Monday, May 14, 2007
quick one...
Very busy lately, so this is getting ignored... however, I do want to take this occasion to sell 500 shares of GNVC at $4.00 per share. It's currently trading at $4.02 but I'm trying to make life easier on myself.
Saturday, January 13, 2007
End of Year 2006
End of Year Update
Get some quick news out of the way:
Genvec announced interim efficacy analysis for a phase II / III trial in pancreatic cancer. To quote:
“Kaplan-Meier analysis of overall survival data, based on available results for the first 51 patients enrolled in the study, some followed for as long as 18 months, showed a 42.5% absolute increase in overall survival with the addition of TNFerade to standard of care (SOC). At one year, survival was 70.5% in the TNFerade + SOC arm, versus 28.0% in the SOC arm. Significance was at the 75% confidence interval level, and was based on 5 deaths out of 33 TNFerade patients and 7 deaths out of 18 SOC patients”
That was on the 19th of December. On the 20th of December, they announced a ~20 million financing.
Transparent? Yes.
Par for the course for Genvec? Yes.
Those familiar with some of the trading history of this company will know that someone has always had the advance scoop for news, and such shenanigans aren’t out of the ordinary. And although the preliminary results for this pancreatic cancer trial appear exciting, it is a serious stretch to depend heavily on a control arm comparison that had only 7 events and 18 patients. All in all, it’s pretty clear that Genvec management gamed the market with this announcement. So for the experienced jaded biotech investor that has seen more of these shenanigans than they can count, the overall situation is a plus because they actually get some clinical data to chew on.
Telik... ugh...
Obviously the big news for this hypothetical portfolio was the crater left at Telik headquarters after they released topline results for ASSIST-1, 2 and 3. Seemingly the impossible happened :-)
I’d handicapped this event in a way that did not give any possibility to all three failing because I thought ASSIST-3 was a gimme, trial-wise, even if it may not have been adequate for approval by itself. Well, due to some significant trial issues, management managed to F up this trial so much so that it is scientifically inconclusive. Coupled with the drug failing in ASSIST-1 and ASSIST-2, this was the absolutely worst outcome for Telik. Not only does the drug fail to prove superiority in two large trials, the third trial is so poorly managed that not only will it be insufficient for a regulatory filing, it doesn’t give a clear answer as to the drug’s future in the combination treatment settings.
For those that love uncertainty, this situation has created nothing but.
Why uncertainty and not certain failure?
Arguably, Telcyta’s strongest data to date have been the combination results. In handicapping the ASSIST trials, i’d given very low incremental odds for the monotherapy ovarian and NSCLC trials to succeed. Those failures are now certain. However, the market opportunities in 3rd line ovarian and NSCLC were limited, and for Telik to truly be a lucrative investment, the combination studies in earlier stage disease were key. But with ASSIST-3 being inconclusive, it’s hard to decide if there is any future for the drug as combination therapy.
It’s hard to comment on or analyze this situation any further, because there are absolutely no data to look at. Some important questions to address will be:
1) Although ASSIST-1 and ASSIST-2 failed to show statistically significant improvement over the control arm, did the hazard ratio favour Telcyta? I’m talking about a 15-20% favoring of the Telcyta arm, not 5%.
2) Management said that objective responses were observed on the Telcyta arm of all trials. What were the response rate percentages? In the previous ovarian cancer monotherapy trials, the response rates were in the 10-15% range. For consistency, it would be nice if this was reproduced in ASSIST-1. It would also be nice if the median survival in the small monotherapy trials was, more or less, reproduced in ASSIST-1.
3) If you withdraw the 25% of patients with discordance in ASSIST-3, do the data still favour the Telcyta combination arm?
4) Will they change ASSIST-5 to a survival trial?
For me, these questions will determine whether or not Telik will be suitable for risk-loving investors going forward, or if it will simply be a lost cause. If the hazard ratio reasonably favored Telcyta in ASSIST-1 and 2, with response rates mimicking the previous phase II results *and* ASSIST-3 favored the Telcyta arm once the discordancies were subtracted, this *might* be one of the repeated “buying opportunities” that a certain subset of biotech investors enjoy. If the above three conditions are satisfied, I would like to see ASSIST-5 turned into a survival trial.
Why do we care about ASSIST-1, a failed trial, reproducing the results of the previous monotherapy trials? Although Telik’s biggest problem is the failure of these three trials, management’s second big issue is that of credibility. If investors see that the previous phase II trials were properly run (and the results reproduced in ASSIST-1), that can give some comfort to investors who are now tentative about relying on the phase II combination data that the company had previously released. As it stands, all the encouraging phase II combination data to date is suspect. That is the grim truth.
In the meantime, the triplet data in first line NSCLC is due to be released at AACR in April. With over 100 patients in this dataset, it should be a meaningful piece of information for those who are following Telik. But understandably, even if the data look “good”, there will be a substantial dose of skepticism... all of which will be deserved.
Synopsis
With prudent hedges in place ahead of the phase III results, many could have dampened the impact of the 70% decrease in share price. In fact, in real life, I use hedges for these situations. However, I want to limit such additional considerations for the purposes of this blog. That aside, I do think Telik’s current situation can be a recipe for disaster for many investors. If you’re one of those investors who is inclined to have “faith” in a drug, and you feel it is “not if, but when” Telcyta will be approved, the current valuation may appear too good to pass up. But without additional data on the ASSIST trials, buying here would be pretty much irresponsible, in my opinion. Bottom fishing is for traders, and this blog has no intention of confusing the current fundamentals of Telik with the allure of scalping 20% by trading a stock that just crashed and burned based on phase III results.
As of today, the hypothetical portfolio stands at a value of $87 011.75, or a loss of 13%. That’s a terrible, terrible one year performance. Read at your own risk!
Get some quick news out of the way:
Genvec announced interim efficacy analysis for a phase II / III trial in pancreatic cancer. To quote:
“Kaplan-Meier analysis of overall survival data, based on available results for the first 51 patients enrolled in the study, some followed for as long as 18 months, showed a 42.5% absolute increase in overall survival with the addition of TNFerade to standard of care (SOC). At one year, survival was 70.5% in the TNFerade + SOC arm, versus 28.0% in the SOC arm. Significance was at the 75% confidence interval level, and was based on 5 deaths out of 33 TNFerade patients and 7 deaths out of 18 SOC patients”
That was on the 19th of December. On the 20th of December, they announced a ~20 million financing.
