Investopedia: MELA Gets A Surprising "Yes"

When it comes to the FDA these days, almost anything is possible. In the last year, the agency has blocked applications that seemed like slam-dunks and granted approvals to long shots. Even though the FDA's position on MELA Sciences' (Nasdaq:MELA) MelaFind during the company's advisory panel meeting could best be summarized as "over our dead bodies," the FDA surprised the market Monday morning by issuing an "approvable letter" to the company, and MELA's stock is likely to soar in the immediate aftermath. (For more on the FDA, and the effect it can have on stock prices, read Pharmaceutical Sector: Does The FDA Help Or Harm?)


Not Quite "Yes," but Close Enough
The FDA has not given the company the green light to start selling the MelaFind device yet. What an approvable letter means, in essence, is that the FDA finds that a device is more or less approvable as is but there have to be some additional changes to labels, user guides, training, and post-approval trial guidelines. Importantly, these issues never require a second clinical trial to resolve and I cannot immediately recall an example in the last 15 years where a company and the FDA were not able to resolve these issues and go from "approvable" to "approved."

In other words, while the company will not begin shipping MelaFind to U.S. doctors on Tuesday, the finish line is very much in sight.



Read the full piece at the link here:
http://stocks.investopedia.com/stock-analysis/2011/MELA-Gets-A-Surprising-Yes-MELA-CYBX-ABMD-GIVN-ATRC-SPNC-HNSN0926.aspx

Investopedia: Should Biotech Investors Go Where Institutions Won't?

Some investors find safety in numbers, while others dream of discovering the next big thing long before the big institutions. When it comes to biotech investing, though, investors may want to consider just how wise it is to invest where the big institutions fear to tread. While nobody has a fail-safe method of identifying the best biotech stocks, it seems like investing in biotechs with minimal institutional support is a gamble that just isn't worth taking. 

Framing the Problem 

The biggest problem with biotech, and the biggest reason why there can be such outsized gains for investors in the industry, is that nobody truly knows if a drug will work (or be approvable) until very late in the process. Pick the right stock, Alexion (Nasdaq:ALXN) in the late 1990s, and the rewards can be enormous. Pick the wrong stock, say Essential Therapeutics or Shaman Pharmaceuticals, and it can result in a big (if not total) loss of capital. 

A few biotechs manage to muddle along, posting just enough promising early trial data to keep accessing the capital markets, but for the most part investing in biotechs with no approved drugs is a binary outcome. With that sort of expected outcome tree, it clearly makes sense for investors to use all resources at their disposal to winnow the list of credible investment candidates, and institutional support may be one metric to consider.

To read the full piece, please click the link to Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/Should-Biotech-Investors-Go-Where-Institutions-Wont-ALXN-YMI-ZIOP-ONTY-MNKD-NEOP-MELA0707.aspx

MELA Sciences' New Device - Will It Be Approved?

On Thursday, would-be medical device manufacturer MELA Sciences (Nasdaq:MELA) got its day in front of an FDA advisory panel. Despite an unrestrained barrage from the FDA regarding the utility, safety and efficacy of the company's investigational device, MelaFind, the panel nevertheless gave an equivocal vote on the device. In the final tally, the panel voted that the device was safe and effective, and very narrowly voted that its potential benefits outweighed the risks. 

Will The Panel Sway a Skeptical FDA? 
Here again is the time and place for the boilerplate notice that although the FDA often does follow the advice of its panels, it is not obligated to do so and has in the past issued decisions contrary to the panel's vote. This seems to be an example of another case where that is likely.

I have worked in the medical device industry as a securities analyst and consultant for nearly 15 years, and I have never seen the FDA object to a device with as much rigor as they directed toward the MelaFind. There have certainly been debates and disagreements in the past; panels for medical device makers like Cyberonics (Nasdaq:CYBX) and Therasense (now part of Abbott Labs (NYSE:ABT)) featured some intense disagreements and pointed barbs, but nothing quite like this.

The link below leads to the full article:
http://stocks.investopedia.com/stock-analysis/2010/MELA-Sciences-New-Device-Will-It-Be-Approved-MELA-CYBX-ABT-GE-SI-PHG-ALR1119.aspx

FDA Locked And Loaded For MELA Sciences

The FDA has been playing a rough game of "Whack-A-Mole" lately, smacking down would-be drugs in the fields of obesity, diabetes and psychiatry, and hitting the stocks of companies like VIVUS (Nasdaq:VVUS), Arena Pharmaceuticals (Nasdaq:ARNA) and Alexza (Nasdaq:ALXA). With a very aggressive pre-panel meeting review, investors are now extremely nervous that the agency is about to do the same to MELA Sciences (Nasdaq:MELA) and MelaFind, the company's would-be testing device for melanoma (a very serious type of skin cancer). 

A Consummate Binary Event
For investors who are not familiar with the term "binary event", the FDA's ultimate decision on MelaFind is a very good working definition. While large medical device companies like Stryker (NYSE:SYK) or Medtronic (NYSE:MDT) need FDA cooperation to thrive, it is more of a matter of survival for MELA Sciences.

If the agency grants approval, the company will be able to enter a large field with no other comparable competitive device option. If the agency refuses to allow MELA to market this device, the company has nothing else in its bag and will effectively be a zombie company. In other words, the stock will go up a lot if the FDA approves MelaFind, or down a lot if MelaFind is rejected. Not surprisingly, then, there has been a huge amount of stock shorting interest and option activity going into Thursday's panel meeting.

To read the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/FDA-Locked-And-Loaded-For-MELA-Sciences-MELA-VVUS-ARNA-ALXA-MDT-SYK1116.aspx