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... :-)

===

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