RE: FDA approval and insider selling...
You are welcome to sound as negative as you wish. Short sellers and bears are welcome to engage in discussion on this thread. It is healthy to disagree.
Cytarabine has already been approved by the full FDA for intravenous use. It is a cell cycle-specific agent, meaning that cancer cells are only vulnerable to the drug at limited times within their mitotic cell life cycle. By developing a slow release form, smaller doses, with lesser side effects can be present in a body cavity long enough to "catch" all cancer cells at the vulnerable point in their cell cycle. Comparing DepoCyt to AraC (cytarabine), it is apparent that the depo formulation has superior efficacy and less toxicity. Still, it is not free of side effects, nor is it a cure for cancer in most patients. It is just a lot better than the best therapy in present useage for neoplastic meningitis and for prophylaxis of same.
You are right that ODAC only is making a recommendation to the full FDA. The full approval is expected in Q1 '98. The drug is being fast-tracked with a rolling application. They are well into a Phase IV (postapproval) study. Usually the FDA goes along with ODAC. FDA disagreements with ODAC are rare. I don't know anybody who foresaw what happened to NSTA. In retrospect, the full FDA's concerns are not unreasonable. I understand the concern to be that Anesta is making what looks like a lollipop loaded with morphine. Actiq apparently looks too appealing to children. Actiq never was a life-saving or life-extending medicine. This is fundamental difference from DepoCyt, which is a life-and death medicine.
Roger Davisson is a general partner of a venture capital firm, Brentwood associates. What happened here is that Mr. Davisson did not own the shares in the first place, his venture capital partnership did. This means that the numerous nonventure capitalist investors in the partnership owned the shares, even though they are nominally listed as being owned by him. In general, venture capital investments are long-term and highly illiquid. I have consulted on over 50 biotech companies for a leading venture capital firm, attended lots of their meetings, etc. One recurring goal is enhancing the liquidity of the venture capital funds. VC partners have a fiduciary responsibility to their shareholders, first to enhance return, but enhancing liquidity is part of the consideration. Sometimes the perceived need to enhance investor liquidity leads them to sell stock in good companies. I do not know specifically what made them decide to liquidate this holding as opposed to some other holdings, versus keeping their investors money tied up in the shares. Often they will distribute the shares to investors, who then sell the shares. Sometimes the VC partners vote to sell the shares and not even distribute them.
Overall, selling by shareholders is not nearly as bearish as an individual insider selling this number of shares. It doesn't bother me in the least. It happens a lot. Recall that DEP0 was selling at almost $30 per share earlier this year, when it appeared that speedy FDA approval was imminent. As it became apparent that approval would be delayed, the price dropped, and some people decided to sell.
By my reckoning, Mr. Erikson still owns about 150,000 shares. My guess is that he needed some money. Remember that insiders sell for many reasons, but buy for only one.
There will likely be a selloff and some price decline after a favorable recommendation from ODAC. I don't think it will be as large as some others because the full FDA approval is expected so soon.
Hope this helps,
Tom D
P.S. The price action of this stock is getting tricky. Usually it opens high each a.m. and then settles back down as the day progresses. In two of the last three days the stock closed strong. Friday the asking price at the close was higher than the daily high. I have an unconfirmed report that DEPO is presenting at the BARS conference this week. There are some stocks that I think are undervalued which probably won't change in price in the next week or two (FUSE, ADVH). DEPO is not one of these. There is risk that it could go up a lot (2 to 3 points) in the next week and you could miss it. If you are going to buy some, good luck trying to get it at a decent price. |
