Satraplatin looks like a promising cancer drug. It’s related to cisplatin, a platinum containing drug that cross-links DNA. A big advantage of Satraplatin is that it’s taken orally, not an injection.

One important detail about Satraplatin: it was initially being developed by Bristol-Myers (BMY), but they stopped a clinical trial after only 50 patients were treated due to “…low commercial priority for this drug by BMS at the time.” This is a valid explanation. A large company like Bristol-Myers just can’t make a big profit from a smaller drug such as Satraplatin. Sensing opportunity, Spectrum Pharmaceuticals (SPPI) licensed the drug, and subsequently re-licensed it to GPCB.

In December 2006 two generic versions of Oxandrin were launched. Savient is doing all it can to prevent this competition, and has been trying to stop sales of these by both claiming patent infringement and petitioning the FDA to block the approval of these drugs. Savient reported Q1 2006 sales revenue of $9.5M: sales in Q1 2007 were $6.4M. This isn’t the main value driver of this company.

With its days of unfettered access to the market numbered, Savient knew enough to seek new products. It's currently developing Puricase as a treatment for gout. Gout is an accumulation of uric acid in joints and tendons, and can be quite unpleasant. Gout occurs in about 1.4% of men and 0.6% of women (suffering from gout is one of the few things Benjamin Franklin and Bart Simpson share in common). Puricase is a PEGylated form of an enzyme called urate oxidase which metabolizes uric acid.

Monogram’s products are designed to allow physicians to determine if the disease causing species have become resistant to current therapy.

Worse yet for Encysive, Gilead (GILD) received approval from the FDA for its drug Ambrisentan for the same indication. To be clear, the FDA will require strict conditions for prescribing Ambrisentan, but strict conditions are much better than not having access to the U.S. market.

After-hours trading in ENCY was actually halted about 5:45 pm EDT. The combination of the GILD approval and ENCY's 3rd approvable means the stock is in for a massive plunge Monday morning.

I missed the recent peak of just over $20 on June 1, but that’s OK. The catalyst for the recent run-up was an announcement that ELN will begin a Phase 3 clinical trial (with Wyeth (WYE)) on its AAB-001 antibody to treat mild to moderate Alzheimer's disease earlier than expected.

On May 29 Elan announced the FDA would convene an advisory panel to make recommendations about application of Tysabri to treat Crohn’s disease on July 31st. The Market seems to have been little impressed by this, as the stock closed Friday (June 8) only a penny higher than on the 29th.

On June 7 Abbott (ABT) announced that its arthritis drug Humira had been granted approval in Europe for the treatment of Crohn’s disease. The FDA had approved Humira to treat moderate to severe Crohn’s disease in February. Remicade is also used to treat Crohn’s.

Initially Celgene had the foresight to develop Thalidomide (a sedative that caused birth defects) as a treatment for cancer. Celgene’s follow-on compound, Revlimid, is even better.

Celgene has been doing a great job of growing revenue and profit over the past five years. Revenue has nearly doubled each year since 2002: the company is set to easily surpass one billion this year. Operating income has doubled each year since it became profitable (2004).

Andrew Vaino submits: Nothing really beats finding a tiny company with great potential that not too many people seem interested in. Halozyme (HALO) was trading at $2.48 last August and is now over $10. Biosante (BPA) is another excellent example, and is up over 100% since I mentioned it in February.

A perceptive reader emailed me about Critical Therapeutics (CRTX). It is a small company that sells Zyflo, a pill that inhibits 5-lipoxygenase inhibitor (5-LO). 5-lipooxygenase is responsible for the conversion of arachidonic acid to leukotrienes, which can cause constriction in the lungs. Other potential applications of a 5-LO inhibitor include vascular disease, stroke, and even pancreatic cancer. Zyflo is sold as a treatment for asthma. Seventeen million Americans have asthma, and this number is increasing.

I suggested that after approval the inevitable short squeeze that had to occur (short interest on DNDN was 25%) was a good buying opportunity, and was happy with the 56% return that this afforded in just over a week (I wrote in the blog on April 10 that I thought it was time to sell). Now, with the FDA set to rule by May 15 on whether Provenge should be approved, there’s yet another opportunity to make some money from Dendreon. It just doesn’t get any better than this!

There’s no shortage of opinion about whether or not Provenge will get approval from the FDA. Arguments in favor of approval are based on survival benefit, and recommendation of the advisory panel. Arguments against approval are based on less than straightforward statistics that were used to establish the survival data.

