For risk takers: MATX as a speculative long?
Debate is whether FDA will approve MATX's IntraDose treatment of head and neck cancer. FDA Advisory Panel to discuss clinical trial results with MATX on Monday, Sept 10.
MATX stock fell sharply last Friday and has continued to fall this week, reportedly partially because a hedge fund sold a large portion of its MATX holdings based on the recommendation of a consultant who reviewed MATX's clinical trial results data. That spooked a lot of other investors.
However, there are other "experts" who think the hedge fund consultant was wrong on his interpretation of the data. See a couple of articles/opinions below. Do your own DD, and going long on MATX could be rewarding but not for those averse to risk.
Matrix Sinks on Fears the FDA Won't Approve IntraDose
By Adam Feuerstein
Staff Reporter
08/31/2001 06:06 PM EDT
Shares of Matrix Pharmaceutical (MATX:Nasdaq - news - commentary) fell almost 17% Friday on Wall Street's rising fears that U.S. drug regulators may turn negative on the biotech firm's unique cancer treatment.
Friday's Matrix selloff came fast and furious. There was little activity in the stock until just before 2 p.m. EDT. But in the last two hours of trading, Matrix shares lost $1.56, or 16.9%, to close at $7.69 per share. Shares traded at almost 10 times the average volume.
Matrix goes in front of an advisory panel of the U.S. Food and Drug Administration on Sept. 10, seeking approval for IntraDose, a novel treatment used to help patients dying from head and neck cancer.
Earlier this week, a hedge fund with a large long position in Matrix sold off its stake on the advice of a consultant who expressed doubt about IntraDose's chances at the advisory panel meeting, according to a source at the firm. The consultant based his opinion on his own interpretation of the company's previously released data, and not on any inside knowledge of the upcoming FDA meeting.
This hedge fund sold its position earlier this week, so it was not directly responsible for today's action. In fact, Matrix's price was fairly stable all week. But news like this gets around Wall Street pretty quickly, which could have led other institutional players to unload shares today.
Phone calls placed to other institutional investors in Matrix were not returned.
Today's Matrix selloff is a bit surprising in that the fears about the company's chances at the FDA advisory panel meeting are not new. The company designed a novel way of testing IntraDose, which is seeking approval as a palliative treatment for terminally ill patients and not as a cancer cure. Instead of analyzing data to measure the survival of patients, Matrix used a subjective measure of patient benefit, or improvement in their quality of life.
In its two late-stage tests, IntraDose failed to meet preset patient benefit goals, although the combined data from the test did pass. Matrix's challenge has always been to put a positive spin on these mixed results to the FDA panel members. But in today's risk-averse atmosphere on Wall Street, some institutional investors apparently lost their appetite for the risk.
Matrix does have some undeniably good news to deliver to the FDA, most notably additional test results that show IntraDose shrinks or eliminates head and neck tumors in 30% of patients -- a significant rate of success for cancer drugs.
And lest you think that Matrix has lost all of Wall Street's support, guess again. One hedge fund manager, who remains bullish on the company, scoffs at today's selloff and remains confident that IntraDose will get a positive nod at the FDA meeting.
Bill Martin, Matrix's spokesman, says he expects the FDA advisory panel members to take a critical look at IntraDose, just like any other drug they review, but the company is confident that it will present a strong overall case for approval.
smallcapsonline.com
MATRIX PHARMACEUTICAL, INC. (MATX)
IntraDose Injectable Chemotherapeutic Delivery Gel
September 5 , 2001
RECOMMENDATION: BUY
Key Points:
MATX shares have dropped more than 25% in the last week. The drop was apparently sparked by rumors of a single hedge fund’s decision to unload a large long position in the stock. Though we have not been able to verify this, reports in the media have prompted us to respond to some of the rumors circulating among investors.
It was reported in one news article that the hedge fund’s decision was based on a consultant’s doubts about IntraDose’s chances for FDA approval. To our knowledge, no new information was used in this assessment. The reasons for the doubts reportedly centered around the fact that the Phase III trials did not use survival as an end point. Survival is the current gold standard among endpoints in oncology clinical trials.
IntraDose has never been positioned as a product that will increase survival rates in patients with advanced head and neck cancer. The product was designed and was clinically tested for its utility in controlling local disease—a clear unmet medical need, especially in head and neck cancer (see below).
It is also important to note that oncology clinical trials are typically conducted in an open, unblinded fashion, creating a huge potential for ascertainment bias. This feature helps explain why the most unambiguous endpoint, survival, is often preferred for oncology drugs reviewed by the FDA.
However, the trials testing IntraDose were double-blinded and placebo controlled, greatly reducing the potential for bias—this justifies the use of tumor response as a primary end point, in our opinion. Additionally, the data from these trials was analyzed on an “intent to treat” basis, which the FDA considers the gold standard of clinical trial analysis.
We believe the objective tumor response data was strong (see below). We also believe that the Company’s use of the Treatment Goals Questionnaire® further validates quantitatively the effect of IntraDose on patient benefit (see below).
We maintain our Buy rating on MATX and a price target of $20/share. (To see remainder of this report, go to the link I posted above). |
