I love it when I’m right. I predicted that Astex Pharmaceuticals (Nasdaq: ASTX  ) and marketing partner Eisai would receive a rejection for their blood-cancer drug, Dacogen, as a treatment for acute myeloid leukemia in patients over the age of 65. And like clockwork, last week the FDA told the duo “no.”

Apparently, I’m not any smarter than the rest of you, though; Astex’s shares actually went up the day after the announcement. It was pretty easy to guess the FDA’s decision after the advisory panel voted 10-3 recommending that the agency not approve Dacogen for AML.

Being right isn’t enough
Not every binary biotech event results in a huge stock move. It’s a sad fact of investing: if you and everyone else thinks something is going to happen, there’s no money to be made.

Earlier this year, Roche and Curis (Nasdaq: CRIS  ) gained approval of their basal-cell carcinoma drug, Erivedge. With an approval widely expected, shares of Curis actually went down on the day despite the positive news.

And FDA decisions aren’t the only binary events that can be anticipated. A few years ago, investors shrugged off the failure of Myriad Genetics‘ Alzheimer’s drug Flurizan because it was clear the drug was a long shot anyway. Ditto for Medivation (Nasdaq: MDVN  ) and Pfizer‘s Dimebon when it was tested for Huntington’s disease. The original failure in Alzheimer’s disease is a different story.

Straddle the indecision?
The big gains in biotech come when it’s unclear exactly what will happen. Going into the binary event, investors have to take a middle-of-the-road valuation, because no one knows which way the stock will head until the event occurs.

You can get a hint about what investors are thinking by looking at the price of the options on the stock: In situations where investors are uncertain, the calls and puts will be expensive. In a situation where there’s a 50/50 chance of it going either way, the value of the put plus the call is approximately how much investors think the stock will move up or down. Buying a straddle will make you a guaranteed winner — either the call or the put will increase in value substantially — but if investors were correct in guessing the post-decision valuation, the price of the winning option isn’t likely to be much more than your cost basis of the two combined. There’s no free lunch with options, but they can tell you a lot about investor sentiment.

Playing overexuberance
People who play the lottery don’t expect to win every time, but they’re willing to make the long-shot bet because the reward is so high. Same goes for long-shots at the track, roulette, and No. 16 seeds to win it all in the NCAA tournament.

Investors can do the same with binary events, sometimes with better odds.

As it turned out, buying shares of Astex the day before the FDA decision was essentially a free call option on the stock. If the FDA had shrugged off the advisory panel’s recommendation, shareholders would have been sitting on a huge gain. As it was, the FDA decision went as expected and investors didn’t risk anything holding over the binary event.

That shouldn’t really happen; there should be some risk premium if the chance of an approval isn’t zero. And if it truly is zero, there would be no reason to buy.

The problem lies in figuring out post-decision valuations, which is more art than science. Good bets like the one on Astex are a lot easier to identify after the fact than before it, but when valuations get low enough, it can be worth making a small bet on an outcome that has little chance of happening.

One to watch
In the who-knows-which-way-it’ll-go category, there’s Aeterna Zentaris (Nasdaq: AEZS  ) and Keryx Biopharmaceuticals‘ (Nasdaq: KERX  ) cancer drug perifosine. The companies are expecting data this month from their phase 3 trial that’s testing the drug in refractory advanced colorectal cancer patients, possibly a little later. Because of the way the phase 2 and phase 3 trials were designed, it’s hard to estimate the likelihood of success.

A few weeks ago, I suggested they might be good buys despite the uncertainty given the low valuations, but last week the biotech hype patrol got a hold of them and they skyrocketed. Both have returned from orbit, landing them in the zone where there doesn’t look to be a compelling reason to go long or short into the event.

http://www.fool.com/investing/high-growth/2012/03/15/being-right-in-biotech-is-only-half-the-battle.aspx

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Medivation Inc.    hopes to raise about $175 million through a convertible senior note offering.

