23-Apr-2012
PRIMA BIOMED & SIRTEX MEDICAL
Shares plummet after Prima BioMed US listing
ASX Code PRR, SRX

WHEN Prima BioMed's chairman Lucy Turnbull and chief executive Martin Rogers rang the Nasdaq's opening bell in New York on Monday night celebrating its listing in the US, it produced a reaction they probably weren't expecting.

Since then the high-performing biotech's stock has fallen about 15 per cent. Possibly this is a portent of more to come. Prima is developing a treatment for ovarian cancer and at 22¢ its market cap is $256 million. This is hefty for a company that isn't forecast to make a profit for at least another four years (if it even does).

The clinical results Prima BioMed has come up with so far do not seem to support its share price rise from 2¢ or so in early 2009, to peak at 39¢ this time last year. The full results of its preliminary (phase 2) are due out in the next few months, but what we know so far is that the data from 21 patients "has not demonstrated statistically significant results" in the words of a report by Nomura Equity Research.

Prima is one of the new breed of "biologic" drugs, made from cell lines that are almost impossible to copy, rather than the simple chemical synthesis used to develop small-molecule drugs such as aspirin. Its CVac vaccine is designed to prevent the recurrence of ovarian cancer after surgery and chemotherapy. Dendritic cells are taken out of a woman's body and then "sensitised" to ovarian cancer and reinserted. When a woman's cells sense ovarian cancer these cells take it to the immune system and destroy the cells, in theory.

Advocates tout the performance of US biotech Dendreon, which has a similar "immunotherapy" for prostate cancer. Owing to supply issues its shares have halved in the past few months, but its market cap is still $US1.4 billion ($1.3 billion). The big difference between the two is approval. Prima has a long time in the wilderness before the final results of its crucial late-stage 800-patient trial. Also, we haven't heard a peep out of the big pharma.

Cancer is a high-risk game, even for biotech's.

Developing silver bullets for cancer is at the high-risk end of the biotech sphere for investors. It is a fast-changing field where results are measured in the extension of life, sometimes by a matter of days. One moment a therapy might seem to have a lot of promise, the next it gets blown out of the water by some other drug.

One of the most successful companies in the space is Sirtex Medical, which announced last month that sales for its liver cancer treatment increased 34 per cent for the third quarter. That's right, it actually has sales, and a price-earnings ratio of about 20 times. 

And get this: it's paying dividends.

Sirtex's shares have rocketed about 50 per cent since in the past five months, and to our knowledge it's board members haven't been ringing any bells.


Source: Fairfax, 23 April, 2012

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