Transparent? Yes.
Par for the course for Genvec? Yes.
Those familiar with some of the trading history of this company will know that someone has always had the advance scoop for news, and such shenanigans aren’t out of the ordinary. And although the preliminary results for this pancreatic cancer trial appear exciting, it is a serious stretch to depend heavily on a control arm comparison that had only 7 events and 18 patients. All in all, it’s pretty clear that Genvec management gamed the market with this announcement. So for the experienced jaded biotech investor that has seen more of these shenanigans than they can count, the overall situation is a plus because they actually get some clinical data to chew on.
Telik... ugh...
Obviously the big news for this hypothetical portfolio was the crater left at Telik headquarters after they released topline results for ASSIST-1, 2 and 3. Seemingly the impossible happened :-)
I’d handicapped this event in a way that did not give any possibility to all three failing because I thought ASSIST-3 was a gimme, trial-wise, even if it may not have been adequate for approval by itself. Well, due to some significant trial issues, management managed to F up this trial so much so that it is scientifically inconclusive. Coupled with the drug failing in ASSIST-1 and ASSIST-2, this was the absolutely worst outcome for Telik. Not only does the drug fail to prove superiority in two large trials, the third trial is so poorly managed that not only will it be insufficient for a regulatory filing, it doesn’t give a clear answer as to the drug’s future in the combination treatment settings.
For those that love uncertainty, this situation has created nothing but.
Why uncertainty and not certain failure?
Arguably, Telcyta’s strongest data to date have been the combination results. In handicapping the ASSIST trials, i’d given very low incremental odds for the monotherapy ovarian and NSCLC trials to succeed. Those failures are now certain. However, the market opportunities in 3rd line ovarian and NSCLC were limited, and for Telik to truly be a lucrative investment, the combination studies in earlier stage disease were key. But with ASSIST-3 being inconclusive, it’s hard to decide if there is any future for the drug as combination therapy.
It’s hard to comment on or analyze this situation any further, because there are absolutely no data to look at. Some important questions to address will be:
1) Although ASSIST-1 and ASSIST-2 failed to show statistically significant improvement over the control arm, did the hazard ratio favour Telcyta? I’m talking about a 15-20% favoring of the Telcyta arm, not 5%.
2) Management said that objective responses were observed on the Telcyta arm of all trials. What were the response rate percentages? In the previous ovarian cancer monotherapy trials, the response rates were in the 10-15% range. For consistency, it would be nice if this was reproduced in ASSIST-1. It would also be nice if the median survival in the small monotherapy trials was, more or less, reproduced in ASSIST-1.
3) If you withdraw the 25% of patients with discordance in ASSIST-3, do the data still favour the Telcyta combination arm?
4) Will they change ASSIST-5 to a survival trial?
For me, these questions will determine whether or not Telik will be suitable for risk-loving investors going forward, or if it will simply be a lost cause. If the hazard ratio reasonably favored Telcyta in ASSIST-1 and 2, with response rates mimicking the previous phase II results *and* ASSIST-3 favored the Telcyta arm once the discordancies were subtracted, this *might* be one of the repeated “buying opportunities” that a certain subset of biotech investors enjoy. If the above three conditions are satisfied, I would like to see ASSIST-5 turned into a survival trial.
Why do we care about ASSIST-1, a failed trial, reproducing the results of the previous monotherapy trials? Although Telik’s biggest problem is the failure of these three trials, management’s second big issue is that of credibility. If investors see that the previous phase II trials were properly run (and the results reproduced in ASSIST-1), that can give some comfort to investors who are now tentative about relying on the phase II combination data that the company had previously released. As it stands, all the encouraging phase II combination data to date is suspect. That is the grim truth.
In the meantime, the triplet data in first line NSCLC is due to be released at AACR in April. With over 100 patients in this dataset, it should be a meaningful piece of information for those who are following Telik. But understandably, even if the data look “good”, there will be a substantial dose of skepticism... all of which will be deserved.
Synopsis
With prudent hedges in place ahead of the phase III results, many could have dampened the impact of the 70% decrease in share price. In fact, in real life, I use hedges for these situations. However, I want to limit such additional considerations for the purposes of this blog. That aside, I do think Telik’s current situation can be a recipe for disaster for many investors. If you’re one of those investors who is inclined to have “faith” in a drug, and you feel it is “not if, but when” Telcyta will be approved, the current valuation may appear too good to pass up. But without additional data on the ASSIST trials, buying here would be pretty much irresponsible, in my opinion. Bottom fishing is for traders, and this blog has no intention of confusing the current fundamentals of Telik with the allure of scalping 20% by trading a stock that just crashed and burned based on phase III results.
As of today, the hypothetical portfolio stands at a value of $87 011.75, or a loss of 13%. That’s a terrible, terrible one year performance. Read at your own risk!
Wednesday, December 13, 2006
Quick Purchase
Going to purchase 800 more shares of IDIX. Current ask (2:35 PM EST) is 9.32, so that's the price we'll take.
$7456.00 cost.
$7456.00 cost.
Saturday, October 28, 2006
Another Approval
Idenix (IDIX) received approval for their HBV drug Tyzeka / Sebivo / Telbivudine this week. The label seems to be as expected, so we now wait for the start of sales which will reportedly start in November. IDIX was purchased into the portfolio at a fortuitous time and a good price, but approval has not sent the stock soaring... unless you're looking at the chart upside down.
This is actually the second approval for a stock in the portfolio, the first being GTCB's Atryn. Approval there also landed with a thud, as the stock has been down appreciably from the portfolio's purchase point.
The moral of the story? Perhaps the market is putting on more of a "show me" stance towards approvals. The share price of IDIX and particularly GTCB suggests that few are willing to give these two drugs the benefit of the doubt on upcoming sales. Arguably GTCB has had a financing that makes the situation a bit more complicated, but nonetheless, the share price is what it is.
