skitahoe

GenVec, Inc.: The Biggest Little Biotech

A week from now GNVC will have disclosed the full results of it's peek at the TNFerade Phase III data on 92 events at ASCO. I believe at least two facts that haven't previously been disclosed will be, and it will excite much greater interest in GNVC.

The first fact is that far more then 1/3rd the deaths in the 92 events occurred in the group receiving the SOC alone, which is 1/3rd of the patient population. The second fact is that far more than twice as many resections occurred for the 2/3rd of the patients on TNFerade.

We'll also see the actual K-M Curves for the first time, but I believe discussion already released gave people a reasonable idea of what they should look like.

There is no doubt, the company is cash starved and it's holding down the price. I believe on seeing the full results investors will arrive at the conclusion that the drugs performance leaves no doubt it will be approved, and it will confirm in many peoples mind that a partnership will occur when the company's satisfied with what's offered.

No one likes seeing a company with inadequate funding, but the question is, do you invest now, while the stock's 70 cents, after ASCO when the data moves it into the $1 to $5 range, after a partnership when the range moves from $4 to $10 or more, or after approval when $15 to $30 could easily be justified.

If you look at the mechanism by which TNFerade works, you'll find that pancreatic cancer's just the tip of the iceberg. Benefits are already significant in trials on Head and Neck and Esophageal Cancers, but there's little doubt it can be applied to many others, perhaps most cancers. Unlike other drugs, it will compliment most other drugs rather than competing with them.

If you look even deeper into the company, you'll find that in addition to TNFerade, GNVC has Foot and Mouth Vaccines that Homeland Security has developed with them and H.S. is committed to a large buy of one or more of the vaccines late this year. This can be found in H.S. documents, not GNVC claims. GNVC has not yet even claimed a soul source contract with H.S. that's been announced, but apparently not yet awarded. I mention this because FMD Vaccines may very well answer the immediate cash problems faced by the company.

Gary

National Debt: A Chinese Stress Test

I had no idea the debt was so low. Let's just eliminate it. The FED should just lend each of us $30K at the current rates they're lending to the banks, say 0.25% for 60 years. We could all pay it back for roughly $50 a month.

While I wrote this in gest, if we eliminated the debt by such a simple manipulation of accounting, essentially just saying that's what the FED's doing and adding $600 a year to our average tax burden, I have little doubt that our taxes could be reduced by $600 a year in eliminating the debt, so we could eliminate the debt by just doing it all with creative accounting.

If we did it, we could start building a new debt immediately, just wipe the slate clean.

Gary

Are U.S. Home Foreclosures Caught in a Never Ending Vicious Cycle?

One fact seems to be forgotten in all this discussion, when all the dust settles we still need more housing then we currently have. Certainly the banks made loans to people who wouldn't qualify for the loans at the time, but with teaser rates they could pay presumedly until another loan would be available that they could not only qualify for, but afford.

The problem was largely bank initiated, and it was feed by the banks who instead of offering a hand when rates adjusted offered a foot to boot people out of their homes. While historically ARM's were offered at nearly a point below fixed, the banks tightened the screws and some times even raised the ARM's to levels equal to or even above the Fixed Rate Loans so people on ARM's or other teaser loans didn't have a chance when rates adjusted, the refinancing they were promised at the initiation of the loans on adjustment weren't there.

Part of the problem had to do with the fact that banks sold off the loans, so they really had little interest in assisting the homeowner who was unable to make the payments. The FED added fuel to the fire by not recognizing what was happening, lowering rates, and therefore making rate adjustments substantially lower. Even now, banks don't reduce rates until a specific date specified on the loan, if you had a loan that adjusted last April, you probably got a huge increase as the FED hadn't made any major moves downword prior to then, the fact that 6 months later they were down to the lowest rates ever, it doesn't matter, your rate won't come down till April. In short, if you're foreclosed before the rate goes down, they weren't providing much help.

What's sad is that if the rates available now were available one to two years ago many foreclosed properties wouldn't have been. Sure, some would, prices would have fallen some, and construction would have slowed down, but things wouldn't be nearly as bad as they are today. Much the same can probably be said if the SEC had done its job about the collapse of all sorts of companies.

Certainly there's enough guilt to go around, but the fact that when all the dust settles, when the economy on its way back up, when unemployments back down to 5% or so, and when the world outlook is far more positive, the need for more new homes will once again exist, and real estate prices will be on the rise again. As a resident of Los Angeles, it might be awhile before they're as high as they were a few years ago, but they'll also be nowhere near as cheap as they are today. Of course the key is keeping interest rates low, if the FED is foolish enough to raise rate substantially, the recovery will be shortlived.

