. Theoretically, then, it should work synergistically with Aricept, which is an acetylcholinesterase inhibitor that works by preventing or slowing the breakdown of acetylcholine.

Perhaps the study was too small and the two-week treatment too short to show an effect for the PRX-Aricept combination. Still, if the PRX monotherapy data were positive, why not see something positive from the combination therapy as well?

Epix and partner GlaxoSmithKline (GSK Quote - Cramer on GSK - Stock Picks) are currently running two larger phase IIb studies to flesh out more robust data on PRX monotherapy and PRX-Aricept combination treatment. I think it best to wait for these data before making any predictions about the drug's prospects.

It should be noted that Epix, at about $1.60 a share, is not exactly baking in a lot of upside for PRX or for anything in the company's pipeline. Investors are skittish because Epix seems to be in a bit of disarray these days. Questions remain about the future of Vasovist, the company's long-delayed MRI contrasting agent. (On Thursday, Epix re-acquired full commercial rights to Vasovist from German drug firm Bayer.) Late last month, Epix's CEO resigned, replaced on an interim basis by an outside consultant until a new CEO can be found.

While I was gone, Cell Genesys (CEGE Quote - Cramer on CEGE - Stock Picks) blew up. This prompted several emails, including this one from Doug P.

"Cell Genesys -- you were right on. Is this curtains for GVAX and Cell Genesys?"

Last week, Cell Genesys announced that it was halting a phase III study of its GVAX prostate cancer vaccine due to a higher number of deaths in GVAX-treated patients compared to the control arm. The stock fell about 70% to around 80 cents a share. Ouch.

I've never been a Cell Genesys fan because I think the company's approach to cancer immunotherapy is fundamentally flawed. I discussed my issues with the GVAX technology previously. (Just ignore all the happy talk about Dendreon (DNDN Quote - Cramer on DNDN - Stock Picks) in that column. Ahem.) More recently, of course, I've been bearish on the company and the prospects for the GVAX prostate cancer vaccine despite a partnership with Japanese drug maker Takeda.

So, color me decidedly unshocked by the company's recent setback.

Cell Genesys put a halt to the VITAL-2 study, which was testing the combination of GVAX and the chemo drug Taxotere against Taxotere on its own. Still under way is the VITAL-1 study, which pits GVAX against Taxotere. Cell Genesys backers, those who remain, are now putting all their chips on a positive outcome from VITAL-1.

That's a bad bet.

Of the two phase III studies, VITAL-1 was always the one with the smaller odds for success. Head-to-head studies are difficult under the best conditions, even more so in this case since Taxotere is an effective prostate cancer drug.

The higher death rate in the GVAX arm of the VITAL-2 study is forcing Cell Genesys to ask an independent data monitoring committee to take an unscheduled, early survival analysis of VITAL-1 to make sure that this study, like VITAL-2, is not doing more harm than good.

I'd expect the data monitors to set a relatively high bar for futility in VITAL-1, which means they're going to be extra sensitive to any data that suggest GVAX isn't likely to beat Taxotere if the study were allowed to run through completion.

If I were calling the shots at Takeda, I'd be cursing and second-guessing myself for spending money for a piece of GVAX in the first place. To ensure that more good money doesn't get poured down the drain, I'd be forcing Cell Genesys to set a very high bar for the VITAL-1 futility analysis. If not, I'd be walking away.

Even if the futility analysis comes back benign, meaning that the study should continue, the odds for success at the final analysis are that much higher. This unscheduled look at the data must be paid for with some statistical power normally reserved for the final analysis, which makes GVAX's task of besting Taxotere in terms of survival all the more difficult.

I didn't like Cell Genesys before the VITAL-2 blowup, so I'm definitely not liking it now, even with the stock below a buck.