One additional wrinkle to the IDIX story is their HCV drug valopicitabine. Vertex is demonstrably the leader of the pack for experimental HCV therapies, whereas valopicitabine has had a bit of a stumble this year. For IDIX, this has created an asymmetric situation. Forward progress on valopicitabine will likely show a muted effect on share price because the market is expecting VX-950 to eat everyone's lunch. On the other hand, negative news from valopicitabine will tank the stock because the HCV market is perceived by the market to be the crown jewel. With valopicitabine likely dominating IDIX's share price, I think this asymmetry may present a future buying point provided that Telbivudine sales are tracking satisfactorily.
===
GPCB / PHRM's drug satraplatin recently demonstrated a significant delay in PFS for prostate cancer. Share prices for those companies have responded positively. It struck me the other day that in a previous email correspondence, I spoke cautiously / negatively regarding satraplatin. It stemmed from an imbalance in the performance score (PS) for the two arms of a phase II trial, where there were more PS = 0 patients in the satraplatin + prednisone arm (44%) versus 30% in the prednisone arm. My concern stemmed from the fact that the PFS result in that phase II may have been driven more by the discrepancy in PS rather than the addition of satraplatin. Obviously that concern has been invalidated by the strong PFS result in the phase III SPARC trial. So although a healthy dose of skepticism is good, perhaps being overly fearful of every discrepancy isn't constructive. Adjusting the total investment in these circumstances appears to be a much better option than not investing altogether. In hindsight, I would think that a 5% position is suitable in situations where the only thing keeping one away is a relatively small detail. I'll have to keep this in mind for next time.
===
Other stuff: COR seems to have been stabbed in the heart again. Sorry guys... safety concerns are really a black box. They're harder to predict than efficacy, in my opinion.
DNDN continues to get mileage out of their trial data, especially 9901. There's always that one guy at a meeting putting up the raggedy poster with dozens of pinholes on the corners because he's gotten some great mileage from it. Those would be the DNDN guys, if it wasn't for powerpoint. I still think they're going to get an approvable letter, and the FDA will wait for 9902B data. Even if they get approval, 9902B remains the make-or-break trial. Approval on 9901 + 9902A will provide some sales, but those sales would obviously be strengthened by positive 9902B. But if Provenge is on the market and 9902B fails, you can kiss sales goodbye. So in a way, approval on 9901 + 9902A is, in a bizarre manner, almost a non-event pending 9902B results. This one may also fall into the "show-me" situation insofar as the market's reaction based on 9901 + 9902A approval.
===
2006 Big Event Tally, or the BET (a strangely appropriate acronym for the biotech sector):
Approvals: Two (GTCB's Atryn and IDIX's Tyzeka)
Failures: One (SGXP's Troxatyl)
At 67%, it's still better odds than Vegas, so the portfolio lives on.
Next Up: Speedel (SPP100 / Rasilez / Tekturna) and Telik (TLK286 / Telcyta)
===
P.S. Speaking of Vegas, myself and a couple of friends want to go for the NBA All-Star game. If anyone has leads on tickets that are not $1500 apiece, drop me a line :-)
P.P.S. I do like biotech discussion in general. If there is a company that you're interested in, drop me a line and I'll post the info I have, if any.
This is actually the second approval for a stock in the portfolio, the first being GTCB's Atryn. Approval there also landed with a thud, as the stock has been down appreciably from the portfolio's purchase point.
The moral of the story? Perhaps the market is putting on more of a "show me" stance towards approvals. The share price of IDIX and particularly GTCB suggests that few are willing to give these two drugs the benefit of the doubt on upcoming sales. Arguably GTCB has had a financing that makes the situation a bit more complicated, but nonetheless, the share price is what it is.
One additional wrinkle to the IDIX story is their HCV drug valopicitabine. Vertex is demonstrably the leader of the pack for experimental HCV therapies, whereas valopicitabine has had a bit of a stumble this year. For IDIX, this has created an asymmetric situation. Forward progress on valopicitabine will likely show a muted effect on share price because the market is expecting VX-950 to eat everyone's lunch. On the other hand, negative news from valopicitabine will tank the stock because the HCV market is perceived by the market to be the crown jewel. With valopicitabine likely dominating IDIX's share price, I think this asymmetry may present a future buying point provided that Telbivudine sales are tracking satisfactorily.
===
GPCB / PHRM's drug satraplatin recently demonstrated a significant delay in PFS for prostate cancer. Share prices for those companies have responded positively. It struck me the other day that in a previous email correspondence, I spoke cautiously / negatively regarding satraplatin. It stemmed from an imbalance in the performance score (PS) for the two arms of a phase II trial, where there were more PS = 0 patients in the satraplatin + prednisone arm (44%) versus 30% in the prednisone arm. My concern stemmed from the fact that the PFS result in that phase II may have been driven more by the discrepancy in PS rather than the addition of satraplatin. Obviously that concern has been invalidated by the strong PFS result in the phase III SPARC trial. So although a healthy dose of skepticism is good, perhaps being overly fearful of every discrepancy isn't constructive. Adjusting the total investment in these circumstances appears to be a much better option than not investing altogether. In hindsight, I would think that a 5% position is suitable in situations where the only thing keeping one away is a relatively small detail. I'll have to keep this in mind for next time.
===
Other stuff: COR seems to have been stabbed in the heart again. Sorry guys... safety concerns are really a black box. They're harder to predict than efficacy, in my opinion.
DNDN continues to get mileage out of their trial data, especially 9901. There's always that one guy at a meeting putting up the raggedy poster with dozens of pinholes on the corners because he's gotten some great mileage from it. Those would be the DNDN guys, if it wasn't for powerpoint. I still think they're going to get an approvable letter, and the FDA will wait for 9902B data. Even if they get approval, 9902B remains the make-or-break trial. Approval on 9901 + 9902A will provide some sales, but those sales would obviously be strengthened by positive 9902B. But if Provenge is on the market and 9902B fails, you can kiss sales goodbye. So in a way, approval on 9901 + 9902A is, in a bizarre manner, almost a non-event pending 9902B results. This one may also fall into the "show-me" situation insofar as the market's reaction based on 9901 + 9902A approval.
===
2006 Big Event Tally, or the BET (a strangely appropriate acronym for the biotech sector):
Approvals: Two (GTCB's Atryn and IDIX's Tyzeka)
Failures: One (SGXP's Troxatyl)
At 67%, it's still better odds than Vegas, so the portfolio lives on.
