Anitgenics (AGEN) to Anticipate a Negative Opinion Regarding Oncophage, According to European Regulators - VFC's Take

In an early Wednesday press release, Antigenics (AGEN) announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA) has verbally notified the company that a negative vote should be anticipated in November, when the European regulators will meet to officially cast their votes.

As a result of that press release, the AGEN stock tumbled by over 40% before settling in at just above $1.20 during mid-day trading.

While many investors who were anticipating a positive review probably jumped ship after the news was released, I took the opportunity to add to my position and I'll explain why.

First, it's long been my opinion that cancer immunotherapy treatments are the next breakthrough in cancer treatment, and I believe that the good ones (the ones that are proving to be extending the lives of patients) will eventually be approved world wide. On that note, I've liked what I've seen from Antigenics regarding the long-term survivability of the patients who have received the treatment when compared to those who have not, according to published reports.

It is also worth noting that it has only been recently that the endpoints of the cancer vaccine trials shifted to survivability from other endpoints, such as tumor progression. Dendreon was able to do that with Provenge mid-trial and therefor they will have met their endpoint when Provenge goes before the FDA next year.

As for Oncophage, we'll have to wait and see the exact reasons for denial and see what the company's course of action will be, if in fact they are denied European approval in November.

As a brief side note, there are headlines out there that are claiming that Oncophage has been denied approval by European regulators, which is false and misleading. After a negative CHMP opinion, it is highly likely that Oncophage will be denied, but if journalism means reporting the facts, then the facts are that nothing has been denied - yet.

Back to the subject at hand, Oncophage, and why I added to my AGEN position on the dip:

In addition to my positive outlook for the long term prospects of Oncophage and cancer immunotherapy as a whole, I would have thought that AGEN would dip to the sub one dollar level on negative news from Europe. It's possible that the stock could continue its slide to lower levels in the coming days, but there is also the possibility that the company will announce good news on the Russia front after the bad news from Europe has settled. Investors may not be completely jumping ship in anticipation of the Russia news.

A commercial launch of Oncophage in Russia, in conjuction with news that the Russian government will assist patients in re-imbursing the costs of the treatments, could push the stock back towards the $2 level, in my opinion.

On that note, I wrote an article months ago where I discussed the prospects of Russia becoming a new destination for 'medical tourism'. Moscow is looking for ways to attract tourism of any kind and there is a growing lobby of medical professionals and patients around the world that support cancer immunotherapy treatments that may be willing to travel to Russia to receive treatments that they cannot receive elsewhere.

'Medical tourism' is a growing sub-culture (although only the financially well-off can afford it) and I believe that Oncophage in Russia has a chance of benefiting from that type of 'tourism', judging by the growing lobby to approve cancer immunotherapies.

It's also possible that the EMEA could change course on an appeal. Most recently (in terms of what I've got in my portfolio) the regulatory agency did just that with Epicept's Ceplene. After an original negative opinion, additional data was provided by Epicept that convinced the EMEA to approve the drug for commercial use in Europe.

The longer patients that have received Oncophage live, the better chances of a future approval, in my opinion, and the most recents results are showing that those patients are living longer - according to the PR trail from the company.

Next, there's QS-21. While Oncophage will be the real money maker for the company long term, in my opinion, the prospects of QS-21 are promising for the short term.

If you invested in AGEN on the prospects of a European approval in 2009, then I fully support a 'ship jump' in order to move on to something else.

Remember, do your own DD and invest according to your own research AND comfort level. Some investors won't sleep for a week after watching the drop today; if that's your comfort level, then I wouldn't dabble in too many biotech stocks in the future.

I'm in this one for the long term and while I did not particularly enjoy Wednesday's news, I did enjoy adding shares for a price that I think will end up being a bargain for the long run. If we do hit the sub $1 level on no additional bad news, then I'll also add at that point.

Like Rocky Balboa said in Rocky 6, "Life ain't all sunshine and rainbows." Today wasn't a happy one for investors of AGEN, but it's also not the end of the story.
If we do see bad news on either of those fronts, then things could get pretty ugly for a while. The next news to anticipate is an update on the Russia front and anything regarding QS-21. DNDN played sea-saw between $3 and $26 dollars for years before settling where it is today.

If your DD supports an 'add on the dip' or a 'hold', then invest accordingly. If it supports a 'sell', then sell; but whatever decision you make, base it on DD and research, not out of fear and other emotional based responses.

Disclosure: VFC is long AGEN.