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ASCO 2012 Stocks: Winners and Losers

Adam Feuerstein|Senior Columnist
Monday, 4 Jun 2012 | 1:07 PM ET
David Joel | Photographer's Choice RF | Getty Images

Here are some snap biotech and drug stock judgments after a weekend spent at the American Society of Clinical Oncology (ASCO) annual meeting:

Bristol-Myers Squibb’s anti-PD-1 immunotherapy generated the most ASCO buzz and has blockbuster potential across several solid tumors.

Yes, Johnson & Johnson created a bio-statistical mess by stopping the Zytiga “pre-chemo” prostate cancer trial too soon, before a statistically significant survival benefit could be demonstrated. No, it won’t stop the U.S. Food and Drug Administration from approving.

Medivation and its prostate cancer drug MDV3100 emerge from the ASCO weekend stronger, not from any significant new clinical data, but because the company can capitalize on J&J’s stumbles.

Dendreon loses. Provenge has formidable competition in the “pre-chemo” prostate cancer treatment market. The only thing positive for Dendreon this weekend was that investors expected ASCO to be bad for the struggling company. If Provenge sales stall through the end of the year, the stock can go lower.

Onyx Pharmaceuticals: Good and bad. Carfilzomib is a real multiple myeloma drug, but investor sentiment remains pessimistic about the outcome of the upcoming June 20 FDA advisory panel meeting. [Key question: Is a 15 percent response rate in dual refractory — Revlimid and Velcade — patients strong enough?] A silver lining: Any significant dip in Onyx’s stock price is likely to be bought.

Roche: T-DM1 in breast cancer was the star of Sunday’s plenary session, a blockbuster in the making. Remember when FDA issued a refuse-to-file letter on T-DM1 in August 2010, refusing to even review the drug? That decision was stupid then and looks even lamer today.

Unfortunately, ImmunoGen hasn’t invented a wayback machine to allow the company to renegotiate its mid-single-digit royalty rate on T-DM1 sales. ImmunoGen’s valuation today already bakes in multibillion-dollar T-DM1 sales. That’s the hard truth.

Celldex Therapeutics: Remember, CDX-011 is an antibody-drug conjugate, just like T-DM1.

Aveo Pharmaceuticals: A “patient preference” study pitting Tivozanib against Pfizer’s Sutent will be started this year. Smart move. The kidney cancer drug market is crowded and competitive, so more data convincing doctors to use tivozanib before Sutent (or even GlaxoSmithKline’s Votrient) should help.

Synta Pharmaceuticals: An A-list of health-care hedge funds attended the company’s Saturday night cocktail party, with anticipation thick for the release of interim results from the phase II study of the lung cancer drug ganetespib later this month. Synta CEO Safi Bahcall has been hinting at boffo results and of interest from big-name partners. He needs to deliver this time to erase the memory of Synta’s failed skin cancer drug.

Aeterna Zentaris had no presence at ASCO this year, but loses nonetheless because it continues to waste shareholder money on perifosine, a drug that raised the risk of dying in a phase III colon cancer trial.

—By TheStreet.com’s Adam Feuerstein

Additional News: US on Track to Approve More Cancer Drugs in 2012

Additional Views: Drug Stocks Do Well in ‘Gloom and Doom’ Market: Analyst

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Disclosures:

TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks.

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