I sold my stake and am closing this out. To other longs who actually cared about the drug/patients...it looks like we lost this one. It's time to cash in and live to fight another day. Best to you all.
Thank you for these points and I am in complete agreement.
BXLT will certainly have to examine this very closely. It goes without saying that CTIC is being valued as if PAC is completely dead, but of course we don't know what was meant by "dose-finding studies".
Your point #1 is exactly what I was thinking. If there is a clear signal (or even an unclear signal) there may be a dose that it's linked to. This would not shock me and it could even make sense. I'm a little concerned that Persist 2 wasn't the best study design, but I'm not an expert in clinical trial design so will not offer much thought there.
Your point #2 is equally valid. However, the only reason I wonder about this is because I would think they would want to keep it completely away from patients if it was at all toxic.
The combination of BXLT being so aggressive in expanding PAC trials in many indications and the FDA being so accommodating leads me to believe that Persist 2 showed the signal that raised the most concern. No way does BXLT expand into all of these studies with a clear death signal in Persist 1. Also, no way does the FDA not catch this since the US clinical trial sites were good sites. If it's the high dose in Persist 2 then that may make things interesting.
PAC is definitely core to BXLT's oncology business and their revenue models. Shire wants to get their deal done with BXLT by mid-2016 so that gives some time to get this worked out.
There is much to gain if the FDA meeting goes better than expected and nothing to lose as CTIC is being valued way below cash at this stage.
Earl mentioned the Elan trial from years back, but I don't recall those details. This is the first time I have seen this personally. Someone with more large pharma experience may have seen something similar.
It stinks for sure. I suspect we will have an update soon. It would be good if CTIC could meet with the FDA before talking with investors simply because it sounds like the communications from the FDA were vague. CTIC will have to go in there with a team of experts including superior stats people.
I do think your earlier point is an interesting one. Why would the FDA even mention dose ranging studies? It's quite bizarre. If it was truly all bad and patients are clearly dying then the last thing they would mention is dose ranging studies.
So far all we know is the bad news so I'm really looking forward to a real update/opinion. And it would be extra nice for Baxalta to speak up considering they're a big part of this program and there is no getting away from that. They are completely tied to CTIC in that sense and they could be a target for lawsuits simply because they validated the program by launching so many additional studies. They have to stay close with CTIC. That's how I'm seeing it right now. We'll see. We need that update STAT as you said.
This makes it even more shocking that the FDA ever would have allowed them to file for approval with only one trial. The situation is just too bizarre to rationally understand. I mean the FDA encouraged them to file with a study that the FDA is now saying had these safety signals. My take is that the drug showed more deaths than Jakafi in Persist 2 and it may be as simple as that. Jakafi was used at a lower dose and caused less death so maybe in that sense it's a dosing issue in that these very sick patients simply couldn't tolerate the higher dose of PAC. Now that is reading tea leaves because we know nothing. It's also just as much that an overzealous FDA member is connecting the dots between random and non-statistical signals.
Shire came out today and said their BXLT acquisition is on track so it looks like that will move forward. However, my thought is that Shire/BXLT will have to deal with CTIC and either return rights or find a way to come together to make this work. It goes without saying that the bandwidth of Shire/BXLT far surpasses anything that CTIC has. It also goes without saying that BXLT expanded PAC into many studies because of its great potential. There is no way a solid company like BXLT makes that type of decision without strong DD. This gives me some hope that they will fight for this drug at the FDA. This their baby too so they can't just walk away.
BVF is probably the best news we have. Activist investors tend to return funds to themselves and shareholders. They are common holders and have a BOD seat so there are also limitations on their ability to sell. I am happy to have them here. If PAC has any value (as Earl was right to point out that they're still asking for studies and data) then a group like BVF will be best suited to decide how to squeeze the value out of it.
In keeping with my last email, it does open the door to the possibility that CTI really hasn't had a chance to discuss the data with the FDA and a competitor was successful in spooking the FDA. This stinks of some type of hit job.
I don't know the best path ahead. You would think that CTI would be able to make a strong case when they meet with the FDA. Earl could be right that a black box may be what happens here for patients with very low blood platelets with perhaps lower doses. It does sound like there was a dose connection.
Anyway, I'm just trying to figure out if any of this can be salvaged. I find it hard to believe that a program can be killed so suddenly without super strong data clearly linking cause/effect.
And on this note, and it's a weird question, could you file a lawsuit against a competitor if they slandered your company/data and caused the FDA to completely change course?
The only silver lining that I see here is that BVF is stuck in this too and at least they have a lot of skin in the game and have a BOD seat (and will get another). It may be that the best path forward is trying to sell CTIC off. I actually had hoped for a buyout earlier as I really don't like holding through regulatory review periods. I've been burned before but never as bad as this....
Doesn't it surprise you that BXLT expanded into so many other indication if there was a clear safety signal?