Interest in Amylin Pharmaceuticals (AMLN Quote - Cramer on AMLN - Stock Picks) remains high, even as the stock price sinks. Let me share two emails with divergent views on Amylin's diabetes drug Byetta:

Reader P.P. writes, "Regarding Byetta, I have been an insulin-dependent diabetic for almost 25 years and started using Byetta awhile back -- and it is very effective in lowering my insulin requirements. However, after reading the various articles several months ago regarding pancreatitis, I greatly lessened my use of Byetta from two times a day to when needed (to lower an excessive blood sugar.) In response to the latest news, I have discontinued using Byetta altogether.

"I think we will find that many cognizant diabetics and many endocrinologists will err on the side of safety rather than risking further complications. I am an extremely well-controlled diabetic wherein my A1C is almost always comparable to 'normal' beings and the disadvantages (possible death) outweigh the advantages."

Next up, an email from Jason R.:

"While the prospect of developing pancreatitis is frightening, it is also important to remember that 36 cases of pancreatitis have been reported to the FDA while more than 700,000 people around the world have taken Byetta. In other words, these cases represent about five thousandths of 1% of people who have taken Byetta. Also, 27 of the 30 people had other contributing factors such as gallstones, alcohol use, or triglycerides that were way too high."

In the week after the link between Byetta and pancreatitis was reported, new prescriptions of Byetta fell 3.6%, while new prescriptions for Byetta fell 5.9%, according to the drug tracking firm IMS Health.

Those are modestly negative impacts in prescriptions, but it certainly bears watching to see if the downward trend continues, or if Amylin and partner Eli Lilly (LLY Quote - Cramer on LLY - Stock Picks) can turn Byetta around. (Important to note that Byetta prescription growth has been relatively flat for some time, even before this latest concern over pancreatitis.)

From the sell side, the view on Amylin seems to be more bullish, with many analysts calling the stock oversold. I don't hear that rosy view echoed in too many of my conversations with buy-side investors, however.

If you're a RealMoney subscriber, I recommend reading a column from my colleague Justin Ferayorni regarding Amylin. He's cautious on the stock:

"I do not believe the recently elevated concerns surrounding pancreatitis will have much impact on doctors prescribing Byetta in the near term, but the stock's outlook has likely worsened as a result of this information, in my opinion. Investors should use any rallies to seriously consider selling their long holdings," Justin writes.

Lastly, it seems fitting to end this week's Mailbag with an email regarding Introgen Therapeutics (INGN Quote - Cramer on INGN - Stock Picks).

Perry B. writes: "I am sure you have heard, but the FDA rejected Introgen's [Advexin application] as incomplete. I would be curious to hear your thoughts on the matter should you choose to address it. Disclosure: I recently liquidated my Introgen holdings about a week or so ago."

Introgen has never been an investable stock, unless you were short. In that case, it's been a stellar performer. Congratulations to the Introgen shorts, my condolences to those who were long the stock. (But then, don't say I didn't warn you off repeatedly.)

There are some good lessons to learn from the Introgen blowup, irrespective of your position in the stock. (Or even if you smartly steered clear altogether.)

Don't trust a management team that can't keep its story straight from one conference call to the next. Don't trust management that blames short sellers (or outspoken stock commentators) for a plunging stock price. Don't trust a biotech company that plays fast and loose with clinical data. Retrospective data mining or subgroup analyses? Run away, fast!

We still don't know why precisely the FDA chose to reject the Advexin application, but I won't be surprised to learn that Introgen's claims regarding FDA agreement on new statistical plans and interim analyses of the Advexin data from the phase III studies were nothing more than hocus pocus.

Unfortunately, the FDA is prohibited from speaking publicly about its deliberations with drug sponsors. If the agency could speak, however, I'm confident we'd hear a much different -- and more negative -- take on Advexin than what we've been spoon fed by Introgen CEO David Nance and his Austin, Texas cronies all these years.

The FDA can speak to the Securities and Exchange Commission, however, so let's hope that happens real soon.

Good night, Introgen. Part of me is sad to see you go. It's been fun...

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