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.

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.


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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.


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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.


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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)


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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.

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?)

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Spelling and grammar will be corrected later. Maybe.

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.

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 :-)

Troxatyl fails...

Ok, so an interim analysis of SGXP's "pivotal" troxatyl trial came back with "futile".

The failure of this strategy was foreshadowed and predicted here.

Despite the carnage, i'll be keeping SGXP in the portfolio to see the CML program through.

Now some may be asking "Why place a stock in the portfolio if you suspected that their lead program would fail."

Well, that comes down to the raison d'etre of this blog... it's not a vehicle for me to directly manage the dollar value of a biotech portfolio. Rather, I want to make it a documented place where I can place companies into the portfolio for specific fundamental reasons, and manage the portfolio in response to changes in these fundamentals. For SGXP, it was in the portfolio for the CML program, so the recent troxatyl news doesn't effect its reason for entry. You could say that this blog is an intellectual exercise to see how well I do in predicting the feasibility of various clinical programs that biotechs have running, and how well I adjust to changes in company fundamentals.

Ok, so I'm saying this is an intellectual exercise. The question then becomes "Why am I buying and selling positions into a portfolio and tracking its monetary performance if this is an intellectual exercise?"

Fair enough. The positions that are bought and sold into the portfolio are more a way for me to determine if a track record in predicting program success and failure can easily translate to making profits with biotechs. Presumably, the relationship between a dismal record of appraising clinical programs and dismal portfolio performance is easily understood. But what is more a mystery to me is whether accurate appraisal of clinical programs (easily) leads to portfolio appreciation.

So if I'm wrong in appraising clinical candidates, the portfolio suffers and the portfolio will be a numerical representation of the failure. But if I'm right, does the timing of my hypothetical purchases play a defining role in the $$$ performance of the portfolio? In other words, can an investor make money in a biotech, regardless of their initial purchase point, provided that they accurately predict clinical success?

We'll see.

Very brief updates:

CTIC: The interim pixantrone analysis wasn't successful. That was pretty disappointing, and may bode poorly for my inclusion of CTIC in the portfolio.

GTCB: So the drug is on the market, albeit in a manner that I did not expect. We'll chalk that up to luck.

GNVC: Uneventful. Pancreatic trial will likely disappoint, but again, I'm looking at it for the vaccine side.

TELK: D-Day is still looming. This will be an early "make or break the portfolio" event...

Speedel: Still waiting for FDA decision. Still confident in the renin inhibitor.

MLNM: The company has a solid business plan for Velcade, and is bringing new entities into the clinic (IKK inhibitor just entered). The purchase point was ok, and I do think the company has turned a corner with respect to stabilizing their financial situation (reducing loss) and acting prudently in clinical development.

OSIP: This company is wallowing in the EYET purchase (and in its choice of CEO). It has no late stage clinical products to speak of. Given the purchase price ($28.09 per share), and my none-too-enthusiastic outlook on the company (death by macugen), I'm going to take this long weekend opportunity to sell it off at Friday's closing price. So the score for OSIP was:

Purchased 356 shares of OSIP at $28.09 on January 23, 2006. Total Cost: $10000.04
Sold 356 shares of OSIP at $37.90 on September 1, 2006. Total Proceeds: $13204.04
Profit of $3204.04, a return of 32%.

OSIP was put into the portfolio because I do think Tarceva is a good drug. However, the solid (albeit unspectacular) growth in Tarceva that I expected (along with DP-IV revenues) is inevitably going to be overshadowed by the terrible EYET acquisition. In addition, I don't really think management understands how bad that acquisition will affect the company and its long term prospects. They've put themselves into a cash crunch, and have zero credibility on the street. These changes in fundamentals are enough to negate the reason why I put OSIP into the portfolio, and I'm happy to be taking advantage of the recent rise in share price to exit the stock at a hypothetical profit.

At the least, it'll help offset the SGXP damage... :-)

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As an aside, I expect Genta to be punished at ODAC. Also, INGN is a great short here or at any level.

Late Q2 Update

Let's just update the holdings quickly. We'll use the prices as of June 30, 2006 to act as an end-of-Q2 update. Real work is getting in the way of keeping this updated.