Next Up: Speedel (SPP100 / Rasilez / Tekturna) and Telik (TLK286 / Telcyta)
===
P.S. Speaking of Vegas, myself and a couple of friends want to go for the NBA All-Star game. If anyone has leads on tickets that are not $1500 apiece, drop me a line :-)
P.P.S. I do like biotech discussion in general. If there is a company that you're interested in, drop me a line and I'll post the info I have, if any.
Thursday, October 19, 2006
One follow-up...
Brought up the point in the previous post that the ASSIST trials may have had an interim analysis conducted. For completeness, let's be clear that I didn't make this point up out of thin air, and here are a couple of relevant passages from past conference calls to get everyone up to speed:
February 19 2004
Michael Wick
"We expect to complete enrollment later this year. Since this (ASSIST-1) is an event-driven trial, the timeframe for having initial results is not entirely predictable. We designed the trial to have the opportunity for accelerated approval, although we are fully prepared to complete this trial."
April 29 2004
Cynthia Butitta
"We design these trials (ASSIST-1 and -2) with interim looks to provide opportunities for accelerated approval, although we are prepared to complete the trials and anticipate filing the NDA in the second half of '05."
Interim looks and accelerated approval is company-speak for an interim analysis that is looking at an endpoint that is a surrogate of survival (time to progression, progression free survival, response rate), with the hopes of showing a large advantage early on in the life of the trial, without having to go the distance for the survival analysis.
Telik IR recently made it clear to me that although these interim analyses were designed, they were never undertaken. The issue was, to quote, moot.
I do find it funny to design a trial with an interim analysis and not go through with it. I could see a scenario where a change in the standard of care for that indication may render an upcoming interim analysis of a surrogate endpoint "moot". For example, you're studying your drug in 3rd line NSCLC in a trial that has an interim analysis with a time-to-progression (TTP) endpoint, and a final overall survival endpoint. While your trial is running and before your interim analysis triggers, a competitor's drug in the same 3rd line NSCLC indication shows a survival advantage. At that point, a positive TTP finding on the interim analysis may not have as much impact as one hoped, and you'd be better off with survival data in hand. Under that scenario, you could forego an interim analysis if you felt that the impact of the endpoint / findings would not be significant.
I could see this for ASSIST-2. In this setting where Tarceva has survival data in hand, you wouldn't have a selling point. You buy a bunch of oncologists lunch during a seminar in the hope of telling them how your drug improved a surrogate and why they should pass up the drug that improved survival?
(And trust me, unless you're a company representative with a very direct, concise and nuance-free message, MDs don't pay attention. MDs focus more on the cheap, free pens and notepads by the food table than to the message that the representative is conveying. Unless they know the rep... then they start talking about their kids and tonight's little league baseball game.)
(Before any MDs start flaming this blog, go to a couple of more afternoon seminars and see how much time the *other* MDs spend with the Caduet and Lipitor trinkets than with the representative and his or her story. If I'm right, then do the honorable thing and grab a trinket off the table for me... we spilled bacteria on one of our Lipitor tape dispensers and could use another.)
(Excuse me while I take a sip of coffee from my Plavix mug.)
Back to topic, I don't see why they would pass up this opportunity for ASSIST-1. Especially since it is written into an SPA, and there have not been any substantial improvements in the standard of care for ~3rd line ovarian. This one confuses me. The two easiest explanations are that they are being very / overly conservative, or are simply chicken. I can't really decide.
The third option, for the conspiracy buffs, is to not take them at their word and believe that they did, in fact, do the interim analyses. Although I might be a fan of this one for other companies, I've always had concise questions for Telik IR and Mrs. DeGuzman has always given me concise (curt?) answers in response. There is not much to be inferred when the speaker says "they weren't done".
So that's that. As always, you decide.
(But I think I heard a quality in her voice that was clearly restrained enthusiasm, like they knew that... just kidding. Don't you hate it when investors overzealously read into every inflexion of the speaker during a talk? Drives me nuts. How come no one ever hears a restrained quality of impending doom in the CEO's voice during a conference call?)
===
Spelling and grammar will be corrected later. Maybe.
February 19 2004
Michael Wick
"We expect to complete enrollment later this year. Since this (ASSIST-1) is an event-driven trial, the timeframe for having initial results is not entirely predictable. We designed the trial to have the opportunity for accelerated approval, although we are fully prepared to complete this trial."
April 29 2004
Cynthia Butitta
"We design these trials (ASSIST-1 and -2) with interim looks to provide opportunities for accelerated approval, although we are prepared to complete the trials and anticipate filing the NDA in the second half of '05."
Interim looks and accelerated approval is company-speak for an interim analysis that is looking at an endpoint that is a surrogate of survival (time to progression, progression free survival, response rate), with the hopes of showing a large advantage early on in the life of the trial, without having to go the distance for the survival analysis.
Telik IR recently made it clear to me that although these interim analyses were designed, they were never undertaken. The issue was, to quote, moot.
I do find it funny to design a trial with an interim analysis and not go through with it. I could see a scenario where a change in the standard of care for that indication may render an upcoming interim analysis of a surrogate endpoint "moot". For example, you're studying your drug in 3rd line NSCLC in a trial that has an interim analysis with a time-to-progression (TTP) endpoint, and a final overall survival endpoint. While your trial is running and before your interim analysis triggers, a competitor's drug in the same 3rd line NSCLC indication shows a survival advantage. At that point, a positive TTP finding on the interim analysis may not have as much impact as one hoped, and you'd be better off with survival data in hand. Under that scenario, you could forego an interim analysis if you felt that the impact of the endpoint / findings would not be significant.
I could see this for ASSIST-2. In this setting where Tarceva has survival data in hand, you wouldn't have a selling point. You buy a bunch of oncologists lunch during a seminar in the hope of telling them how your drug improved a surrogate and why they should pass up the drug that improved survival?
(And trust me, unless you're a company representative with a very direct, concise and nuance-free message, MDs don't pay attention. MDs focus more on the cheap, free pens and notepads by the food table than to the message that the representative is conveying. Unless they know the rep... then they start talking about their kids and tonight's little league baseball game.)
