In the age of the Internet and social media portals such as Facebook and Twitter, investors are turning more and more to non-conventional sources of information to gain an advantage on investing in the stock market. With a little detective work, the ordinary retail investor can level the playing field versus the professional analyst or money manager, and even game the system to an advantage.
No industry presents more of a potential opportunity to scoop a story than the biotech sector. With over 400 publicly traded pharmaceutical and biotech companies testing their drugs in over 45,000 active clinical trials, many of these trials with hundreds or even thousands of patients, somewhere out there, someone is talking, or tweeting, or blogging.
No example is more representative than what was recently seen with Sarepta Therapeutics (NASDAQ:SRPT). Prior to the release of the phase IIb results on October 3, 2012, Sarepta shares had been slowly trending higher for the better part of the prior three months. Interest in the story, and eteplirsen, a RNA-based therapeutics that is designed to repair a genetic mutation in certain patients with duchenne muscular dystrophy (DMD), was first generated by the company when it reported encouraging preliminary results from the phase IIb study back in July 2012.
However, the press release alone from Sarepta wasn’t enough to send the shares from $3 per share to nearly $17 prior to the release of the full data three months later. Instead, what drove meaningful excitement and net buying in the stock were videos and blogging on twitter by some of the patients prior to the company making the full results available. Parents of three of the eight subjects who were in phase IIb trial had been publicly discussing the results with local media (source, source) and even posted videos of their children’s impressive recoveries on YouTube (source, source).
Biotech investors even took to the Web, following the mother (@jennmcnary) of one of the subjects in the trial on Twitter, and reading her blog (DMDHero.com). You can’t blame these patients. The eteplirsen results were unprecedented, and to the family members of children with DMD, a godsend. Often patients are not asked to sign confidentiality agreements before they enter trials. And patients and their family members are far more interested in treating the disease then running to check stock quotes online.
The practice of patients discussing clinical trial results is becoming more common. Websites like WebMD and Drugs.com have forums where patients with specific diseases can go and discuss coping with their disease, their symptoms, drugs they’re on, and even exciting results of clinical trials. Organizations like the Alzheimer’s Association, Parkinson’s Disease Foundation, Crohn’s and Colitis Foundation of America, and Obesity Society of America all have pretty in-depth websites aimed at educating and connecting patients with diseases. Any one of these has the potential to scoop clinical trial results when patients talk.
If that’s not enough, medical and professional organizations may scoop clinical trial results. Last month we wrote an article about Pozen (NASDAQ:POZN) prior to the company presenting results of its phase III trial for PA-325/40. The drug is a combination aspirin and omeprazole product designed for patients that require daily aspirin therapy for the secondary prevention of cardiovascular events, but also at risk for development of gastric ulcers.
I had not seen the data from the trial, but found on the American College of Gastroenterology (ACG) website the preliminary itinerary for the meeting. Inside the itinerary I noticed that Pozen had received two awards for its poster on the data. One of the awards was the ACG’s prestigious Presidential Poster Award. Again, I hadn’t seen the data, but clearly the ACG Educational Affairs Committee had, and if Pozen won the Presidential Poster Award, a recognition awarded to the, “Most highly ranked abstracts selected for the poster sessions in each category…”then I assumed the data was outstanding. As it turns out, I was right. The data was pretty impressive.
Is It Happening Again?
Lately I’ve been watching shares of Neuralstem (NYSEAMEX:CUR). The company recently completed a phase I trial testing NSI-566, a mixture of human neural stem cells injected directly into a patients lumbar or cervical spinal cord for the treatment of Amyotrophic Lateral Sclerosis (ALS). The phase I trial was a 15 patient open-label design. Neuralstem published preliminary results from the first 12 patients of the trial in Stem Cells (2012;30:1144-1151). Since that time, three new patients and three returning patients have received new injections of NSI-566.
Analysis of the ongoing phase 1 trial in ALS continues. The final patient was treated with five unilateral cervical injections in August 2012. The last three patients treated (patients #16, #17, and #18) all previously completed ten bilateral lumbar spinal cord injections (patients #10, #11, and #12). The data published in Stem Cell showed clear signs of disease stabilization in a subset of ambulatory patients on the ALS Functional Rating Scale (ALSFRS-R), as well as a Forced Vital Capacity (FVC) and Hand-Held Dynamometer (HHD) scales. If we know anything about ALS, it’s that it is a rapidly progressive and degenerative disease. Patients do not spontaneously stabilize.