TELK / Telik Inc. : Position opened with 806 shares purchased at $18.62 ($15007.72). With Telik closing at $16.50, the current value is $13299.00, a loss of $1708.72, or -11.4%.

OSIP : Position opened with 356 shares at $28.09 ($10000.04). With OSIP closing at $32.96, the current value is $11733.76, a gain of $1733.72, or +17.3%.

MLNM : Position opened with 983 shares at $10.17 ($9997.11). With MLNM closing at $9.97, the current value is $9800.51, a loss of $196.60, or -2.0%.

GTCB : Position opened with 2873 shares at $1.74 ($4999.02). With GTCB closing at $1.52, the current value is $4366.96, a loss of $632.06, or -12.7%.

GNVC : Position opened with 1169 shares at $1.71 ($1998.99). With GNVC closing at $1.41, the current value is $1648.29, a loss of $350.70, or -17.5%.

CTIC : Position opened with 966 shares at $2.07 ($1999.62). With CTIC closing at $1.44, the current value is $1391.04, a loss of $608.58, or -30.5%.

SPDHF / Speedel : Position opened with 91 shares at $110.08 ($10017.28). SPDHF closed at 160 Swiss Francs, and with 1 Swiss Franc = ~0.82 U.S. dollars on June 30 (sorry, missed the day so i needed to read conversion from 3 month graph), the adjusted share price in USD is $131.2. The total value of the position is therefore $11939.20. Minus the opening cost of $10017.28, the position if profitable for $1921.92, or +19.2%.

Purchased 1250 shares of SGXP (SGX Pharmaceuticals Inc.) at $8.00, which is the closing price as of April 6, 2006. Cost is $10000. SGXP closed at $5.15 on June 30, 2006, for a value of $6437.5, or a loss of $3562.50 or -35.6%.

Cash position remains at $35980.22. The total stock equity is at $60616.26, and therefore total equity stands at $96596.48, a loss of $3403.52 or 3.4%. Not great, and most of it is probably attributable to a knee-jerk SGXP buy. Performance not all that great. Probably a little hasty picking up SGXP, especially in advance of what i think will be negative troxatyl news. But still, I think that one will work out in the long run, and i'm not a great timer. But part of the raison d'etre of this exercise is to learn from such mistakes.

Will probably look to establish a position in IDIX once this recent run slows down.

Probably the biggest news of the last quarter was the European reversal on GTCB's Atryn application. I won't make any seemingly retrospective comments on the suitability of this reversal. I really should have written them down on this blog at the time. Nonetheless, let's just assume we're the beneficiaries of a pleasant turn of events. GTCB will likely be a part of the portfolio for a long time.

Telik notified investors that ASSIST-3 enrollment is complete and that ASSIST-2 has hit the prespecified events for analysis. Only waiting on ASSIST-1 to hit the prespecified events.

OSIP's Tarceva is actually showing strong sales, imo. Over $100 million in Q2 of 2006 as reported by Genentech. Could be worse... just think if the CEO / Board weren't dumb enough to pick up EYET.

No comment on MLNM really. Nothing much happening. Revlimid getting onto market, but I don't think that is going to toss Velcade to the trash heap like the market thinks. MLNM will probably be in the portfolio for a while. Looks like it's a good buy at $8 per share, and their VISTA phase III trial is a lock for success, imo.

CTIC... blah... i wish we could get the pixantrone news and i could stop watching CTIC.

GNVC is a tough one... I'm tempted to sell because the phase III pancreatic trial has been set up with a nearly impossible efficacy bar. I'm not a big fan. But I'm still intrigued by their vaccine program contributions, so it'll just sit here. I think greater than 70% chance that the pancreatic trial fails. This stock, as an investment, is shite.

Speedel: steady as she goes.

Absolutely no news with SGXP. Troxatyl failure a big possibility, especially with management being somewhat coy as to what really constitutes a "success" in the pivotal trial, especially with respect to what types of clinical data will solidify a registration strategy. I'm not convinced that comparisons to an established database of similar stage AML patients is going to cut it. We'll see. However, the recent approval of dasatanib shows how quickly CML drugs can show results and get approval, so SGXP is really interesting for their Novartis collaboration for CML candidates.