The San Francisco-based drug developer (NASDAQ: MDVN), whose stock has shot up more than 300 percent since it disclosed results of a successful Phase III trial of a prostate cancer drug in November, said Monday it could use proceeds of the offering to invest in other products, technologies or businesses.

Medivation said in a press release that it mainly will use the money for working capital and to fund further development and potential commercialization of its drugs.

Medivation, led by CEO David Hung, expects to grant underwriters of the offering an option to buy up to $26.25 million in additional notes.

Citigroup    is the book-running manager of the offering.

The notes are redeemable on or after April 6, 2015, but after Jan. 1, 2017, will be convertible only upon certain circumstances, the company said in a press release.

Medivation, which had the Alzheimer’s disease drug Dimebon fail in Phase III trials in 2010, has seen its stock rise 337 percent in the past four-plus months. It was down 80 cents per share, to $72.19, in after-hours trading Monday.

http://www.bizjournals.com/sanfrancisco/blog/biotech/2012/03/medivation-prostate-cancer-dimebon.html

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The last flickering hope that Medivation’s Dimebon could help Alzheimer’s disease patients has just been extinguished. The biotech announced this morning that a 12-month study of the drug failed to register significant improvements for patients, mirroring two shorter Phase III studies in which Dimebon failed to outperform a sugar pill. Pfizer ($PFE) took the opportunity to bow out of its partnership, writing off its $225 million upfront and $500 million milestone program for what proved to be another embarrassing pipeline failure.

In 2008, Dimebon looked like an odds-on success, with positive data from a Russian study and 10 years of sales experience to underscore its safety. But Medivation ($MDVN) was shaken to the core when its first late-stage study ended in failure, with an additional pratfall for Huntington’s disease to cap the disaster.

In the end, Dimebon’s failure helped tarnish the reputation of Russian drug studies while raising severe doubts about Medivation. But the company and CEO David Hung managed to turn attention to MDV3100 for prostate cancer, with positive data reigniting hope in the biotech’s future and reviving its battered share price. Pfizer, meanwhile, says it won’t give up on Alzheimer’s, which is one of the most difficult fields in drug development.

“We recognize Alzheimer’s is a very complex disease,” said Pfizer’s Dr. Steven J. Romano. “Despite this disappointing result, Pfizer remains committed to advancing the science of Alzheimer’s disease, with the ultimate goal of delivering innovative and meaningful new treatment options to patients.”

Shares of Medivation declined slightly this morning, indicating the market’s near-zero expectations for Dimebon.

SAN FRANCISCO, CA, Feb 29, 2012 (MARKETWIRE via COMTEX) — Medivation, Inc. MDVN -0.55% today provided a corporate update and reported its financial results for the fourth quarter and the year ended December 31, 2011.

“With positive results in hand from our Phase 3 AFFIRM trial in post-chemotherapy patients, 2012 will be a pivotal year for our company,” said David Hung, M.D., president and chief executive officer of Medivation. “We and our corporate partner Astellas plan to file marketing applications for MDV3100 in both the U.S. and Europe this year, and the process of building out our commercial team and infrastructure to be ready to launch MDV3100 in the U.S. should it receive regulatory approval is well underway. We also continue to make good progress on our ongoing studies in earlier prostate cancer disease states to support potential future growth.”

Recent Developments and Anticipated Milestones

http://www.marketwatch.com/story/medivation-reports-fourth-quarter-and-year-end-2011-financial-results-and-provides-corporate-update-2012-02-29

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Medivation’s long shot for Alzheimer’s came up short today. The San Francisco-based company (NASDAQ: MDVN) said today its Alzheimer’s drug candidate dimebon failed in a pivotal clinical trial. Medivation and its collaborator, Pfizer, said they plan to quit developing the drug.

The bad news came from a trial known as Concert, which enrolled more than 1,000 patients with mild to moderate symptoms of Alzheimer’s, the neurodegenerative disease that impairs the memory and cognition of millions of elderly people. The drug failed to show a statistically significant benefit on a common cognition score, or a measurement of activities of daily living and self-care.