(Before any MDs start flaming this blog, go to a couple of more afternoon seminars and see how much time the *other* MDs spend with the Caduet and Lipitor trinkets than with the representative and his or her story. If I'm right, then do the honorable thing and grab a trinket off the table for me... we spilled bacteria on one of our Lipitor tape dispensers and could use another.)
(Excuse me while I take a sip of coffee from my Plavix mug.)
Back to topic, I don't see why they would pass up this opportunity for ASSIST-1. Especially since it is written into an SPA, and there have not been any substantial improvements in the standard of care for ~3rd line ovarian. This one confuses me. The two easiest explanations are that they are being very / overly conservative, or are simply chicken. I can't really decide.
The third option, for the conspiracy buffs, is to not take them at their word and believe that they did, in fact, do the interim analyses. Although I might be a fan of this one for other companies, I've always had concise questions for Telik IR and Mrs. DeGuzman has always given me concise (curt?) answers in response. There is not much to be inferred when the speaker says "they weren't done".
So that's that. As always, you decide.
(But I think I heard a quality in her voice that was clearly restrained enthusiasm, like they knew that... just kidding. Don't you hate it when investors overzealously read into every inflexion of the speaker during a talk? Drives me nuts. How come no one ever hears a restrained quality of impending doom in the CEO's voice during a conference call?)
===
Spelling and grammar will be corrected later. Maybe.
Sunday, October 15, 2006
Telik, and a transaction or two...
Telik announced on the 25th of September that their 3rd line ovarian cancer trial, ASSIST-1, had hit the prespecified number of events. The primary endpoint of this trial is overall survival / reduction in risk of death, similar to ASSIST-2 which had hit its prespecified number of events back in the spring.
So both A-1 and -2 are ready to analyze. ASSIST-3, the combination trial in platinum refractory / resistant ovarian cancer, had fully enrolled in the late spring. The primary endpoint of this trial is response rate, with a secondary endpoint of progression free survival (PFS). Since it has been roughly 5 months since the closure of that trial, it is relatively safe to assume that patients have had 6 cycles of drug on either arm, if necessary (drug is administered every 3 weeks). Therefore, there has been enough time for responders to respond, and nonresponders have likely progressed by now, especially since median PFS in this population is around 4-5 months.
In short, all the trials are ready for analysis. If we are to assume that it would take 4-8 weeks until the results are released, investors are looking at a pleasant or unpleasant surprise soon (it has been 3 weeks since they noted A-1 had hit the number of events).
Since part of this exercise is to see how well we do at predicting drug success, I'm going to put down a prediction and a few words. We can come back to it in a few months and have a good chuckle. We'll rank the trials from most likely to hit primary endpoint, to least likely:
Most Likely to Hit Primary Endpoint: ASSIST-3
This trial is looking at response rate for patients taking carboplatin and telcyta versus those taking Doxil. Doxil's response rate is pretty well confined to ~15%, whereas carboplatin and telcyta has shown a response rate over 40%. Provided that tumour responses are independently verified, they are probably the most direct indication of a drug effect and most reliable in terms of reproducibility. Whereas other endpoints such as PFS and survival can be greatly influenced by reporting intervals and the heterogeneity of patients and their stage of disease / post-trial care, response rate isn't as influenced by these factors. That said, I do think that A-3 is likely to reproduce the 40% or so response rate seen in the phase II trial, and will show a statistically significant improvement over Doxil.
Also, as the response rate approaches 50%, I do think that there is a very decent shot at showing an improvement of PFS in this trial. My only reservation for the PFS measurement of this trial is that the data may not be mature if they locked the database right after the last enrolled patient was given a chance to show a response (after 5-6 cycles of drug). If there are many patients like this, then their PFS would be unknown / censored. If there are too many censored patients on both arms, then it may reduce the ability to see any stat sig difference in PFS.
Really, this trial's primary endpoint makes its success pretty much guaranteed. It's the regulatory relevance of this trial that is up for debate.
Next Most Likely to Hit Primary Endpoint: ASSIST-1
This trial is looking at overall survival in 3rd line ovarian cancer. The median overall survival data from the previous phase II trials have looked good when compared to Doxil / Hycamtin, and the confidence in those data is increased because two such trials were run. Small biotechs often run one phase II trial and then shuffle off to phase III, so running two phase IIs allows investors to get a better feel of whether or not the results are reproducible. In both trials, the response rates were reproducible, suggesting that the drug effect is there. Whether that will reproducibly result in an improvement in survival is the question. My feeling is that there is a good chance of hitting the primary endpoint, although this trial is not the gimme tha A-3 appears to be.
Least Likely to Hit Primary Endpoint: ASSIST-2
In the two phase II trials that preceded A-2, Telik saw response rates of zero and 11%. The trial with no responses ended up showing a median survival greater than 10 months for the 41 patients reported. No data were released for the trial with the 11% response rate. Obviously if the 10 month value could be repeated, this trial would be a success. But since one trial had responses and the other had none, the reproducibility comes into question. NSCLC is notorious for showing phase II trials with good median survival that drops like a rock in randomized trials. This trial also has an international flavour, which can always be a red flag / wildcard. All in all, I think this is the one most likely not to succeed.
Regulatory Relevance?
Success in A-1 and/or -2 will be sufficient for FDA approval, in my opinion. Both trials are looking at overall survival / reduction in risk of death and both trials have SPA agreements with the FDA. If either hits the primary endpoint, I would think that approval is assured (barring unexpected and unforeseeable circumstances).
There is the issue of whether A-1 had an interim analysis, and how this may or may not have influenced the statistical hurdle at the final analysis. The company has mentioned that this trial had the chance to support accelerated approval, and that if any interim data suggest a course change, investors will be notified. Investors weren't notified of anything, which doesn't mean that there were or were not interim analyses. To be honest, it is unclear to me what types of interim analyses Wick talks about in this regard. Trials do have safety boards that convene and intermittently look at the data to determine if one arm is being unduly risked in the trial. These types of analyses are not the formal "interim" analyses that a company and the FDA negotiate ahead of time, and which necessitate a statistical penalty. However, the ambiguity of the comments and the mention of accelerated approval leaves open the possibility that there may have been a comparison of objective response rate and / or PFS at some interim point. If it was response rate, it would not be surprising if the analysis did not stop the trial. If it was a PFS analysis, it would be somewhat disappointing. This is an outstanding issue that I've not been able to completely clarify, and remains a risk.