I'm really struggling with this. BXLT is a sophisticated company so why did they jump all over this opportunity and then aggressively expand the potential indications. It's really difficult to understand. This was sort of like the ultimate tease since CTIC was allowed to file with only one trial and then the FDA does a complete 180 and kills the program. This brings me to another point that I recently discovered. CTIC filed a prospectus on 12/4/16. I think you will reach the same conclusion as me when you read it. It sounds like a CTI competitor openly challenged PAC's safety and efficacy and this may ultimately be why the program was halted. It's hard to know, but clearly some fight was going on.
In it was disclosed this:
On December 3, 2015, we received a letter from a potential competitor for pacritnib dated December 2, 2015 alleging, among other things, that certain oral statements made by us regarding the safety and efficacy of the potential competitor’s drug and pacritinib were false or misleading. The potential competitor has demanded that we discontinue such messaging and take appropriate corrective actions to remedy those statements. Based on a preliminary review of this letter, we believe that the claims in the letter are misguided and that the letter was motivated not out of any concern regarding the safety or efficacy of pacritnib but rather for competitive purposes. We intend to respond to this potential competitor in due course, indicating our strong disagreement with the conclusions drawn in the letter.
If they knew it would be disgusting on a level that I'm not sure one could stomach. This brings up another whole topic.
When they raised money they did so at 1.10 and 1.25 primarily. One of the largest investors was BVF and they now have a board seat so they are in this thing too. You may remember the strange trading action when BVF originally came in at $1.57 and then again heavily at 1.10. Lots of insiders were selling heavily at that time including BOD members. It was an ugly situation.
What I do know is that those were preferred rounds but the preferred converted to common as I recall. Did you follow this at all?
I remember that all of the long term performance awards were replaced with new options with a 1.24 strike for Bianco. He also holds 2.26 million shares (or around that) so his skin in the game has narrowed drastically.
Certainly the agenda for all involved is to get as much money out of this as possible. One would assume that BVF is the most damaged here since they own so many shares...around 44 million or so. BVF is an activist investor or so I've heard. What do you think their next move will be?
I'm assuming their N1 or N2 preferred shares have largely converted to common, but it's impossible to get this information. If they are largely exposed (and stuck with common) then it stands to reason that they will push for an exit.
One has to wonder if CTI can be sold off. PAC was the obvious lead asset but there is a pipeline (even though many here don't seem to think much of it).
What do you see happening?
Do you believe that Blackrock was one of the investors in the recent preferred rounds? I'm just trying to figure out when they invested and at what price level.
Am I the only one who finds it very odd that the FDA gives breakthrough therapy designation and then pulls this? Why gives BTD is you're already concerned about an increased mortality signal? Defining "signal" is very difficult as well. One case is a signal to some statisticians even if there is no statistical significance.
The patients in Persist 2 were just so sick so it was likely to see adverse events there. What this may really come down to is a poor clinical strategy by CTIC and Baxalta. Persist 2 is probably the kind of study you do once you're already on the market and doctors know the drug. In other words, going against the market leader may have led to massive headaches.
They will have to flush the data out and really figure out who had an SAE and who didn't. One thing is clear, Baxalta was very aggressive in expanding trials so it seems unlikely that they were seeing major signals.
Baxalta is also very quiet about all of this. They have a good relationship with EU regulators (so I would think anyway) and I'm looking forward to hearing what happens there. We need more details. We're literally having to guess and it's just so inappropriate that we have no color to this.
The FDA has one stats guy...I can't remember his name but he's legendary for his brilliant mind (I say that with a hint of sarcasm) and his very intense approach to splitting hairs. They are going to need to hire the very best to argue their case. EarlGross made good points. The FDA is still making requests. That doesn't happen when a program is totally dead.
It's so hard to know what this means and I'm sure you're feeling just as frustrated. In Persist 1 it would seem to me that you would see more deaths after crossover because therapy was failing these patients already or they wouldn't have crossed over...unless I'm missing something. In Persist 2, they were treating the sickest patients so you would again expect to see a higher death rate.
It would be interesting to see how Jakafi patients fared when going against BAT after crossover. Jakafi was never studied in patients with platelet counts as low as what we had in Persist 2 and maybe that was very wise. They realized how sick these patients were.
On the surface, it almost feels like CTIC is being punished for actually trying to treat the sickest patients.
It's really clear to me that CTIC needs to hire the best statistician they can find to discuss this with the FDA's person because these studies are not always clean and clear. I'm really disappointed that CTIC and BXLT were not prepared for the worst-case (or maybe they were). I'm even more surprised that a partial turned into a full clinical hold this quickly.
CTIC is being careful about saying anything and I suspect that they will be meeting with the FDA ASAP. They need to get some clarity to investors immediately. This is in total free fall because no one knows what is happening. It's just a bizarre situation.
I am going to write more later as I'm at work. I have some things I want to say to you and Earlgross2.
I completely hear you and agree, but the information we have is too incomplete. I would really like to hear from Baxalta. Perhaps they will return rights and are not going to say anything, but we need more data. This is crazy. Investors are being forced to go completely blind.
