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eResearchTechnology, Inc. Message Board

  • alcideholder alcideholder Apr 21, 2005 9:26 AM Flag

    Why ERES has fallen and can't get up

    I believe that ERES has fallen and can't get up because there is a significant likelihood that non-clinical trials may be sufficient to preclude the need to conduct any clinical through QT under the E14 guidance. Rashmi R. Shah a member of the ICH working group outlines this issue in the paper that you can purchase by following the link below. The paper was prepared to solicit comment on revising E14 guidance. He states that since the initial concept paper for E14 was introduced there have been a number of studies that indicate that QT prolongation can consistently be determined in non-clinical trials. In other words, there may be no reason to conduct any clinical through QT trials at all because they could be conducted in non-clinicals. I am not an expert and you can read the paper and draw your own conclusions but I do know that if the next round of guidance provides that non-clinical trials are sufficient to preclude the need for clinicals then the vast majority of Eresearch's business will disappear overnight. I sold my entire position once I figured this out. I could be wrong and would be happy to hear any comments on this analysis. I really liked the prospect of ERES initially but after doing my due diligence this information was too disturbing. I feel that there is too much risk that non-clinicals will be found to be sufficient to establish QT prolongation. It is my understanding that at the DIA Public Meeting on April 11-12 that representatives of Pfizer took the position that recent studies suggest that non-clinicals should be sufficient to preclude the need for clinical thorough QTs trials. Indeed, it seems that no large pharma's have been enlisting ERES to conduct any trials for some time.

    http://www.ingentaconnect.com/content/adis/dsf/2005/00000028/00000002/art00003

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    • Well, nothing in the preamble gets me worried that thorough QTc prolongation studies would go away. If someone actually buys the report and can provide it somewhere publicly, I'd be happy to read it and comment. Actually it sounds a little like pharmas are worried a mild prolongation of QTc could nix a promising drug even though the QTc studies are at higher concentration of drug in the body than therapeutic doses or that a negative QTc study could allow a drug through which may have concerns based on other studies. Again doesn't imply that QTc studies would go away.
      I congratulate you on being a short who provides a meaningful reason for supporting your position other than "this is a POS". Others take note!

      • 1 Reply to drtkw
      • Following was included in his hotline dated today.

        I received a subscriber question from Ed about eResearch Technology (NASDAQ: ERES) about a paper regarding the draft regulations for QT trials to be considered at the ICH meeting in mid-May. Ed, I bought the paper for $50. All he is saying is that in addition to the QT studies there are other studies that should be done to confirm or not miss a real problem. I don't see how this would affect eResearch Technology significantly.

    • There is a simple answer: competition. ERES has spent too long gouging the market and refusing to deal with the ever increasing threat from effective competitors. They are still the leaders, but the wind is blowing harder in their face, and they have built up a head of dissatisfaction among their clients who are now educating themselves about the marketplace, and other vendors in particular.

      Regarding the Shah paper: the question is not 'does the absence of QT prolongation in preclinical mean I don't have to do a thorough QT study'?. The position on that is clear, and the FDA (and Rashmi Shah) were adamant on that question at the recent FDA/DIA joint session. Absence of effect in preclinical only means you have to CONFIRM this absence of effect in clinical with a thorough QT study.

      The question actually being asked is 'does a POSITIVE effect in preclinical mean that I can skip the thorough QT study, as the preclinical results mean I already KNOW that the thorough QT study will be POSITIVE'. Drug companies would like to factor QT into the decision to go into the clinic, so is there a direct link between positive preclinical and positive clinical findings?

      If a direct link were established it would therefore impact the number of drugs coming into the clinic, but it would NOT impact the need for those drugs to have a thorough QT study unless preclinical definitively showed QT prolongation. In which case the guideline already calls for intensive ECG work throughout the clinical program.