The A-3 trial is the one that has the least regulatory relevance. I do think there is reasonable debate as to whether or not a trial with response rate in second line ovarian cancer will be sufficient, by itself, for FDA approval. This question mark becomes larger since the scenario that would necessitate A-3 being the registrational trial for approval would necessarily mean that A-1 failed. It would be difficult to argue for approval of Telcyta based on a surrogate endpoint when a trial testing survival fell short.
The All-Important Predictions
1) Assist-3 will hit the primary endpoint. No doubt.
2) My best guess is that both A-1 and -3 will end up hitting their primary endpoints whereas A-2 will not. This scenario would be sufficient for approval of Telcyta. The market reaction may be muted, because NSCLC is the larger market that one wants to enter. However, the triplet data of telcyta + carbo + taxol in NSCLC is looking good, and this is probably Telik's best shot at entering the NSCLC market in an appreciable manner. Competition in 2nd/3rd line NSCLC is fierce, and unless Telcyta has blow-out results in A-2 (unlikely), they would be unable to compete significantly against the sharks from DNA / Lilly / Sanofi even if they showed an increase in survival over Iressa / placebo.
So if we place some percentages, I'm looking for success in A-1 and A-3 as the most likely outcome (45%). This is followed by success in A-3 alone (40%), then A-2 and A-3 (10%), and least likely scenario, A-1, 2 and -3 (5%). You'll note that I do not think any scenario suggesting failure of A-3 is possible, which removes a whole host of scenarios including the deadly "each of A-1, 2 and 3 fail".
On other matters, we're going to make a couple of additions:
1) Purchase 1200 shares of IDIX at Friday's closing price of $9.00, total cost of $10800. The PDUFA date is the end of October, and I think approval is likely. Going to buy the stock in anticipation of (cross our fingers) earnings. That leaves us with cash of $38672.62.
2) We're also going short 2800 shares of INGN at Friday's (the 13th!) closing price of $4.4701, a total "cost" of $12516.28. This company is simply not being straightforward with the market, so we're going to take advantage. Watch for their Advexin registration strategy to fall flat on its face. I'm looking to cover this at around $3.50 per share, barring unforeseen developments. The general strategy with short positions will be to hold long term even if it goes against us in the short term. Since we're mostly concerned with fundamentals, and since INGN's fundamentals suck, patience should provide good returns. This technically returns our cash position to $51188.90, but I will continue to consider the cash at $38672.62 because I do not want to have to mark things to market, calculate margin requirements, etc... (see #1 below).
I did have one suggestion to put the leftover cash into HQH, a dividend paying "fund" that is filled with public and private biotechs that are the focus of a blog like this. It's a good idea, but I'm not going to do it for a couple of reasons:
1) I'm lazy. I don't want to follow the quarterly distribution. (Yes, this is a very weak reason)
2) More importantly, I want to keep the cash available because there may be a time in the future where I may want to take advantage of an unfavorable market in biotechs to pick up some shares that I may consider to be bargains. If I keep the cash on hand in HQH, then an overall decline in biotechs will cause a fall in HQH and will lessen the buying power especially at the time when I may want that extra buying power. Clearly I could try and time an exit out of HQH if I feel the tide is turning, but that becomes an even more expansive market-timing exercise that I don't want to overly burden myself with.
It may also occur to some that I could put the remaining cash in a money market fund and maximize the return from the cash, albeit modestly, while it waits to be used for future purchases. This is true, but see #1 above... I'm lazy. I don't want to calculate average balances etc... At least we know that the performance of this portfolio would be relatively "modest" in comparison to what one would truly get in the real world since their broker could easily track the cash balance and provide investors that little extra yield. Of course, I don't include commissions which would reduce the yield, so maybe all these things balance out in the long term.
Also, in case people forget: Please assume that I have a short or long position, as you deem appropriate, in any company mentioned here. Assume the most sinister possibility because that is fine with me. I'm not one of those people who thinks that such general commentary on the web truly moves stock prices. And if you're going to email me or post comments with conspiracy theories on why I have this blog and the positions that are disclosed, please make them creative.
So both A-1 and -2 are ready to analyze. ASSIST-3, the combination trial in platinum refractory / resistant ovarian cancer, had fully enrolled in the late spring. The primary endpoint of this trial is response rate, with a secondary endpoint of progression free survival (PFS). Since it has been roughly 5 months since the closure of that trial, it is relatively safe to assume that patients have had 6 cycles of drug on either arm, if necessary (drug is administered every 3 weeks). Therefore, there has been enough time for responders to respond, and nonresponders have likely progressed by now, especially since median PFS in this population is around 4-5 months.
In short, all the trials are ready for analysis. If we are to assume that it would take 4-8 weeks until the results are released, investors are looking at a pleasant or unpleasant surprise soon (it has been 3 weeks since they noted A-1 had hit the number of events).
Since part of this exercise is to see how well we do at predicting drug success, I'm going to put down a prediction and a few words. We can come back to it in a few months and have a good chuckle. We'll rank the trials from most likely to hit primary endpoint, to least likely:
Most Likely to Hit Primary Endpoint: ASSIST-3
This trial is looking at response rate for patients taking carboplatin and telcyta versus those taking Doxil. Doxil's response rate is pretty well confined to ~15%, whereas carboplatin and telcyta has shown a response rate over 40%. Provided that tumour responses are independently verified, they are probably the most direct indication of a drug effect and most reliable in terms of reproducibility. Whereas other endpoints such as PFS and survival can be greatly influenced by reporting intervals and the heterogeneity of patients and their stage of disease / post-trial care, response rate isn't as influenced by these factors. That said, I do think that A-3 is likely to reproduce the 40% or so response rate seen in the phase II trial, and will show a statistically significant improvement over Doxil.
Also, as the response rate approaches 50%, I do think that there is a very decent shot at showing an improvement of PFS in this trial. My only reservation for the PFS measurement of this trial is that the data may not be mature if they locked the database right after the last enrolled patient was given a chance to show a response (after 5-6 cycles of drug). If there are many patients like this, then their PFS would be unknown / censored. If there are too many censored patients on both arms, then it may reduce the ability to see any stat sig difference in PFS.