End of March Update

Always delayed, but...

The prices are as of close of trading on April 7, 2006.

Portfolio:

TELK / Telik Inc. : Position opened with 806 shares purchased at $18.62. With Telik closing at $17.75, the current value is $14306.50, a loss of $701.22, or -4.67%.

OSIP : Position opened with 356 shares at $28.09. With OSIP closing at $30.02, the current value is $10687.12, a gain of $687.08, or +6.87%.

MLNM : Position opened with 983 shares at $10.17. With MLNM closing at $9.60, the current value is $9436.80, a loss of $560.31, or -5.60%.

GTCB : Position opened with 2873 shares at $1.74. With GTCB closing at $1.02, the current value is $2930.46, a loss of $2068.56, or -41.38%.

GNVC : Position opened with 1169 shares at $1.71. With GNVC closing at $2.15, the current value is $2513.35, a gain of $514.36, or +25.73%.

CTIC : Position opened with 966 shares at $2.07. With CTIC closing at $1.79, the current value is $1729.14, a loss of $270.48, or -13.53%.

SPDHF / Speedel : Position opened with 91 shares at $110.08. SPDHF closed at 181 Swiss Francs, and with 1 Swiss Franc = 0.771903 U.S. dollars, the adjusted share price in USD is $138.94. The total value of the position is therefore $12643.77. Minus the opening cost of $10017.28, the position if profitable for $2626.49, or +26.22%.

Total stock positions are valued at $54246.14. Cash level is $45980.22. Total value is $100226.36, or an increase of 2.26% (EDIT: This is clearly crap math on my part... it should read an increase of 0.226%... round that to zero if you wish!).


Adjustments:

Going to take this time to purchase 1250 shares of SGXP ( SGX Pharmaceuticals Inc.) at $8.00, which is the closing price as of April 6, 2006.

Total cost is $10000, and that will reduce the cash position to $35980.22.


Comments:

Telik continues to get battered in the last couple of weeks. Not surprising, as investors are likely (and rightly) nervous before phase III results. Biotechs in general have also been weak. I think ASSIST-3 is a guaranteed success, mostly because the primary endpoint is a gimme. ASSIST-1 and 2 are the toss-ups. Statistical significance in ASSIST-1 will be sufficient for marketing approval and sales. As for ASSIST-2, I'm thinking that the magnitude of the putative survival benefit will be the determining factor. A stat sig outcome in this trial with a modest survival increase may land Telcyta in the shark infested waters of 2nd / 3rd line NSCLC. Tough to make sales of a drug in that arena, especially if the median survival is in the 7-8 month ballpark that the competition is demonstrating (Taxotere, Alimta, Tarceva). With Telik having excluded BAC, the overall survival of the Iressa arm in this trial may appear to underperform what most may expect from a 2nd / 3rd line NSCLC population. Telik would have to do a pretty good job of detailing to stress the difference.

All in all, I'm thinking 2 of the trials will be successful, specifically ASSIST-3, and one of ASSIST-1 or 2. I'm undecided right now as to which has the better chance, but just for fun, I'll go with ASSIST-1. We'll see how wrong I am in a couple of months!

CTIC sickens me. But I'm keeping it in the portfolio, just as an "intellectual" play on pixantrone, and whether it will demonstrate success as I hope. Otherwise, there is absolutely nothing appealing about CTIC as an investment.

I bought into SGXP. I think their 3d structural work is a viable service arena. The recent collaboration with Novartis for a CML drug is a step in the right direction. SGXP's lead candidates are targeting BCR-ABL signaling, and have demonstrated the ability to inhibit a broad variety of BCR-ABL mutants, particularly the T315I mutation which Gleevec and dasatanib are unsuccessful at shutting down. This indication also lends itself to fast and significant clinical responses, so it would not be surprising to see this compound quickly show significant responses in a phase I population selected for the T315I mutation.

End of February Update...

So let's update things as of close on February 28, 2006.