Gary

Rick Santelli: The Best Five Minutes in CNBC History

I believe that there are as many people who'd be identified a hard working upper middle class or upper class people who're hurting just as much as those who're being classed as those not working, expecting a hand out. Certainly when companies go belly up, or lay off huge percentages of their labor force more of those laid off are middle to lower class, but they're not slackers, they work for a living and you can bet the majority are seriously looking for work.

I was speaking to a Property Manager who I moved a property I own to about the foreclosures in that area. He indicated that he knew of not one single case where the owner who lived in the property was being foreclosed. His contention was it was almost all losses by flippers that resulted in foreclosure. While this is probably an exageration, or specific to his area, there is a lot of truth in what he's saying.

Many flippers aren't lazy, they often do repairs on property they buy themselves, but for years they've made big money buying and selling property often where banks financed nearly everything. They certainly didn't see their world ending, but when it happened many walked away leaving the banks holding the bag.

Today the flippers with money are performing a service, and they should be well rewarded. They're buying the foreclosed properties, which even new have often been looted and allowed to run down, and they're fixing them up for resale. This is positive as run down properties bring everyones prices down, so they shouldn't be condemned for their actions, but the banks should perhaps be condemned for permitting flippers of the past to put in almost none of their own money in purchasing real estate.

The problem investors in real estate have is the banks have gone from one extreme to another. I'm a real estate investors, the last purchase I made was over ten years ago, few have been sold, and most of those that did were to tenants. I'm never late with mortgage payments, yet because I own over 4 properties, the banks don't want to talk to me.

My point is that banks need to service their customers instead of pulling back services. They act as though they don't have money to lend even after receiving hundreds of billions in bail out funds. If you pay down a credit card balance, they lower your credit limit even though all bills have been paid on time.

In short, it's the action of the banks that brought down the economy, and it's the lack of action by the banks that's keeping it down. It's foolish to give loans to people who can't pay them back, but it's even more foolish not to work with people who're willing to work with you by doing things like lowering interest rates at a time you can borrow from the FED at under 1%. I doubt very much that many of those foreclosed on in the last 3 years couldn't have kept their properties if offered loans at 4%. Sure, 3 years ago loans weren't that low, but with all the foreclosures occuring, they should have been, but the FED didn't see it either. Sure if the banks acted without the FED they'd have lowered profits, and no doubt lowered executive bonuses, but they'd be in far better shape.

The problem in part was the banks often didn't have a horse in the race. They simply were servicing loans they sold, if they did foreclose, others held the bag. In short, the system failed because every agency in it had opted for short term greed over long term gains.

Freddie and Fannie would never have gotten in trouble had they stuck to buying fully complying loans, but there were supposed to be bigger profits in buying others. Lending requirements were dropped to levels where I could probably have gotten a loan for my dog, if not, most certainly my daughter who's still going for a professional license so she can be paid, but currently works essentially for free. In short they all cooked the books because that's what paid the big bonuses.

Deregulation has a wonderful sound, people like to be free, but the reality is it both led to tremendous greed on the part of executives, the higher up the chain the greedier, and it led to ignoring the regulations where they were in place because the regulators made it clear that they could. That's where agencies like the SEC come in.

In short, we've had many years of our politicians, regulators, and executives essentially all saying, "Greed is good", it was a great line in the movie, but long term profit would have been far better. Companies like GM have put greed over long term profit for at least the last 40 years, failing to reinvest profit in more efficient and higher quality production facilities resulting in foreign named American made vehicles all rating higher in quality and reliability. Perhaps we needed the wake up call we're having now, it's painful, but hopefully if won't be to long before it's over.

Gary

Why Friday Was Such a Critical Day for Bank Stocks

Bank of America and others have put themselves in the hole they're in by neglecting those they serve, and they're adding more fuel to the fire.

Because of having a large real estate portfolio, with BAC holding the mortgages on many of them, I was a Premier client, that status is being dropped in March as real estate is no longer a criteria for such status. I really don't care about the status, what I care about is the reason, they can't or won't do business with me any more.

They don't care that I've made all the payments on time, they don't care about the fact that I'm not trying to get loans over 70% of current value, I have more than four properties, they no longer wish to deal with me.

Sadly, when speaking with my Premier banker she did indicate they'd talk to me about new loans if I didn't make a payments for two months, but I'd be speaking with someone else.

I know they may be following the guidelines for selling loans to Fannie, Freddie, etc, but if you want to stay in business, you learn to provide the services your customers need. Right now Americans all over need help, those that provide it will be well rewarded.

I for one will still be looking to refinance both for better rates and cash out to pay off other short term debt. I'm planning to wait for things to ease as it's clear that now's not the time, but when they do, I doubt if I'll be dealing with BAC again.

I certainly know BAC isn't alone in the practice, I've spoken with a loan officer at Well Fargo as well, they're following the same guidelines. The difference is it wasn't Well Fargo who told me that whenever I needed to refinance in the future they'd be there for me, BAC did.