Really, this trial's primary endpoint makes its success pretty much guaranteed. It's the regulatory relevance of this trial that is up for debate.
Next Most Likely to Hit Primary Endpoint: ASSIST-1
This trial is looking at overall survival in 3rd line ovarian cancer. The median overall survival data from the previous phase II trials have looked good when compared to Doxil / Hycamtin, and the confidence in those data is increased because two such trials were run. Small biotechs often run one phase II trial and then shuffle off to phase III, so running two phase IIs allows investors to get a better feel of whether or not the results are reproducible. In both trials, the response rates were reproducible, suggesting that the drug effect is there. Whether that will reproducibly result in an improvement in survival is the question. My feeling is that there is a good chance of hitting the primary endpoint, although this trial is not the gimme tha A-3 appears to be.
Least Likely to Hit Primary Endpoint: ASSIST-2
In the two phase II trials that preceded A-2, Telik saw response rates of zero and 11%. The trial with no responses ended up showing a median survival greater than 10 months for the 41 patients reported. No data were released for the trial with the 11% response rate. Obviously if the 10 month value could be repeated, this trial would be a success. But since one trial had responses and the other had none, the reproducibility comes into question. NSCLC is notorious for showing phase II trials with good median survival that drops like a rock in randomized trials. This trial also has an international flavour, which can always be a red flag / wildcard. All in all, I think this is the one most likely not to succeed.
Regulatory Relevance?
Success in A-1 and/or -2 will be sufficient for FDA approval, in my opinion. Both trials are looking at overall survival / reduction in risk of death and both trials have SPA agreements with the FDA. If either hits the primary endpoint, I would think that approval is assured (barring unexpected and unforeseeable circumstances).
There is the issue of whether A-1 had an interim analysis, and how this may or may not have influenced the statistical hurdle at the final analysis. The company has mentioned that this trial had the chance to support accelerated approval, and that if any interim data suggest a course change, investors will be notified. Investors weren't notified of anything, which doesn't mean that there were or were not interim analyses. To be honest, it is unclear to me what types of interim analyses Wick talks about in this regard. Trials do have safety boards that convene and intermittently look at the data to determine if one arm is being unduly risked in the trial. These types of analyses are not the formal "interim" analyses that a company and the FDA negotiate ahead of time, and which necessitate a statistical penalty. However, the ambiguity of the comments and the mention of accelerated approval leaves open the possibility that there may have been a comparison of objective response rate and / or PFS at some interim point. If it was response rate, it would not be surprising if the analysis did not stop the trial. If it was a PFS analysis, it would be somewhat disappointing. This is an outstanding issue that I've not been able to completely clarify, and remains a risk.
The A-3 trial is the one that has the least regulatory relevance. I do think there is reasonable debate as to whether or not a trial with response rate in second line ovarian cancer will be sufficient, by itself, for FDA approval. This question mark becomes larger since the scenario that would necessitate A-3 being the registrational trial for approval would necessarily mean that A-1 failed. It would be difficult to argue for approval of Telcyta based on a surrogate endpoint when a trial testing survival fell short.
The All-Important Predictions
1) Assist-3 will hit the primary endpoint. No doubt.
2) My best guess is that both A-1 and -3 will end up hitting their primary endpoints whereas A-2 will not. This scenario would be sufficient for approval of Telcyta. The market reaction may be muted, because NSCLC is the larger market that one wants to enter. However, the triplet data of telcyta + carbo + taxol in NSCLC is looking good, and this is probably Telik's best shot at entering the NSCLC market in an appreciable manner. Competition in 2nd/3rd line NSCLC is fierce, and unless Telcyta has blow-out results in A-2 (unlikely), they would be unable to compete significantly against the sharks from DNA / Lilly / Sanofi even if they showed an increase in survival over Iressa / placebo.
So if we place some percentages, I'm looking for success in A-1 and A-3 as the most likely outcome (45%). This is followed by success in A-3 alone (40%), then A-2 and A-3 (10%), and least likely scenario, A-1, 2 and -3 (5%). You'll note that I do not think any scenario suggesting failure of A-3 is possible, which removes a whole host of scenarios including the deadly "each of A-1, 2 and 3 fail".
On other matters, we're going to make a couple of additions:
1) Purchase 1200 shares of IDIX at Friday's closing price of $9.00, total cost of $10800. The PDUFA date is the end of October, and I think approval is likely. Going to buy the stock in anticipation of (cross our fingers) earnings. That leaves us with cash of $38672.62.
2) We're also going short 2800 shares of INGN at Friday's (the 13th!) closing price of $4.4701, a total "cost" of $12516.28. This company is simply not being straightforward with the market, so we're going to take advantage. Watch for their Advexin registration strategy to fall flat on its face. I'm looking to cover this at around $3.50 per share, barring unforeseen developments. The general strategy with short positions will be to hold long term even if it goes against us in the short term. Since we're mostly concerned with fundamentals, and since INGN's fundamentals suck, patience should provide good returns. This technically returns our cash position to $51188.90, but I will continue to consider the cash at $38672.62 because I do not want to have to mark things to market, calculate margin requirements, etc... (see #1 below).
I did have one suggestion to put the leftover cash into HQH, a dividend paying "fund" that is filled with public and private biotechs that are the focus of a blog like this. It's a good idea, but I'm not going to do it for a couple of reasons:
1) I'm lazy. I don't want to follow the quarterly distribution. (Yes, this is a very weak reason)
2) More importantly, I want to keep the cash available because there may be a time in the future where I may want to take advantage of an unfavorable market in biotechs to pick up some shares that I may consider to be bargains. If I keep the cash on hand in HQH, then an overall decline in biotechs will cause a fall in HQH and will lessen the buying power especially at the time when I may want that extra buying power. Clearly I could try and time an exit out of HQH if I feel the tide is turning, but that becomes an even more expansive market-timing exercise that I don't want to overly burden myself with.
It may also occur to some that I could put the remaining cash in a money market fund and maximize the return from the cash, albeit modestly, while it waits to be used for future purchases. This is true, but see #1 above... I'm lazy. I don't want to calculate average balances etc... At least we know that the performance of this portfolio would be relatively "modest" in comparison to what one would truly get in the real world since their broker could easily track the cash balance and provide investors that little extra yield. Of course, I don't include commissions which would reduce the yield, so maybe all these things balance out in the long term.
