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The enormous advancement in the biological sciences that is taking place has begun to change the traditional way of practicing medicine. Far-reaching biological products are being approved and news about breakthroughs are occupying the headlines. However, selecting the biotechnology firms in... More
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  • SAVIENT: WHY KRYSTEXXA’S REWARD OUTWEIGHS THE RISK?

    The day has come for Krystexxa (Pegloticase), the gout drug from Savient (SVNT) to be put on trial after completing clinical experimentation. At the sight of clinical trial results, which have met their endpoints time and time again with regard to efficacy, researchers, Wall Street analysts and investors were extremely enthusiastic. Yet, the stock, which was trading as high as the mid $20s faltered to a low one-digit price tag as investors’ euphoria turned into pessimism when negative news of cardiovascular adverse events was disclosed. Pharmaceutical companies that were expected to rush into forging alliances with Savient distanced themselves.  

         In the meantime, the FDA granted Kystexxa orphan designation. Following the announcement of final results, the agency accepted the Biologics License Application (BLA) for Kystexxa’s approval, and granted the drug priority review status.

          In light of the cardiac adverse effects that opened the door for the critics to hammer savient and demean with it the rest of the small cap biotech firms, and in view of the FDA’s giving the firm VIP treatment, what decision must we expect from the FDA independent committee?

          To answer this question, we will take a look at gout, its origin, symptoms and short- and long-term complications. Gout symptoms and complications are the result of elevated levels of uric acid in the blood (hyperuricemia). As a result, uric acid crystals (tophi) deposit in various tissues. In the joints, inflammation, pain and, in the long run, joint erosion occurs, leading to severe disability. In the kidney, uric acid stones form, followed, sometimes, by progressive kidney disease in 25% of patients, which can progress to kidney failure. Tophi that might lodge in the spine may cause compression that could be seriously disabling. 

         Patients live a normal life when their conventional treatments work, but this is not the case for all of them. One has to imagine the pain and suffering and the life-threatening complications those left behind patients endure in the absence of treatments. Tens of thousands of patients either stop responding to the conventional treatments or cannot take them in the first place. It is on these patients that Savient’s Krystexxa makes the big difference. 

         Krystexxa acts by a unique mechanism that totally differs from the available anti-gout drugs. It is an enzyme, urate oxidase, present in almost all mammals but not in humans. The enzyme lowers uric acid levels by converting it into an inactive metabolite, allantoin, that is easily excreted in the urine. It is developed as a recombinant PEGylated modified mammalian urate oxidase. Savient has licensed the worldwide rights to the technology related to Puricase from Duke University and Mountain View Pharmaceuticals, Inc.  Puricase is a registered trademark of Mountain View Pharmaceuticals, Inc.

         Krystexxa has demonstrated its efficacy in eliminating of gout tophi (as demonstrated by digital photography, image analysis, central reading), reducing the frequency and incidence of gout flares, improving the number of swollen and tender joints and overall improvement in patient-reported outcomes.

         Do you see now why the FDA pampered Krystexxa?

       What about the cardiac symptoms expected to be the topic of the FDA committee’s discussion?    

       Scientists and rheumatologists recognize the fact that gout is accompanied by high blood pressure, coronary artery disease, and congestive heart failure. Hyperuricemia, in fact, has been associated with a higher risk of death from these conditions. A 2001 study reported that disease activity in gout may contribute to unhealthy blood cholesterol levels and some interesting evidence suggests that the increase in uric acid level may occur as a response to inflammatory damage that occurs with heart disease and may even be protective.

         The members of the committee are all scientists and specialists and know these facts and we expect they will definitely consider them. Can anybody swear that Krystexxa has to do with the cardiovascular events? Do these events occur at the same rate to gout patients who are and are not on conventional drugs?

          In our opinion, the reward of the drug overweighs the risk of leaving 100,000 patients who do not benefit from current treatment suffer inflammation, pain, and life-threatening complications of the nasty disease.    

          We hope we are correct. We are optimistic.

     

    Disclosure: No Positions

     

    Jun 16 8:26 AM | Link | 2 Comments
  • SEQUENOM: WHY HAVE SHORT SELLERS PANICKED?

    The Sequenom (SQNM) story is written now by short-sellers who are really not sure why they short this firm, except that it is their way of investing. The title we suggest for the short selling story is “gamble based on deadlines and rely on the plenty of gossipers who love bad news and perpetrate them." In the case of Sequenom, negative investors rely on the fact that the deadline indicated by Se-quenom to validate its Down syndrome non-invasive diagnostic test is near year end. From now until that time, they will rely on making sure that hundreds of articles will be posted against the firm, its management and its Down syndrome test on the internet. They will make sure that nothing will be said about two other embryonic tests that are no less important than the Dawn syndrome non invasive diagnostic test. 

    To the bad luck of those who shorted Sequenom, the news that came this time  (true or false it does not matter) was positive for the company. The reaction of negative investors cannot be described except as reflecting panic. They rushed to protect their investment, buying the stock like crazy, hence causing the rally themselves. They are now selling at the higher price, taking profit, and shorting again.  Good for them.

    The question is: If those negative investors were confident that the firm is bad and the test is bad as they have been suggesting in their Internet postings, then why they panicked?

    When the stock rallied from $3.50 to $5.50 they panicked without calling it a rally. When the stock lost one dollar out of the two gained to profit-taking, they  rushed to say  that SQNM has tumbled, insinuating that the stock would definitely continue to slide.  

    We do not know what would happen if the good news about the three tests come earlier than expected. What we are sure of, though, is that the rally this time will be unparalleled.

    Because this investigation, like all investigations,  will eventually come to an end. and the ongoing trials will  do the same,  rumors in this case are no rumors. Everybody knows that the investigation is closer to the finish line today than last month and so are the trials.   

    It is true that Sequenom had said in April it would delay the launch of the test due to mishandling of R&D data by some employees. However, nobody can claim knowing that those employees have committed any crime. We also agree that the timelines the company has provided in April had not changed and that the company still expects to have a revalidated Down syndrome test by the fourth quarter of 2009. This is, indeed, good news as it has been recently ascertained by Sequenom.

    Good luck for everybody who takes advantage of this story, especially the vul-nerability of those who are shorting the stock as a matter of addiction to shorting.  In any case, when the Dawn syndrome test will be validated and if it was not Dawn syndrome test alone, but two other non-invasive tests for embryos, a small investment in this firm could turn big.

    Such an opportunity does not frequently exist.

    Disclosure: No positions

    Jun 11 9:05 AM | Link | Comment!
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