Neoprobe: Follow-Up on ASCO, Citizen Petition and Readers' Comments

First, thank you for your interest in my writing. I have received a lot of great positive and less-than-enthusiastic feedback.

Now, on to Neoprobe (NEOP). My guess is most of you did not attend ASCO. For your viewing pleasure, I am providing the discussant (Dr. Michael S. Sabel) slides and talk on my website. Dr. Sabel discussed the Lymphoseek results and his talk was right out of my line of thinking.

Dr. Sabel noted that Lymphoseek is superior to blue dye, but sulfur colloid and blue dye is the standard of care. He even went as far as to display a slide of an “elephant in a room” to demonstrate how awkward it was for Neoprobe to conduct a study without sulfur colloid. He noted how lengthy Neoprobe was in explaining why they used just blue dye as a comparator, joking that when one goes to great lengths to explain why one is doing something, it usually is the wrong thing to do.

The discussant simply suggested what I have suggested, Neoprobe should run a study reflecting the real world. Dr. Sabel presented a slide that said, “How does Lymphoseek plus blue dye compare to sulfur colloid versus blue dye?” Neoprobe hasn’t answered that question and the FDA won’t approve Lymphoseek so until they do. Dr. Sabel referred to Lymphoseek as a “good first step”.

Thing brings me to my Citizen Petition. If you haven’t read my “CP”, it is available on my website. I can’t talk too much about this as I will let the press release and CP speak for themselves, but I am pleased to again participate in the FDA process. I have previously submitted similar materials for MannKind (Nasdaq: MNKD) and Arena (Nasdaq: ARNA). My track record for predicting FDA outcomes is reasonably good and I hope I am right once more with Neoprobe.

One more thing about ASCO: There were 22 Serious Adverse Events (SAEs) in NEO03-09 which were not well-disclosed by the company. The company says these were not drug related and won’t go through the details about what the SAEs are. While this included a 30-day follow-up period, I think the FDA will be interested in diving into the safety profile of Lymphoseek. I’m not totally concerned about this, but some of you might find it alarming.

Let me respond to a lot of your comments. First, I often get the comment, “Lymphoseek is great for finding the sentinel node, it is better than blue dye with respect to false negatives, etc.” I hate to be mean on this point, but Lymphoseek is simply further out on the receiver-operator characteristic curve than blue dye. This is basic diagnostic science and I encourage you to learn more about it. One can interpret blue dye as liberally as one wants and achieve the same result. Combined with no sulfur colloid, you really have an inadequate test that doesn’t merit approval.

I get a lot of comments about RIGS. The market has thought RIGS to be worthless for some time judging by the share price, but I have reviewed it and here are a few brief thoughts. RIGS is a neat idea but it fails to exploit tumor biology properly. Surgery margins are important knowing how much tumor to excise sounds like a fantastic idea. There’s only one problem: TAG-72, the antibody target of RIGS, is not perfect. In fact, so little is known about it, I suspect it is not a meaningful diagnostic for tumor margins. We don’t know if every metastasis will overexpress RIGS, or how sensitive the antibody is, or if it helps resection and survival. For example, TAG-72 might be so “downstream” of the cancer process that core mutational processes that go awry in cancer (PARP, AKT, p53 etc) might be leading indicators for metastasis while TAG-72 is a trailing indicator. There’s just too much unknown. I look forward to the outcome of any studies Neoprobe is interested in conducting, but they’ll be expensive and take years. The prior studies look like post-hoc data mining to me. I promise to investigate RIGS and TAG-72 more, however.

The next comment I get is “Neoprobe is smarter than you, FDA is smarter than you, these cancer doctors are smarter than you, etc.” I think that after a few years of investing in healthcare, one realizes that there is a lot of snake oil out there. Management makes money no matter what the stock price does. Unless Neoprobe is paying you a salary I would be a little more cynical!

I used one of the expert networking firms to conduct a sulfur colloid pricing survey and the numbers support my prior article.

Finally be sure to read my Citizen Petition where I show that the FDA did ask Neoprobe to do a regional nodal dissection study for Lymphoseek and Neoprobe disclosed this in their 2008 Annual Letter to Shareholders. This is one of the most alarming things I’ve seen and my understanding is Neoprobe doesn’t have a great answer to this. Stay tuned to my page for an actual long recommendation!

Disclosure: I am short NEOP but may change my position at any time--including increasing, decreasing, hedging, liquidating or reversing my position.

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