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Biotech / Medical : Pharmos (PARS)
PARS 2.700+13.6%Jan 21 4:00 PM EST
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To: NeuroInvestment who wrote (1369)12/21/2004 11:59:37 AM
From: Clarksterh   of 1386
 
Thanks neuro - Upon further thought, I came up with a broader list of possible failure modes and lessons learned. I thought I'd share them to get feedback. Note that like most people I have an ability to lie to myself and one of my mechanisms to control that is being very analytic about penalties - and the amount of money I invest is a function of my expected probability of success. But take the exact numbers with a grain of salt.

Lessons learned from the Dex TBI trial. I may update this in the future if Pharmos publishes meaningful data (given that Pharmos wants to use Dex for CABG it is in their self interest to determine what went wrong, but it is not necessarily in their interest to publish it.).

First lesson:

1) If the insiders are selling extensively. Discount from 25% to 75%. Exacerbating factors:
a. They are essentially selling all of the shares they are allowed to sell
b. They started selling after getting extensive data (even blinded data – especially if the company clearly has good parametric models). Don’t assume you are smarter than the insiders.

Remaining lessons:

For right now I somewhat arbitrarily divide up the possible failures into ICP failure and no ICP failure for the simple reason that if there is no ICP failure there are fewer lessons to be learned since it is clear that the whole model for TBI is wrong which is more TBI specific than broadly applicable.

1) How many factors has the company changed between Ph II and Ph III. This is a judgement call, but discount between 5 and 10% per changed parameter. (in the case of Dex they clearly changed CT entry critieria, mGCS and they might have used a different manufacturing technique to produce Dex)
2) How much ability/pressure do the participating doctors have to cheat on the entrance criteria (e.g. in Dex there was probably substantial pressure on the participating doc’s to enroll people after the 6 hour window – they have been talking to the family for 2 or 3 hours trying to convince them, but the family agrees only as things get worse, and the phase II data says that is 2 or 3 hours outside the 6 hour window. Were I Pharmos I’d audit extensively - it should be easy to find ambulance records indicating when the injury occurred and it should be easy to find when randomization occurred since it was centrally controlled.). Exacerbating factors:
a. Very multicenter trial. This tendency to cheat is probably much easier to control in a trial with only a few centers that are easily audited. Also the doctors are substantially less likely to think ‘if I cheat it won’t hurt the trial’ if they are treating ¼ of the total patients.
b. Are the admitting doctors doctors whose primary job does not entail much trial work – doctors who work primarily on trials are likely to be better used to the pressures and resisting them.

Comments?

Clark
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