Biotech Bet

12/31/2004 12:00 am EST

Focus:

John McCamant

Editor, Medical Technology Stock Letter

The Medical Technology Stock Letter is always fascinating to read, both for its investment advice and also its general overview of the leading developments in the biotech arena. Editor John McCamant selects an oncology play for his Top Pick for 2005.

"Our top pick for 2005 is Cell Therapeutics (CTIC NASDAQ). The company’s lead drug candidate is Xyotax, which links paclitaxel (the active ingredient in the commonly used chemotherapeutic drug Taxol) to a PG polymer. Xyotax is designed to selectively target tumor cells. And, because the drug payload is not released until it is inside the cancer cell, much of the toxicity associated with freely circulating Taxol is avoided.  This lower toxicity, in turn, allows Xyotax to be dosed more often than conventional Taxol and should translate into better treatment outcomes. 

"We will not have to wait long for proof of efficacy as Phase III results from the Stellar 3 trial, which is testing Xyotax as a treatment for non-small cell lung cancer (NSCLC) patients, are expected in the first quarter. The timeline for the release of the Stellar 3 results was recently pushed back from January to later in the first quarter. Because the trial’s primary endpoint is patient survival, we believe the only explanation is that Xyotax is helping NSCLC patients live longer. 

"We expect the stock to have a major move if Xyotax delivers positive results. Another significant catalyst would be the signing of a partnership for Xyotax. Given the shrinking pipelines of Big Pharma companies, the value of Xyotax is rising. In fact, the drug candidate may be so attractive to Big Pharma that one of them may try and partner Xyotax before data are released and a bidding war ensues. CTIC is poised for a big move in 2005. CTIC is a buy under $9.

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