TELK Current value $17,828.72 +$2,821.00 (18.80%)
OSIP Current value $11,562.88 +$1,562.84 (15.63%)
MLNM Current value $10,301.84 +$304.73 (3.05%)
GTCB Current value $3,562.52 -$1,436.50 (-28.74%)
GNVC Current value $2,361.38 +$362.39 (18.13%)
CTIC Current value $1,864.38 -$135.24 (-6.76%)
SPDHF Current value $11,391.38 +$1,374.10 (13.72%)

Cash Balance $45,980.22
Total $104,853.32 $4853.32 (4.85%)


Note: Speedel price was 164 swiss francs, converted to USD at a rate of 0.7633 dollars per swiss franc.

So not bad at 4.85% gain for 2 months, but definitely not great since biotechs have been on a tear. Still needs improvement, and i'm itching to sell a bit of Telik just to trade around the recent rise in price.

We'll see.


(sorry, having some trouble with formatting)

GTCB Drowns

Ok, so the decision went against GTCB. At least one of the given reasons (extra purification step) sounds like a red herring to me. Such filtration techniques are usually polishing steps rather than steps with strong resolving power to greatly enrich the protein of interest. That this is one of the dealbreakers suggests to me that there is a level of uneasiness which the CHMP did not want to articulate in writing.

So what to do?

Well, the "this-is-a-first-of-a-kind" situation risk was why the portfolio had a relatively small exposure to GTCB (5%). That's the good news. The bad news is that marketing has been seriously pushed back, with the U.S. application possibly being the lead application now... and that's a sad reflection because the trial to spearhead the U.S. application is not complete. Therefore, dilution will come, and any future revenues (*if*) will be diluted even further.

But for the purposes of this portfolio, given the limited exposure, I'm treating this position as a proof-of-concept (and no, the concept is not to prove that I can lose fictional money). I do think alternative production strategies are required for the continued economic feasibility of biologics. So the goats stay because they have ultimate value, if not to GTCB, then to another suitor. The economic windfall from a cheaper biologics production strategy is too lucrative to ignore.

Had this position been 10% of the portfolio or greater, I would have sold today. The small hit that it took (down 40 cents from the purchase price) would have been a gift opportunity to get out relatively unscathed.

So GTCB was the first big decision since the portfolio was formed. It went negative. Next (predictable) big day will be Telik's announcement of phase III results. All I ask is for all three Telik trials to be successful... yes, I'm that easy.

Figurative money where the mouth is...

It's time to see how hard this public portfolio stuff is...

So let's get started with $100,000 in play money. Looking to buy biotech stocks at today's prices, and keep some figurative cash on hand for future purchases. We'll start slowly.

TELK 806 shares at $ 18.62 (Total Cost: $15007.72)
MLNM 983 shares at $ 10.17 (Total Cost: $ 9997.11)
OSIP 356 shares at $ 28.09 (Total Cost: $10000.04)
Speedel 91 shares at $110.08 (Total Cost: $10017.28)
*(Converted from 138.90 CHF at 0.7925 US/CHF)
GTCB 2873 shares at $ 1.74 (Total Cost: $ 4999.02)
GNVC 1169 shares at $ 1.71 (Total Cost: $ 1998.99)
CTIC 966 shares at $ 2.07 (Total Cost: $ 1999.62)

Stock Total $54019.78
Cash On Hand $45980.22

For the above, TELK is being followed for the Telcyta pivotal trial results.

OSIP because Tarceva is useful, they will likely get some future DP-IV royalties... so maybe that's a purchase because it has been beat down.

As for MLNM, Velcade is still useful. And finally the company has trimmed enough where the pipeline is a little more interesting.

Speedel, for its renin inhibitor.

GTCB is a platform company, same as GNVC. GNVC's vaccine business is probably more interesting than the slow-as-molasses TNFerade program.

CTIC is a flier for pixantrone only. It's a race between the CEO's blowing of money on Xyotax versus the pixantrone trial getting fully enrolled and maturing. Hope the pix results come first, but the $2000 allowance shows how confident I am in management's ability to cash in on every last cent in the company account.

Drugs under private development that we'll follow:

Prolyl Hydroxylase inhibitor from Fibrogen (private).


I'll leave this blog open to comments and questions. I believe the email is listed on the profile. I'll try and post thoughts and updates as time permits. Hopefully I can update the portfolio performance once a month.