One patient (#11), named Ted Harada, showed significant improvement in motor function. Mr. Harada’s improvements were so much so that he was able to walk without a cane. Physicians even had to re-diagnose his disease to confirm ALS after his unprecedented improvement following lumbar spinal cord injections of NSI-566.
Similar to what we saw above with Sarepta and eteplirsen, Mr. Harada discussed his results with local media (source). An article by Crain’s Detroit Business (link) highlighted the success of Mr. Harada, and another ALS patient, Ed Tessaro, after receiving another round of treatment. There’s even a video interview of both Mr. Harada and Mr. Tessaro discussing their experiences with NSI-566.
In October 2012, Neuralstem provided a brief safety update on the phase I trial. Dr. Eva Feldman, MD, PhD, principal investigator of the trial, presented safety results from all 18 procedures at the American Neurological Association (ANA) meeting. Results show intraspinal transplantation of NSI-566 to be safe and feasible in patients with ALS.
I expect to see another update on these patients in early December 2012 at the ALS/MND meeting in Chicago, IL. Final results from the study will be available in March 2013. I am eagerly waiting for these results, especially from the three patients that received both lumbar and cervical spinal cord injections, which includes Mr. Harada, Mr. Tessaro, and another patient. It’s these cervical cord injections that are thought to have an impact on things like breathing and swallowing. Respiratory failure is the primary cause of mortality for patients with ALS.
Watching the videos and reading the media stories on Ted Harada, one would think NSI-566 is a miracle drug for ALS. But we caution investors that Neuralstem’s phase I trial was small – only 15 patients total. And of the 15 patients treated, only six received cervical injections. In fact, two patients are dead and six patients injected that were non-ambulatory prior to treatment with NSI-566 showed no signs of improvement. NSI-566 creates neurogenesis, but it seems only in the presence of existing healthy neurons. These patients were too far gone, unfortunately, for the drug to work.
What To Think
I’ve been a stock analyst for the past 14 years, and before that I was a bench scientist for 4 years. As an ex-scientist, professional investor and analyst, you can’t help but be skeptical of this type of information. It’s anecdotal, and dangerous. Then again, as a human being, you can’t help but hope it’s true.
There were clear signs that the Sarepta trial results were heading in the right direction. Not only did the preliminary results show statistically significant improvement in the 6-minute walk test (6MWT), but dystrophin levels were also higher in patients taking eteplirsen. This turned the anecdotal into the scientific. There was basis to believe eteplirsen worked prior to the final study results.
Results from Neuralstem’s phase I trial clearly show anecdotal evidence of improvement. Mr. Harada’s disease was rapidly progressing prior to his first treatment with NSI-566. He walked with a cane and got winded after only a few steps. He was too weak to pick up his youngest child. He couldn’t even open a Ziploc bag. A few months after this first treatment with NSI-566, Ted Harada was walking, without a cane, in ALS fundraiser rallies, some as long as 2.5 miles (source).
But there’s scientific evidence of improvement as well. Below are the results for Groups B and C (patients #7 through #12). Note the improvement by patient #11 (Mr. Ted Harada) on the ALSFRS-R scale, as well as stabilization for patients #10, #12, and #8. ALS is a rapidly progressive disease, so even 200 to 300 days of disease stabilization is clinically meaningful. These groups also showed signs of stabilization in Forced Vital Capacity (FVC), a measure of lung health, and Hand-Held Dynamometer (HHD) readings, a measure of muscle strength in the legs.
Are Neuralstem’s expected results in early December 2012 or full results in March 2013 a slam-dunk? No, far from it. ALS is a horrible, debilitating disease. Stabilization, let alone improvement, would be a huge win for the company. But the phase I trial is primarily a safety study, and with only a small number of patients enrolled, there will be limited statistical analysis. The efficacy evidence will be anecdotal, and come through patient stories, blogs, and videos found on the web. Like DMD, ALS seems to lend itself well to this sort of sleuthing. Start surfing, and delve deep.