“We are disappointed in the Concert results and the implications for Alzheimer’s disease patients and their caregivers,” said David Hung, Medivation’s CEO, in a statement.

The Medivation drug, original developed in Russia in the 1980s as an allergy treatment, showed some promise in a smaller study Medivation conducted including more than 180 patients with Alzheimer’s, which was published in 2008. But investors largely gave up on the drug when Medivation and Pfizer failed to reproduce the results in March 2010 in a pivotal trial of about 600 patients, known as Connection. Medivation suffered layoffs after that setback, but it has made a comeback on the strength of a prostate cancer drug called MDV3100, which showed last November that it was able to help men live longer. Details from that trial are expected to come out this year at a medical meeting.

“Given Dimebon’s poor precedence from its Phase III Connection trial in 2010, the failure of Concert should come as no surprise. Investor focus should remain on MDV3100 for prostate cancer,” said Biren Amin of Jefferies & Co., in a note to clients this morning. He notes that the full data from the pivotal study of MDV3100 is expected to be released at the American Society of Clinical Oncology’s Genitourinary symposium, scheduled for February 2-4.

Shares of Medivation fell 1.2 percent to $55.01 shortly after the opening bell.

http://www.xconomy.com/san-francisco/2012/01/17/medivation-fails-alzheimers-trial-pfizer-drops-out-partnership/

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Medivation, Inc. (NASDAQ: MDVN) and Pfizer Inc. (NYSE: PFE) today announced results from the CONCERT trial, which is a Phase 3 trial that evaluated dimebon (latrepirdine) when added to ongoing treatment with donepezil HCL tablets in patients with mild-to-moderate Alzheimer’s disease. Dimebon did not achieve statistically significant results for either of the two co-primary endpoints, the Alzheimer’s Disease Assessment Scale – cognitive subscale (ADAS-cog), which measures cognitive ability, or the Alzheimer’s Disease Cooperative Study – Activities of Daily Living (ADCS-ADL), which measures self care and daily function.

“We are disappointed in the CONCERT results and the implications for Alzheimer’s disease patients and their caregivers,” said David Hung, M.D., president and CEO of Medivation. “I would like to extend my sincere thanks to the patients, their physicians and study teams involved in this trial.”

Dimebon was generally well tolerated in the study. A full analysis of the results from CONCERT will be conducted and submitted for presentation at an upcoming scientific congress.

Medivation and Pfizer will discontinue development of dimebon for all indications and will terminate the ongoing open label extension study in Alzheimer’s disease. The companies also announce that they will terminate their collaboration to co-develop and market dimebon pursuant to the terms of their Collaboration Agreement.

“We recognize Alzheimer’s is a very complex disease,” said Steven J. Romano, M.D., senior vice president, head, Medicines Development Group, Global Primary Care Business Unit, Pfizer Inc. “Despite this disappointing result, Pfizer remains committed to advancing the science of Alzheimer’s disease, with the ultimate goal of delivering innovative and meaningful new treatment options to patients.”

The Phase 3 CONCERT trial was a 12-month global randomized, double-blind, placebo-controlled trial that enrolled 1,003 patients with Alzheimer’s disease. Patients on a stable dose of donepezil for at least four months were randomized to one of three treatment groups: dimebon 20 mg three times per day, dimebon 5 mg three times per day or placebo.

About Medivation

Medivation, Inc. is a biopharmaceutical company focused on the rapid development of novel small molecule drugs to treat serious diseases for which there are limited treatment options. Medivation aims to transform the treatment of these diseases and offer hope to critically ill patients and their caregivers. Together with its corporate partner Astellas, Medivation currently has its investigational drug MDV3100 in Phase 3 development to treat advanced prostate cancer.

http://www.vadvert.co.uk/health/20918-medivation-and-pfizer-announce-results-from-phase-3-concert-trial-of-dimebon-in-alzheimers-disease.html

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US biotech firm Medivation (Nasdaq: MDVN) says that patient enrollment was completed at end November in the CONCERT study, a 12-month, Phase III clinical trial in patients with mild-to-moderate Alzheimer’s disease evaluating the potential efficacy of Dimebon (latrepirdine) when added to ongoing treatment with donepezil.

