Antigenics (AGEN): VFC's Take on The AGEN Aftermath and Readers Respond

AGEN: After taking a 40% hair cut on Wednesday after Antigenics received a verbal indication that Oncophage was going to be denied marketing by European regulators, AGEN will be a stock worth watching for at least the rest of the week.

It's my opinion that if good news on the Russian front does not materialize soon - or any other positive developments for that matter - then AGEN could slip back to the sub $1 territory, for the short term.

If that is the case, I'll continue to add shares. I've made no secret of the fact that I like the long term prospects of cancer immunotherapy treatments, and Oncophage is one that is proving to work; I'll accumulate accordingly.

Oncophage is being investigated in the treatment for multiple cancer indications and is currently approved for marketing in Russia. While investors have heard no news from the company regarding the commercial launch in that country, news is due in quarter four of 2009.

QS-21, the company's vaccine adjuvant, is being utilized in 20 vaccines - all in various stages of clinical trials - according to the Antigenics website.

My take on maintaining a long position in the stock takes nothing away from the fact that there's a whole lot of small investors out there that are having trouble getting to sleep at night after the forty percent haircut. I know what it's like to be just starting out and only having enough cash to risk and investment in a few stocks, and then to watch one of those few take a dive. It sucks - no doubt about it.

But Wednesday's over. Pick yourself up, dust yourself off and move forward; BUY, SELL or HOLD based on your DD, not on emotions. It's the ones that quit the game that lose the most. It was tempting for me to give the game up when my portfolio was sitting at over a 50% loss during the depths of the recession in March, but I took a few Rolaids and bought the heck out of the stocks that everyone was selling and it's turned out to be one heck of a year.

The lesson there is that you get your ups and downs, but don't change your overall strategy that's worked for you before; aside from taking into account a few lessons learned.

As for my take on AGEN moving forward, I'll now conisder the stock a mid to long term speculative play instead of a short to mid term play. Wednesday was one chapter in a long story. Let the peanut gallery jump up and down for a day and enjoy watching a few small investors lose money, but rest assured: Antigenics is not shutting off the lights and closing the doors, there's still potential in the company, its products and the stock - in my opinion.

As always, do your own DD and judge for yourself whether the risk is worth the reward and invest accordingly.

I will say this, however, if you're new to the biotech game and Wednesday's dip has you losing sleep, kicking the dog or shouting at wifey, then I suggest investing in a more stable sector or in already-established stocks. It's important to balance dabbling in speculative investments with your own well-being. You don't want it to consume you. If it has, take some time off and come back refreshed and with a clear mind.

Disclosure: VFC is long AGEN.



With all the attention that AGEN received today, I'll hit a few comments and/or emails before calling it a night.

The following comment is from Fer, referencing a couple of articles written by Feuerstein over at TheStreet.com:

Hi VFC,
I would like to know your opinion on Feuerstein today's article on AGEN at The Street. Please note I'm not his admirer but I believe he has a point.

http://www.thestreet.com/story/10614603/1/europe-rejects-antigenics-cancer-vaccine.html

http://www.thestreet.com/story/10596882/1/antigenics-vaccine-booster-baked-into-valuation-biobuzz.html

I'm mainly concern on his following statements:

1. Oncophage failed a pivotal phase III study in kidney cancer and a pivotal in skin cancer.

("Antigenics has previously stated that it cannot seek Oncophage's approval in the U.S. because of the failure of the drug's phase III study.")

2. "The timeline is uncertain at this point," said Sharp, when asked about reimbursement negotiations between Antigenics and the Russian government.

3. "Antigenics will only earn a small royalty on sales of vaccines that include QS21 and this expected revenue doesn't even support the company's current valuation."

"The company's royalty rate for its experimental vaccine adjuvant QS21 ranges from 1.5% to 6% depending on the vaccine, but is generally in the low single digits, said CFO Shalini Sharp in a response to my question after her presentation."

4. "... less than 24 hours after announcing the Russian approval of Oncophage, the company went out and raised $21 million through a PIPE, or private placement sale, through Rodman & Renshaw..."

I'm wondering why do you think Oncophage would be approved in Europe after failing a Phase III study in USA.

How come USFDA and Russia views are so different?

What do you think about Feuerstein's valuation of the company?
If I'm not wrong well below $2 a share taking into account QS21 approval and marketing.

I want to add that I'm heavily invested in AGEN.

Thanks a lot.
Fer

VFC's Take: I'll admit that I haven't read Feuerstein's blogs recently, I only glance at the headlines as they pop up on Yahoo Finance.

I'll address your questions and offer my take:

Q:I'm wondering why do you think Oncophage would be approved in Europe after failing a Phase III study in USA.

