To Antigenics or Not to Antigenics?

by Michael Shulman
BiotechBlitz




Antigenics (AGEN) got a Russian approval for its cancer immunotherapy -- a cancer "vaccine" is the sexy, headline grabbing term. This also created a few seconds of buzz around two other immunotherapy companies, Dendreon (DNDN) and Cell Genesys (CEGE). I mention these two other companies because (for purposes of full disclosure) I own CEGE stock and recommend it in my newsletter service. I also own a full hedged position of DNDN that I can't wait to liquidate when my hedge expires.

In the United States, AGEN has failed to get approvals from the FDA for good reason: Its treatment, Oncophage, didn't work in Phase III trials and didn't even come close -- which is at least a sort of argument DNDN could and did make.

Oncophage targets kidney cancer and was shown to work within a sub-group of patients with "lower-stage tumors," and therefore a better shot at survival. 45% of these patients responded to Oncophage, hence the approval in a Russia looking to build new industries.

A couple of things are going on that are of critical interest to dying patients and some interest to investors:

• I started my career as a biotech wise-guy and sage, and I was a fan of the FDA under Dr. Mark McClellan. I now believe the agency kills far more people in a month than Rumsfeld and successors have done in Iraq. How? The FDA, despite what it says, does not really change its view of trial results for drugs for dying patients who have no hope.

Its statisticians hide behind numbers, insisting trial data be used only based on the original protocol for the trial -- subset analyses not in the original plan are verboten. And this is true even for patients with absolutely no alternative other than a very painful death.

• Medicine is moving worldwide and if Antigenics can treat a cancer patient in Russia, people with money in the United States and Europe will go there for treatment -- treatment that will be a lot cheaper than in the United States, even if Oncophage is approved in the U.S.

Immunotherapies from Antigenics and Dendreon are capital and labor intensive -- treatments are literally customized and prepared in a factory for each patient -- and Russia is a lot cheaper place to do that than other places.

• Professional investors are so disgusted with the FDA and so aware of the vibrant new international medicine market that they are willing to financially support the Antigenics business model. The proof is a new private offering by Antigenics to the tune of $21 million.

Where does this leave investors?

• AGEN is now an interesting play because it may now be able to generate revenue AND prove out its therapy in a distinctive sub-group of patients without needing huge additional infusions of capital.

• DNDN now has a fallback. I believe their interim trial results will not get them an approval due to the way the trial is structured and their final results may not be strong enough under the current regime of statistical fascism at the FDA. So, Dendreon could go to Russia, but probably would go the China or India route if necessary.

• Cell Genesys has by far the best-structured trials -- it provide for patients with and without the current standard of late-stage care, have embedded metrics using immune system biomarkers and are huge. In my opinion CEGE stands the best chance of an FDA approval, but the Russia, India, China option helps CEGE too, as it now has a fallback if needed.

The bottom line here is that this was not a minor announcement by Antigenics. It has far-reaching ramifications and you can expect other companies with good sub-group analysis and life-saving treatments -- but no FDA approval -- to look to Russia, China and India for quick trials, drug approvals and an international base to build out their product.

And this reduces the risk in many companies.





BiotechBlitz is a regular contributor to BioHealth Investor
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