Medivation is conducting this study under its collaboration agreement with drug behemoth Pfizer (NYSE: PFE) which acquired rights the product in 2008 in a deal worth a potential $725 million ($225 million upfront) to the former company.

Dimebon – an old Russian antihistamine approved in that market in 1983 – had once been touted as a blockbuster drug for AD, with potential for anything between $1.5 billion and $5 billion annual sales. However, earlier this year, the majority of observers wrote it off after – somewhat unexpectedly – it failed to meet co-primary or secondary efficacy endpoints compared to placebo in two Phase III trials (The Pharma Letter March 4). After the disastrous results, Medivation’s shares cratered and have yet to recover from the beating they received.

Has received FDA feedback

“Completing patient enrollment in CONCERT is an important step forward for our Dimebon development program in Alzheimer’s disease,” said Lynn Seely, chief medical officer of Medivation. “Now that enrollment is complete, we expect to report top-line results from the CONCERT trial in the first half of 2012. We have previously received feedback from the FDA [Food and Drug Administration] confirming that we can use our Phase III CONCERT trial to complete our registration package for mild-to-moderate Alzheimer’s disease, provided that the results are robustly positive,” she added.

The international, randomized, double-blind, placebo-controlled Phase III CONCERT trial  enrolled 1,003 patients with mild-to-moderate AD at approximately 100 sites in the USA, Australia, New Zealand and Western Europe. Patients on a stable dose of donepezil were randomized to one of three treatment groups: Dimebon 20mg three times per day, Dimebon 5mg three times per day or placebo. Patients were required to be on treatment with donepezil for at least six months and at a stable dose of 10mg daily for at least four months prior to enrollment in the study. The primary endpoints are the Alzheimer’s Disease Assessment Scale – cognitive subscale (ADAS-cog) and the Alzheimer’s Disease Cooperative Study – Activities of Daily Living (ADCS-ADL) – a measure of self-care and daily function.

http://www.thepharmaletter.com/file/100475/medivation-persists-with-dimebon-research-in-alzheimers-despite-earlier-failures.html

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When the calendar flips from December to January, many people like to start the year with a clean slate…

They swear off junk food and promise to exercise more. They declare they won’t waste their evenings on reality TV, making a promise to themselves to read more. And finally that they will dump their losing stocks and instead only buy quality names.

Let me give you that little push that you may need. I can’t help much if you’re addicted to Haagen-Dazs and Mob Wives…

But if you own any of the following three stocks, sell them immediately.

“Hung” up on Medivation

San Francisco-based Medivation (Nasdaq: MDVN) has a promising drug for prostate cancer – MDV3100. In Phase III trials, advanced prostate cancer patients lived an average of 18.4 months versus 13.6 for patients on placebo.

The stock is up 200 percent from when the data was released just over a month ago, giving Medivation a market cap of $1.7 billion.

The company should provide more information next year as to the path to regulatory approval. Meanwhile, Medivation and partner Astellas Pharma are currently in an additional Phase III and two Phase II trials.

My problem with Medivation is two-fold:

• Its current market cap is 25-percent greater than Dendreon’s (Nasdaq: DNDN), which already has a prostate cancer drug on the market. Granted, initial sales for Dendreon’s Provenge were disappointing, but there’s a very big difference between weaker than expected sales for a drug that has already been approved versus one that hasn’t been given clearance by the FDA yet.
• The second issue is with Medivation CEO David Hung. I’m very familiar with Hung and Medivation, having covered the company when data for its Alzheimer’s candidate Dimebon was very encouraging. The drug produced stellar Phase II results only to fail miserably in Phase III. Hung is a smooth talker and oozes confidence – a little too much confidence in my opinion. Successful biotech CEOs tend to be cautiously optimistic by nature, not boastful.