In connection with a side project, I came across a paper from UMass Amherest on how capital markets respond to successes and failures of biotech companies (J. Prod. Innov. Manag., 2004, 21, 297–308). Looking at abnormal returns after both positive and negative FDA rulings, the authors concluded that the magnitude of price decline on bad news was greater than for positive news. The best explanation for this is that as humans we react more strongly to negative events than to positive.

On April 11 the FDA announced it needed more time, and pushed back the date of the decision by three months, to July 16.

To be clear, I had the good fortune to have done my Ph.D. work at Queen’s University in the laboratory of Professor Walter Szarek. Aside from being a world leader in carbohydrate chemistry and, I can say from personal experience, a fantastic teacher and advisor, Prof. Szarek is one of the founders of Neurochem. While I was working in his lab when the company began I did not then have, nor have I ever had, any insider information about this company.

Dendreon’s drug Provenge went before an FDA advisory panel on Thursday. These panels provide guidance that the FDA considers in deciding whether or not to give a drug final approval. The date of final approval has been set as May 15.

In anticipation of wild trading in the stock on Thursday, trading of DNDN on the NASDAQ was halted. My recommendation of last week, which was highly speculative, was a bull spread created by buying Jan 08 2.5 calls and selling the 7.5 calls. As I mentioned, I was mildly bullish on this stock and the bull spread, I thought, was a prudent play.

Dendreon had been beaten down in the past year based on Phase 3 clinical data of its drug Provenge (to treat hormone refractory prostate cancer) that did not demonstrate any benefit measured by time to progression of the disease. Average survival time of patients on Provenge, however, was increased by 3-5 months. As well, there were some potential concerns over the safety of the drug: a small number of adverse cardiovascular events occurred.

According to the FDA, priority review is granted if: “The drug product, if approved, would be a significant improvement compared to marketed products [approved (if such is required), including non-"drug" products/therapies] in the treatment, diagnosis, or prevention of a disease.”

According to a January 2006 study by Booz Allen Hamilton, 62% of drugs with priority review received approval in the first cycle, compared with 34% of drugs that were subject to normal review. To be clear, the sample size in this study was small, a total of 77 applications, of which only 26 were priority review. As well, 62% is still far from a sure thing.

So far it has only received approvable letters from the FDA. That is, the FDA wanted more data. Encysive's CEO stated that there was one issue the FDA still had a problem with, but wouldn't specify what that issue was. While the CEO stated the issue had been addressed, I was mistrustful of his lack of transparency.

The Monday after I suggested shorting the stock (November 6), it was at $5.76. The stock closed Friday (March 16) at $2.77, a 52% decline (note, in the BC tracking portfolio I covered on December 29 at $4.17, a gain of 27.6%: I guess bulls make money, bears make money, and chemists cover too soon!).

The stock was trading heavily yesterday morning, reaching nearly $6, on higher than average volume, before crashing below $3.50 in after hours trading. According to a report from Reuters, the government has canceled the RFP on which Hollis Eden had been bidding.

I wrote last week that I'm little impressed by Hollis Eden’s pipeline, and that in my opinion this contract was a "sink or swim" decision for HEPH. I purchased March 7.5 puts in anticipation of no contract award.

Looking at the Markets this week, both the AMEX biotech index [BTK] and biotech ETF iShares Nasdaq Biotechnology (IBB) (more diversified than (BBH)) plunged in lockstep with the broader markets, even falling a bit extra. In the long run, stocks of biotech companies with good pipelines are insulated from movements in the Market as a whole. So, when a big decline in biotech stocks occurs for reasons beyond science it can be a good time to buy.

As “mere anarchy was loosened on to the world” this week I was watching for good biotech stocks to fall. Cardiome (CRME) a Canadian biotech I like, and wrote about last Canada Day, has taken an 11% dive since Tuesday (as of close Thursday). I don’t believe this is warranted.

I wrote in July that Cardiome had fallen due to the FDA rejecting its NDA filing for an IV form of their drug RSD1235, which treats atrial fibrillation. A paper in 2004 published in the Journal of the American College of Cardiology on a Phase 2 study of this drug was very encouraging. The rejection had nothing to do with the science but merely with careless paperwork. As well, it announced good clinical results for an oral formulation of this same drug in September. The stock had a good run after I mentioned it, going from $8 to $14 and is now below $11.

As I’ve mentioned, I think this company has a weak pipeline (loads of preclinical studies, but, according to the FDA [clinicaltrials.gov], nothing currently in Phase 2) and sinks or swims based on this award.

