Short-term investors are responding to dilution concerns. Any long-term investor has to know that further dilution is inevitable. What the long term investor would like to see is for that dilution to come after a P3 approval and to be put toward the commercialization costs of Cabo for treatment of late-stage prostate cancer. An anticipated acceleration in expenses suggests that event may be on the horizon. On a sidenote, it is starting to look as though the recent $76 million secondary was well-timed and necessary. For once, it looks as though management may have gotten it right in this respect.
Point well taken. Management went to great lengths to avoid discussing anything related to the future of Cabo in CRPC. Yet, it seems pretty clear that they are anticipating an acceleration of expenses as the company moves through 2014. That they are budgeting for these outlays implies that they are anticipating approval and the timeline for approval is near enough in the future, that follow-on marketing and implementation costs will occur in 2014 rather than 2015. Though management was tight-lipped about anything related to the P3 trials, they "tipped their hand" regarding expectations by acknowledging an acceleration in expenses in 2014. I think investors responded negatively to the accelerated burn rate, when in fact this acceleration may have given a very strong hint of positive expectations within the company - something no-one seemed to want to acknowledge on the conference call (justifiably so).
Ronald Reagan once told the following story:
The parents of two brothers - one an incurable pessimist and the other an incurable optimist - took their sons to see a doctor in the hopes of curing the boys of their respective conditions. The physician started with the young pessimist. He took the boy into a room brimming with a mountain of new toys.
"These are all yours," the doctor said.
Immediately, the young pessimist burst into tears. "What's wrong?" His parents asked. "If I play with the toys, "the boy sobbed, "surely they will all break and be ruined."
Next, the doctor tried his hand with the young optimist. Instead of toys, the doctor took his patient into a room filled with a mountain of horse dung. "This is for you." The doctor told him.
With that, the boy smiled, so wide he could have eaten a banana sideways. Excited, he raced to the top of the mountain of manure, where, with his bare hands, he began digging into the pungent heap. Baffled, the doctor and the parents looked at one another quizzically, "Son," the father asked." What in heaven's name do you think you're doing?"
"Well, the boy replied, with all this horse dung, I figure there's got to be a pony in there somewhere!"
Am I looking for a pony when I ask the question of whether management may have tipped its hand some when it revealed a higher than expected burn rate in 2014? Your burn rate accelerates when you have product to roll-out, not when when your product is rejected by the regulator. Comments?
It is nice to have you as a resource. Your understanding of the biotech industry and the machinations of drug studies is always helpful and appreciated. Thanks for being here and giving your input.
He ain't me and you aren't mine and I share no kinship with a Hoosier.
You hit the nail on the head though with regard to my failure to consider that the survivors could be patients that are not receiving Cabo. The possibility never occurred to me. Duh. I am probably a huge disappointment to you as your co-conspirator here on the MB. Sorry.
Thank you for that clarification. Indulge my naive bliss and let me play the angel's advocate here just a bit longer. You say "the triggering event may have occurred weeks or even months ago, but the company has not received those results from the DSMB yet." Given that we are talking about OS and not PFS, how much scrubbing, interpretation, and evaluation is necessary when the event is death? To use your metaphor about the "wild west," even Wyatt Earp could tell that Clanton and the McLaury brothers were dead without dissembling into an existential consideration of whether or not death is indeed an endpoint or a transitional event. Why would a bunch of Ph.D.'s struggle for months to interpret results based on an endpoint that my stupid - even by dog standards - mutt figure out with a few quick sniffs?
In regard to the difficulty of making assumptions about control arm performance, doesn't the prevalence of prostate cancer and its relative indolence in comparison to other forms of cancer offer a more predictable subject for speculation?
Help me understand why more time does not equate to more drug efficacy. For example, if I am not mistaken, we are still waiting on OS data from the phase three MTC trial. If the data runs past its expected release date, why isn't it fair to assume that the survival data isn't going to be better given the delay. Again, correct me if I am mistaken, the trial results are due after a certain number of events occur. Since we are looking at OS, I presume those events to mean deaths. Why shouldn't I conclude that the average OS is expanding with the life spans of those patients who have yet to die? My apologies in advance if this question reveals my ignorance about this subject.