When there was tremendous buzz about Dimebon, Hung became a rock star at investing conferences, once telling me, “I’ve made a lot of people (investment managers) heroes.”

Before you think this is sour grapes, you should know that my subscribers took big gains on Medivation during the Dimebon run-up and eventual fall. When the stock took off in anticipation of Phase III results, I recommended selling a sizeable chunk of the position, ensuring gains, even if disaster struck, which it did.

Will history repeat itself with MDV3100? In fairness, it appears to be a better-run study than the Dimebon trial. However, the company’s track record and recent run-up in the stock suggests to me that investors will be better off if they take the money and run.

Black Box Warning

ISIS Pharmaceuticals (Nasdaq: ISIS) – I’ve been banging on this one for a while now. ISIS, along with partner Sanofi-Aventis, plans on filing for FDA approval for cholesterol drug Mipomersen before the end of the year.

Mipomersen treats a rare genetic form of extremely high cholesterol. The drug works. There’s little controversy about that. The problem is that in every clinical trial, the drug has raised liver enzymes, which is a sign of toxicity.

Supporters say no patients have actually gotten sick on the drug and that the elevated enzymes are no big deal. Detractors argue that patients will have to stay on therapy for life and that the toxicity will become a problem as patients take the Mipomersen over many years.

My prediction is that the FDA either asks for more information (as they have done in the past) or approves it with a black box warning label, which should hurt sales. A black box warning cautions doctors and patients as to the severe side effects that are possible with the medication. ISIS is near its lows, but I don’t think this one is worth the considerable risk.

Come On, Mann…

MannKind (Nasdaq: MNKD) – If you’re in the plumbing supplies business, it’s alright to name your company after yourself. Same thing if you’re opening a law firm. Not so much, though, if you’re starting a biotech company.

Yet that’s what Al Mann did at MannKind. The CEO was nominated by TheStreet.com’s biotech reporter Adam Feuerstein as one of the Worst Biotech CEOs of the year. I’ve seen him speak at investor conferences before. And while he’s charismatic, you get the impression if this was 100 years ago, he’d be selling snake oil instead of inhalable insulin.

Inhalable insulin has so far not been shown to be commercially viable. Nektar Therapeutics’ (Nasdaq: NKTR) and Pfizer’s (NYSE: PFE) Exubera was a commercial disaster. Despite projections of $2 billion in sales, it only generated $12 million in revenue before being pulled from the market. MannKind’s version, called Afrezza, hasn’t even been able to obtain FDA approval, despite several attempts.

The company has $224 million in assets, of which $196 million is property, plant and equipment, while it has $210 million in debt. Stockholders’ equity is negative $280 million. Over the past year, it has burned an average of $33 million a quarter. At the end of the September quarter, it has just $22 million in cash.

Somehow the stock still has a market cap of $365 million. If you own the stock, I suggest get out now while there’s still something left to sell.

Although the rewards can be great, investing in small cap biotech stocks can be risky even under the best circumstances. In these three situations, the reward does not justify the enormous risks.

http://www.investmentu.com/2011/December/three-biotech-sell-before-2012.html

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We recently downgraded biopharma company Medivation, Inc. ( MDVN ) to Neutral. The stock carries a Zacks #3 Rank (short-term “Hold” rating). Medivation’s shares received a major boost in early November with the company and its partner, Astellas, reporting impressive data on MDV3100 from a pre-specified interim analysis of a phase III study, AFFIRM. The Independent Data Monitoring Committee (IDMC) recommended that MDV3100′s risk-to-benefit ratio was favorable enough to stop the study.

The phase III randomized, double-blind, placebo-controlled study, AFFIRM, was conducted in men with advanced prostate cancer previously treated with docetaxel-based chemotherapy.

Medivation and Astellas intend to conduct a pre-NDA meeting with the FDA in early 2012. We believe the companies will file for regulatory approval of MDV3100 soon thereafter and expect MDV3100 to hit the market in 2013. Based on the data that we have seen so far, we believe MDV3100 has blockbuster potential and will be a game-changer for Medivation.