Gary

Would Genentech Be Better Off Left Alone by Roche?

I certainly agree with all you're saying, however it must also be recognized that Roche is putting money in its own pocket by working to move up the price of DNA. It's a win-win proposition for them.

If they should try a higher bid that also gets rejected, their equity value goes up even more, at this point I doubt they'd want the offer accepted. I haven't done the math, but I suspect they've made several hundreds of millions on their books from the initial offer because of the number of shares they currently hold in DNA and the way the offer moved its price up.

BMY did the same thing with IMCL.

Gary

Why is Wall Street Ignoring ImmunoGen?

I don't believe they'll be ignoring IMGN much longer. The Abstact for once a week dosing of T-DM1 shows spectacular results, this should only get better as we see more patients and confirmed Partial Responses in the ASCO presentation which should include nearly six months of additional data.

Add to this the fact that the Clinical Trials database now shows two new Phase II Trials intended to start in July that will greatly expand the potential use of T-DM1 and you can see that DNA with the concurrence of the FDA is looking to rapidly develop this drug.

I've heard it said that a blind man could see this drug is headed for approval, I believe it's not only true, but the FDA themselves might shorten the process as the data's so overwhelming.

I believe all the new trials, as well as perhaps the current trials, could be using Pivotal Material which DNA now has the capability of making, instead of drug supplied by IMGN. The importance of this is DNA cannot gain approval unless the FDA approves its manufacturing capability, this may already have been done.

It's only a matter of time, and I believe this drug will fly through Pivotal Trials once they're started.

Gary

Immunogen's Bright Future (Part II)

Ohad,

I agree with much you say, and you certainly have much greater technical expertice than me, but my understanding of a few things is different from yours. Please check if I'm wrong.

As I understand it DM4 does bind more securely than DM1, but I think each will work with IMGN's various different linkers. Likewise IMGN's different linkers will work with Taxanes they've developed, and also DC's which haven't been mentioned in some time.

Back when C242-DM1 was in trials there were two patients, I believe with colon cancer, who nearly had partial responses. The benefits they got from the drug may have been sustained for over a year. To me this is saying that with the right patient mix and the right protocol C242-DM4 should work in a manner that's superior to the DM1 based product. I believe the key is the right patients, and perhaps a protocol that includes other forms of chemo. If this drug were in the hands of someone with far more funds, I believe several trials would be run to determine how to best utilize the drug.

From their comments it appears that SNY has done this with My9-6-DM4 and now they're saying they have POC. They haven't said what exactly that means, but we should find out at ASH when it's anticipated they'll be discussing the drug. If POC means to SNY what it normally means, the drug should advance in trials shortly.

Gary

The "Naked" Truth About Antibodies For Cancer Therapy

I believe IMGN's latest guidance is for 2 to 4 drugs by June 2008, the end of their fiscal year. Eight targets currently are licensed to IMGN's partners, and the CEO has guided that SNY will claim at least ten targets to license from IMGN's pipeline by the end of August, 2008. By the end of 2009 the potential of going substantially higher than 4 to 6 new drugs is great.

Something we have almost no knowledge of is just how much work has been done preclinically since the SNY partnership took place. We know SNY has a choice of up to 20 targets from IMGN's pipeline, and that the choice was from 40 or more targets in the pipeline. If over the five years of the partnership many of these 20 to 40 targets they've been looking at have advanced substantially preclinically, by the end of 2009 either IMGN or SNY may put one or more of these in the clinic. Today we know of at least one that SNY intends to bring to the clinic as it appears on SNY's website, even though the drug's not yet licensed with IMGN.

I hope everyone knows when I'm referring to a target it actually represents potentially many different drugs. PSMA was the target IMGN licensed with MLNM, who also had the rights to J591 an MAB developed by BZL which targets it. There are other MAB's that also target PSMA, IMGN won't license them as long as MLNM holds the target rights. While MLN2704 didn't go to Phase II, it was a conjugate of J591 with DM1 with one of IMGN's oldest linkers. Today IMGN could conjugate that MAB with different linkers as well as different effector molecules. It could also conjugate other MAB's targeted at PSMA, but only for MLNM, or if MLNM agreed to sell or abandon its license with IMGN. No one outside the partnered companies seem to know how long licenses are for, so it's also possible that in time they expire if drugs are not being actively pursued from the license.

I believe that Tras-DM1 could be the first approved TAP drug, though there are other possibilities. As I see it, ten or twenty years from now DNA could come back to IMGN and improve on the drug with a better linker, effector molecule, or both, as I don't believe the license would expire just because a drug was approved from it.

These are just my opinions, but I've been invested in the company almost from the beginning.

Gary