VFC: The subset of patients who were shown to benefit from Oncophage were those patients who had earlier stages of cancer. It's long been my opinion that cancer immunotherapy treatments - since they utlize a patient's own immune system - would be more effective if a patient still had an effective immune system which the treatment could utilize to fight the cancer. Once the cancer and chemo treatments have ravaged a patient's immune system, common sense says that a treatment that would utilize that immune system would be less effective. I think that Oncophage is providing evidence to that theory and over the long term I believe that cancer immunotherapy treatments will be tested in patients that have earlier stages of cancer.

I've always stressed here that the regulatory agencies are a fickle bunch, but eventually I think that approvals will catch up the 'earlier stage of progression' data - if that trend continues.

Keep in mind, I don't work in the medical profession, so I'm using discussion with some people in the cancer field and my own common sense to base my judgements.

Q: How come USFDA and Russia views are so different?

VFC: This is Geo-Political question that has to do more with culture than anything else, but as far as Oncophage is concerned, many of the subset of patients that benefited from the treatment were in fact Russian - according to previously released reports.

I also believe that Russia had a bit of that 'medical tourism' that I discussed on Wednesday in mind. Emigration is a huge problem in that country right now and giving the wealthy access to a treatment that they cannot get anywhere else is a way to draw in additional 'tourists'.

However, I get the feeling that the Russian government balked at re-imbursing costs of the treatment for anyone - even their own citizens. The economy has taken a slide in a drastic way in Russia and I'm not certain that they are willing to find the extra money to pay for re-imbursement - especially to a foreign company. that is what I believe is the hold up regarding the Russian launch.

Q: What do you think about Feuerstein's valuation of the company?
If I'm not wrong well below $2 a share taking into account QS21 approval and marketing.

VFC: I'm not sure where he values Antigenics, I haven't read his blog posts, but I will say that he has a habit of picking stocks that have posted huge runs and then say that they're overvalued. That's easy. Let's see him start picking some 'diamonds in the rough' that are undervalued, based on potential. Granted, he does that once in a while, but I think he'd rather find a stock that just gained 1000% and go out on a limb to say that he thinks it will drop.

Thanks for the comment!



From Ian:

HI VFC,

I would also like to hear your answer to Fer's question above. Why do you think that Oncophage is still feasible when the USFDA disapprove it?

Thanks
Ian

VFC's Take: Thanks for the comment. The USFDA never disapproved Oncophage. Oncophage did not meet the endpoint of a Phase III trial so the treatment never made it to the FDA for review.



From Srini:

Thanks VFC,

I been following you for the past 2 months. After DD, I am one of the investors who pulled the plug in AGEN at $2 level. It came as a shock to me this morning to watch my portfolio. I logged back into my account if there is a mistake with the price. After checking the news about AGEN the first think I did is to check you blog. Believe me your post made me feel very comfortable. I am going long on AGEN with their potential. I am a small invester and I would like to average down. Do you think AGEN will hit sub dollar?
Like Rocky "Yo VFC (Adrian)"Thanks and keep up the good work...

-Srini

VFC's Take: I do think that AGEN will hit sub $1, unless good news is released in the short term that would add potential value to the company and the stock. In fact, I would have thought that AGEN would have hit below the dollar mark on Wednesday. It's my opinion that either the big boys are playing their games and taking a breather before dropping it again or there may be other news pending that is propping the stock up for the time being.

If you're already in, my opinion is that it is worth waiting to see how low she drops before adding. That's just my opinion, invest according to your own DD.



From Alejandro:

Hi VFC
Two Lessons learned!!!
Take profit at any spike!!! and only the money in your pocket is real.
I didn´t do that with AGEN when I had the chance because I thought that being aproved in Rusia it had real good chances to be aproved for EU, but apparently I was wrong...
Today I lost the same money I had earned with cvm some weeks ago, that means I have to start again.
Impatience about your thoughts on AGEN (as many others here)

VFC's Take: Two very, very important lessons for everyone, take some profit and a gain is only a paper gain until realized. These lessons are especially important for those investors that have not yet built a cash reserve to have in store in the sidelines.

I will say, however, that don't be discouraged from doing DD and sticking to your basic trading strategies. One good hit on a speculative, low-priced stock (MSBT, TTNP, CSUH) can set up that cash reserve for a long time; althoguh it takes a lot of patience, time and determination to find a gem like that. Just my opinion.



VFC,

I'm sure you are being innundated with questions about CHMP's negative decision on AGEN and the subsequent drop. Nevertheless I am curious what is your take on the company moving forward? The FDA is even tougher so it may be time to jump on AGEN.

Thanks!

VFC's Take: I wouldn't blame anyone for jumping ship after Wednesday's news, it's definitely a setback. Those sticking around will need a bit of a longer term outlook. I'm one that is sticking around for the long term.

Thanks for reading, and Wednesday was a tough day - I'm right there with ya - hopefully everyone had another stock or two that went up to offset the AGEN dip.