Inovio calls their treatment SECTA, short for Selective Electro Chemical Tumor Ablation. The idea has been best demonstrated using the chemotherapeutic bleomycin. Application of the electrical charge directly to the tumor — the technique is particularly amenable to skin cancers — greatly enhances the amount of bleomycin taken into the tumor, providing greater efficacy. This has the added advantage of reducing side-effects of the drug on healthy tissue.

The results of Phase 2 studies on head and neck cancer are impressive. Comparing efficacy of bleomycin along with bleomycin and electroporation, the number of complete and partial responses was significant. To be clear, the number of subjects in these Phase 2 studies was small (total of 54 patients in 3 studies) and in only one of the three studies (of 25 patients) was control data with only bleomycin presented. According to the National Cancer Institute, annual treatment costs for head and neck cancer in the US is $3.2B. Inovio is currently pursuing two Phase 3 studies on head and neck cancer that are expected to be complete (according to the FDA) by August 2009 and November 2009, respectively.

Inovio (then Genetronic) published in 2005 results of a small (19 patient) clinical trial, in the journal Melanoma Research, in which the combination of electroporation with bleomycin was found to be beneficial in treating skin cancer. Pre-marketing approval for the treatment of skin cancer is being pursued in Europe . Though the thinning ozone hasn’t lately been receiving the same press as greenhouse gases, it remains a concern. According to a study published in 2005 in the British Journal of Dermatology, researchers expect the incidence of skin cancer even in The Netherlands — hardly a tropical paradise — to increase dramatically over the next decade. Inovio is also enrolling patients in a Phase 1/2 clinical study to treat breast cancer.

NVD took a big hit in after hours trading yesterday after their partner in developing Zensana, Hana Biosciences (HNAB), announced they had found precipitated materials in batches of the drug that had been stored in the cold. Batches that were stored at room temperature did not have any precipitate even after a year. This will delay the product launch.

I listened to Hana’s conference call discussing this result. The company seems very confident this is simply a solubility issue and not a problem with the stability of the drug itself. Based on the structure of the drug—a modified indole with an imidazole hanging off one end—I would be very surprised if there were any stability issues with the drug itself, and I believe the solubility explanation. Just the same, it would have taken about ten minutes to collect some of this precipitate and shoot it into a mass spectrometer to be certain, and I do wish they had done that (if they did I did not hear it in the CC).

This type of issue, a problem with chemical manufacturing controls [CMC], is typically much easier to fix than issues with having a bad drug. As this is a small molecule, as opposed to the surfactants that have caused Discovery Labs [DSCO] so much CMC grief, this really should be a simple problem to fix.

Biosante is a tiny (according to their most recent 10-K they have fourteen employees) company working on transdermal delivery of hormones. In December of last year, they received FDA approval to market Elestrin, an estradiol gel designed to be rapidly absorbed through the skin. It is meant to be applied daily to the arms, shoulders, abdomen, or thighs. A gel or cream is less invasive than a patch that needs to be worn continuously.

In a Phase 3 study, Elestrin demonstrated significant decreases in incidence and severity of hot flashes in menopausal women, but at a substantially lower dosing level of estradiol. Lower estradiol levels can decrease undesired side-effects in hormone replacement therapy. Elestrin will be marketed by Bradley Pharmaceuticals (BDY). A launch is expected in mid-2007. Bradley Pharmaceuticals has experience selling specialty pharmaceuticals, so this is a good way to market their product.

In addition, Biosante recently announced they had begun a Phase 3 clinical trial of a similar product, to deliver testosterone, to treat female sexual dysfunction [FSD]. There is precedent in the scientific literature that administering testosterone indeed treats FSD. They also announced positive preclinical results on delivery of a vaccine to prevent bird flu. While both these products have potential (I’m not overly impressed by preclinical data), I think the main value-driver of this company is Elestrin.

I wrote on the weekend about Hollis Eden's (HEPH) quest to obtain a contract, under Project Bioshield, to supply the Department of Health and Human Services with Neumune to treat acute radiation sickness. The company has been waiting some time now for this contract, and, once again, they announced a delay. One wonders if a segment last year on "60 Minutes," in which Hollis Eden criticized the government's action on procuring Neumunne, displeased anyone.

This is now the fourth time the tentative date of this award has been pushed back. In his 2006 letter to shareholders CEO Richard Hollis wrote, in regard to Neumune, "HHS has indicated it plans to make awards under this RFP around June 2006." This was then pushed back to September 30, then to November 30, then to January 31 2007, now to March 7.