      In addition, while there was some discussion at the meeting about whether there was a direct link between hERG, purkinje fiber assays and clinical findings every regulator and most sponsors in the room agreed on the following:

      - the link between clinical findings and preclinical is not proven
      - there are many factors other than the hERG gene that affect QT
      - QT is not the only cardiovascular finding of interest in a clinical program
      - the guideline as it is currently written will be clarified, but not substantially changed

      So the market is not slowing, ERES is. They should continue to prosper, just don't expect them to make the crazy returns of the last few years.

    • One thing to note is that ERES is not "overvalued relative to peers" as CEOCast keeps hammering home. Its PE is now significantly under Covance.

    • <I should probably not be giving out free advice on this board in the first place. Don't keep pushing.>

      You started by offering the advice. The question is why?

    • How about poor management ????

    • Why do you think Blum has invested so much in this company?

      According to Blum, a thorough analysis is done of every company invested in and an active role is taken in directing each company to profitabilty, resulting in a doubling or more of its investment in a 1 to 5 year period.

      I think Blum views ERES as an undervalued growth company; that is, undervalued compared to its full potential. They will give ERES management the expert advice it needs to overcome obstacles to growth.

      Blum sees something!

    • Hey WBR,
      Since you have a relationship with IR, ( and they actually respond to you.)
      Why don't you email this post and the previous one to them and see what they have to say about this.
      As Artie Johnson ( of Laugh In ) used to say......Verrrrrrrrrry Interesting.........
      Inquiring minds want to know ????????



      Long Term Sentiment ....HMMMMMMMMMMMMMMMMMMMM

    • hippity,

      Thanks for the civil reply. I'm not necessarily in agreement with your position though. I don�t see the CRO�s as competition to the degree that you do. Although in some ways they can be, they tend to be regional and have high costs. It would make more sense to me to partner up with someone like eres and add additional usage than to try to be a one stop shop in a couple locations. Don�t you think that the pharma industry in general is trending toward more of a global footprint and universal guidelines? I get the sense that it�s the way it�s headed. This would benefit eres with a nimble ability to go where the beds and patients are.

      This latest news with Blum and share buyback opens all kinds of possibilities, all of which would be pure speculation�.from taking it private, a merger, a buyout, or just an very favorable establishment of new fda guidelines. If you think about it, Blum has or will hold a very stable chunk of shares. Couple that with the company taking potentially 12.5 mil out of the float, that could be quite a boon for Blum if things were to develop in a positive direction. Blum�s move is key here as far as I�m concerned, especially now that they have taken a board seat. Sans that seat, I was wondering.

      I could speculate, but it wouldn�t do much good at this point so I�ll keep my wildest thoughts to myself for now. Until it becomes clearer, which it will, I will hold. We may all be surprised.

      cub

    • >>>>>>This latest news with Blum and share buyback opens all kinds of possibilities,<<<<<<

      Blum most likely is the reason the stock did not tank after a lousy quarter just reported . Without him, the stock would be in the $8.00 area . The 10 million buyback , i am guessing, was Blum's idea . It should have been announced 2 quarters ago to fight and confuse the short sellers who dropped the stock .50 by couple of 100 shares sold to the bid everyday .

      With him on the board, the stock will be managed in a professional way and there will be less volatility as he would not be trading his shares . The company has good management , but they just do not know how to handle the stock or event news.

    • Bijan,

      Yeah, the Blum investment does have an effect, anytime someone like them takes a stake of that size and gets a board seat it will cause some contemplation.

      What's really interesting is the why of the Blum investment. You really have to wonder what convinced them that there was an opportunity here to the extent of their investment. Consider that they could have invested that same money in hundreds of other companies, they chose eres. Obviously they did their homework, and are in a close relations with eres. Further, they are in the board room, so it's not a speculation for them. It's also a long term venture by the nature of Blums investment history. To me, it would appear they know what they are doing, and it wouldn't matter if the stock went to 8 bucks a share or not. I don't see how they would be hurt if it did, quite the contrary as it would give them a nice buy at a lower range and average out the cost of the high shares they already own. Additionally, it would allow eres themselves to facilitate their buyback of shares at a bigger bang for the buck.
      So, bottom line is it's the mystery of the Blum that's holding this here, yes.

      cub

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