Hello my friend. This has been a hard couple of days as you can so easily understand. I am going to respond to you more later, but I agree with everything you are saying. My quick response is that this makes no sense to me. These are likely the sickest patients (and perhaps most likely to have SAEs) and severe adverse events are monitored very closely. It's very hard for me to believe that Baxalta would have launched PAC into so many new clinical trials if they have any inkling that this could happen. The FDA is looking at dosing schedules which is very odd. I agree with you. If they're looking at dosing schedules then they must see some potential market for the drug.
The FDA likes to have a meeting with a company to discuss these types of things so I suspect that CTIC and BXLT are being so quiet because they too are trying to figure out what has happened and how to move forward. Baxalta certainly must have been privy to the same information that CTIC had so this is just so odd. In other words, it doesn't appear that CTIC or Baxalta were covering things up.
I also remember Elan so thank you for reminding me about this. A black box warning could certainly be very possible if it turns out that the SAEs can clearly be linked to the drug. I don't recall the Jakafi data, but I don't think that it was completely clean. Also, I don't think it's crazy to consider that a competitor to CTI may have been pounding the table at the FDA to try and limit the market for PAC and maximize it for themselves. This is more of a conspiracy theory but I think we all accept that these types of things do occur.
Am I correct that the crossover patients were the very sickest? This would mean that the other therapy had failed them. Also, one has to wonder if perhaps coming off the other meds caused a withdrawal and this was the cause of the increased SAEs.
One has to wonder what the EU authorities are saying.
So what will Baxalta do? They are very exposed to this asset and it's part of their deal with Shire. Do you think they will just dump it?
The fund is the only silver lining because BVF has a board seat and BVF is an activist investor. It's time to start thinking about selling CTIC. We're trading at cash and there is a decent pipeline here that was never assigned value by Wall Street. There also is a carry forward loss that can be exploited to some extent.
There is also the slight possibility that the FDA is overreacting to unclear signals in very sick patients. I would like to see how the Rux group looks. That will be critical. What we don't know is what BXLT is thinking. My hunch is that they will pull out of the collaboration, but it's not so simple. They are in talks with Shire and this could be upsetting to that deal. Also, just because the FDA halts things doesn't mean the program is dead. Geron was also under a full clinical hold at one time. If BXLT believes in this program then they should buy the company and see it through. Give investors an exit which will all want.
There is something that doesn't feel right about what the FDA did. How did the safety review panel not catch this. Is the FDA being completely ethical or there other influences at work. It's very unclear.
Anyway, the bottom line is that we are at cash now. $1.00 seems to cheap if you add up all the other assets and future revenue streams plus the carryforward loss. If this can get $1.50 I think they should take the exit and allow another group to advance PAC. I'm just shocked that Baxalta has been so quiet. It makes no sense. Our newest shareholder (and BOD member) is an activist so I suspect that they will become active. No way are they okay with this kind of massive loss so soon after investing.
Where CTI will have to be careful is a hostile takeover. The stock is so low that a company really could take them out pretty easily. It's painful for the acquirer but with the price this low it's not nearly as painful as it once would have been.
The partial hold makes no sense. Do you think Incyte is trying to pressure the FDA? I'm happy that we have Baxalta and/or Shire because political power and sophistication is important in this game.
Have any analysts made comments?
The next very important news event I'm waiting for is the naming of the new BOD members. BVF has two BOD seats now...I believe a BVF insider will take one and they will bring in someone from the outside to fill the other. That should be happening quite soon.
It looks like Shire will buy Baxalta so CTIC now has a very powerful partner in Shire. This will likely bring some much needed attention to the stock. Also, it has to make INCY nervous. Baxalta doesn't have the same muscle as Shire so this is very good for us. Also, Shire is an aggressive acquirer so that also makes things interesting.
The other big news I'm looking forward to is a possible priority review. It certainly seems justified so I believe it will happen. With priority review it could be possible for PAC to have approval this summer.
I'm not sure about the milestone payments. I have this in my notes, but couldn't locate it when I looked. I may check again later.
Well, I'm not an idiot so if you're holding then keep holding. PAC is not "the next blockbuster drug" but it's a very important drug that is likely to work in multiple indications. Just remember that Incyte was built around a similar (but not superior) JAK.
I don't think anyone can term Glybera a "success". It's not selling in Europe and it was abandoned in the USA. I also noticed that he didn't mention hemophilia. I think the timing seems odd. I hope for good hemophilia data, but I don't like to see CEO's leave just before data readouts and/or FDA decisions. If the hemophilia data is negative there will be a great opportunity to buy much cheaper because there is promise here. I think it will really come down to the vector since it's a bit different from the original that was used in the earlier studies. In theory things should go great, but the resignation of the CEO at this critical time makes me nervous. I'm sure most others here feel the same.
The BMS collaboration was obviously an awesome deal and I'm most excited by that. Otherwise, this is just another gene therapy play in a field that continues to struggle with ambiguous results. I do like the manufacturing capability but you need something to manufacture (for profit) or it's just another cash burner.