Also, in case people forget: Please assume that I have a short or long position, as you deem appropriate, in any company mentioned here. Assume the most sinister possibility because that is fine with me. I'm not one of those people who thinks that such general commentary on the web truly moves stock prices. And if you're going to email me or post comments with conspiracy theories on why I have this blog and the positions that are disclosed, please make them creative.
Sunday, October 01, 2006
Quarterly Update
So let's see what we have...
MLNM has put out a tender offer for Anormed. The total cost would be 515 million. Anormed, by my estimation, has about 30 million or so in cash, and a couple of upcoming fixed milestones that will net it a few million more. So in effect, this is a buyout at just a bit under 500 million.
Anormed's lead molecule aims to mobilize stem cells, which are often used in the transplant setting for patients with multiple myeloma and NHL. In theory, Anormed's drug mozobil increases the number of stem cells that would be harvested from a patient at every round, either facilitating stem cell collection and / or allowing total collected stem cells to hit the optimum range (5 - 6 million if I recall correctly). I'd crossed paths with Anormed stock before and wasn't too compelled, particularly because stem cell collection, on average, isn't problematic. I had read that roughly 20% of patients have an inadequate / unacceptable stem cell collection, so a drug that treats 20% of a small population wouldn't be particularly compelling from my point of view. The catch is whether MLNM executes on their spin and can actually entice docs to use mozobil to increase the chances of an optimal stem cell collection and / or decrease the number of apheresis procedures required to collect the target number.
If the phase II results are recapitulated in the two phase III trials currently running (don't we always say that?), the path to approval should be relatively straightforward since Anormed has received SPAs from the FDA.
I'm not overly negative about the transaction, but do have concerns that it will use up most of MLNM's 600+ million in cash, forcing them to re-enter the markets to raise cash. I could have done without that aspect.
Telik has announced that Assist-1 has hit its trigger, so expect fireworks from Telik in 4-8 weeks. Been a long time coming.
Prices as of September 30th:
TELK currently at $17.79. We had 806 shares for a total of $14,338.74, a current loss of $668.98 or -4.46%.
MLNM currently at $9.94. We had 983 shares for a total of $9,771.02, a current loss of $226.09 or -2.26%.
GTCB currently at $1.24. We had 2873 shares for a total of $3,562.52, a current loss of -$1,436.50 or -28.74%.
GNVC currently at $1.1264. We had 1169 shares for a total of $1,316.76, a current loss of -$682.23 or -34.13%.
CTIC currently at $1.71. We had 966 for a total of $1,651.86, a current loss of -$347.76 or -17.39%.
SPDHF: We had 91 shares which are currently trading at 183.40 swiss francs or, at an exchange rate of 0.79987, 146.70 USD per share. The total investment value is currently for a total of $13349.70. Total cost was $10017.28, so a current profit of $3332.42, or +33.3%.
SGXP closed at $2.58. We had 1250 shares for a total of $3,225.00, a current loss of -$6,775.00 or -67.75%.
Current Cash Balance: $49,472.62
Total Portfolio value is $47215.60 in stock, plus the cash, is a total of $96,688.22, a loss of around 3.3% so far this year. Obviously not great, but not horrendous as well. It is also largely as a result of the SGXP purchase... can we do pro forma performance :-)
MLNM has put out a tender offer for Anormed. The total cost would be 515 million. Anormed, by my estimation, has about 30 million or so in cash, and a couple of upcoming fixed milestones that will net it a few million more. So in effect, this is a buyout at just a bit under 500 million.
Anormed's lead molecule aims to mobilize stem cells, which are often used in the transplant setting for patients with multiple myeloma and NHL. In theory, Anormed's drug mozobil increases the number of stem cells that would be harvested from a patient at every round, either facilitating stem cell collection and / or allowing total collected stem cells to hit the optimum range (5 - 6 million if I recall correctly). I'd crossed paths with Anormed stock before and wasn't too compelled, particularly because stem cell collection, on average, isn't problematic. I had read that roughly 20% of patients have an inadequate / unacceptable stem cell collection, so a drug that treats 20% of a small population wouldn't be particularly compelling from my point of view. The catch is whether MLNM executes on their spin and can actually entice docs to use mozobil to increase the chances of an optimal stem cell collection and / or decrease the number of apheresis procedures required to collect the target number.
If the phase II results are recapitulated in the two phase III trials currently running (don't we always say that?), the path to approval should be relatively straightforward since Anormed has received SPAs from the FDA.
I'm not overly negative about the transaction, but do have concerns that it will use up most of MLNM's 600+ million in cash, forcing them to re-enter the markets to raise cash. I could have done without that aspect.
Telik has announced that Assist-1 has hit its trigger, so expect fireworks from Telik in 4-8 weeks. Been a long time coming.
Prices as of September 30th:
TELK currently at $17.79. We had 806 shares for a total of $14,338.74, a current loss of $668.98 or -4.46%.
MLNM currently at $9.94. We had 983 shares for a total of $9,771.02, a current loss of $226.09 or -2.26%.
GTCB currently at $1.24. We had 2873 shares for a total of $3,562.52, a current loss of -$1,436.50 or -28.74%.
GNVC currently at $1.1264. We had 1169 shares for a total of $1,316.76, a current loss of -$682.23 or -34.13%.
CTIC currently at $1.71. We had 966 for a total of $1,651.86, a current loss of -$347.76 or -17.39%.
SPDHF: We had 91 shares which are currently trading at 183.40 swiss francs or, at an exchange rate of 0.79987, 146.70 USD per share. The total investment value is currently for a total of $13349.70. Total cost was $10017.28, so a current profit of $3332.42, or +33.3%.
SGXP closed at $2.58. We had 1250 shares for a total of $3,225.00, a current loss of -$6,775.00 or -67.75%.
Current Cash Balance: $49,472.62
Total Portfolio value is $47215.60 in stock, plus the cash, is a total of $96,688.22, a loss of around 3.3% so far this year. Obviously not great, but not horrendous as well. It is also largely as a result of the SGXP purchase... can we do pro forma performance :-)
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