While we remain positive on the company’s prospects, we are moving back to a Neutral recommendation as we believe most of the positive news is already reflected in the current stock price.

Meanwhile, we have low expectations from Medivation’s other phase III candidate, dimebon, which is being developed in collaboration with Pfizer ( PFE ). Dimebon’s development path has been disappointing with the candidate failing to achieve its primary endpoints in late-stage studies for Huntington disease and Alzheimer’s.

Although Medivation and Pfizer are continuing with the development of dimebon, the companies have decided that they will not develop the candidate for moderate-to-severe Alzheimer’s disease. The companies are now focusing on the development of dimebon for the mild-to-moderate Alzheimer’s disease population. Top-line data from the CONCERT study will be available in the first half of 2012. We have low expectations from this study.

Going forward, we expect investor focus to remain on regulatory and development updates on prostate cancer candidate, MDV3100.

http://community.nasdaq.com/News/2011-11/medivation-back-to-neutral-analyst-blog.aspx?storyid=105019

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Medivation Inc. (NASDAQ:MDVN) reported a loss of 29 cents per share in the third quarter of 2011, narrower than the Zacks Consensus loss Estimate of 32 cents but well above the year-ago loss of 16 cents.

Higher expenses led to the higher loss. Revenues for the quarter were $14.9 million, 4.1% above the year-ago period but below the Zacks Consensus Estimate of $16 million.

The Quarter in Detail

Revenues consisted of partial recognition of the non-refundable upfront payment of $225 million received from Pfizer (NYSE:PFE) in October 2008 and $110 million received from Astellas in late 2009. The upfront payments are being recognized on a straight-line basis.

While the Pfizer payment will be recognized through the fourth quarter of 2013, the Astellas payment will be recognized through the fourth quarter of 2014.

Operating expenses increased 25.1% to $26.4 million. Research and development expenses increased 19.7% to $18.7 million primarily due to higher headcount and bonus expense, consulting expenses associated with increased workload on the AFFIRM and PREVAIL trials, and preclinical expenses associated with new programs. This was partially offset by lower clinical expenses due to reduced dimebon development activities.

SG&A expenses increased 41.6% to $7.7 million primarily due to higher payroll-related expenses and legal and other expenses.

Maintains 2011 Outlook

Medivation expects operating expenses (after adjusting cost-sharing payments from Pfizer and Astellas) in the range of $100 – $110 million.

Pipeline Update

Medivation received a huge boost earlier this month when it reported positive survival data on its phase III prostate cancer candidate, MDV3100, which is being developed in collaboration with Astellas Pharma.

The phase III randomized, double-blind, placebo-controlled study, AFFIRM, was conducted in men with advanced prostate cancer previously treated with docetaxel-based chemotherapy. The interim data was impressive with MDV3100 showing a 4.8-month advantage in median overall survival compared to placebo (18.4 months versus 13.6 months).

A 37% reduction in risk of death was observed in the MDV3100 arm compared to placebo. Medivation reported that the US Food and Drug Administration (FDA) recently granted fast track status for the post-chemotherapy indication.

Based on the encouraging interim data, Medivation said that it has decided to exercise its co-promotion option for MDV3100 in the US. Once MDV3100 is approved, Medivation will provide 50% of the US sales and medical affairs field forces for the product.

Medivation and Astellas intend to conduct a pre-NDA meeting with the FDA early next year. We expect to gain more visibility on the regulatory path for the candidate on the conclusion of this meeting. Medivation stands to receive a $10 million milestone payment from Astellas on the acceptance of the NDA for the post-chemotherapy indication.

As far as dimebon is concerned, Medivation remains on track to announce top-line results from the CONCERT study, which is being conducted in patients suffering from mild-to-moderate Alzheimer’s disease. Results will be out the first half of 2012.

http://www.dailymarkets.com/stock/2011/11/14/loss-increases-at-medivation/

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