Rising From the ASHes

The Super Bowl of blood cancer, the American Society of Hematology's (ASH) annual meeting came to a close yesterday. The presentations by drug companies made a few stocks catch on fire, while a couple burned up a little.

Dec. 4 close to Dec. 8 close.

The losers
Celgene's data testing Revlimid in early stage multiple myeloma patients were perhaps the most anticipated results expected at the meeting. Celgene is trying to get the drug used earlier in disease progression and for a longer period of time. Both could result in a nice bump in sales.

Unfortunately while the trial showed a clear benefit in using the drug in a maintenance phase to keep the cancer at bay, it's not as clear that the drug is actually helping patients when used early in treatment. The full data may indeed demonstrate an effect, but until then, investors are skeptical about how much Celgene can increase sales of Revlimid.

Poor Allos. The company was hoping to use ASH as a giant advertisement for its recently launched peripheral T-cell lymphoma (PTCL) drug Folotyn, but Celgene stole some of its thunder by buying its potential rival Gloucester Pharmaceuticals. Investors are rightfully worried about a much stronger competitor, but Glouceter's drug isn't competing against Folotyn yet. Doctors aren't concerned so much about who is selling the drug, so Allos might have had a productive time at ASH even if its stock doesn't suggest as much.

The winners
Like Celgene, Cephalon would like to get its drug Treanda into patients earlier. The drug is currently approved as a second-line treatment for non-Hodgkin's lymphoma. In a trial of newly diagnosed patients, Treanda when combined with Rituxan from Roche and Biogen Idec (NASDAQ:BIIB) delayed the progression of the disease considerably longer than when Rituxan was combined with the standard chemotherapy regimen -- called CHOP.

As an added bonus, Treanda is less toxic than CHOP, which will cause your hair to fall out among other things. Side effects are generally not a major concern with many cancer drugs, but this one could be a selling point to patients with doctors who are accustomed to using CHOP. The chemotherapy cocktail has been around so long that all of the drugs in the cocktail are available as generics.

Ariad's drug AP24534 has only gone through phase 1 trials, but with a market cap under $300 million, it doesn't take much to get investors excited. The drug looks like it has an effect on cancers that have become resistant to other drugs such as Bristol-Myers Squibb's (NYSE:BMY) Sprycel and Novartis' Gleevec and Tasigna. The market may be small, but the competition is too, and there's always the possibility of taking a cue from Celgene and Cephalon and testing the drug as a first-line treatment later.

Yeah, whatever
Geron is most famous for being a stem-cell company, but its most advanced drug, GRNVAC1, is a vaccine to help extend remission of acute myelogenous leukemia (AML). Data presented at ASH from a phase 2 trial suggest that the drug may be helping patients remain cancer free, but it'll take a placebo controlled trial to really know for sure.

Novartis' data for Tasigna was actually pretty positive. The drug is currently approved for use in patients who have failed Gleevec, but in a head-to-head trial, Tasigna outperformed Gleevec. Novartis also sells Gleevec, but it'll lose patent protection fairly soon, so having a replacement that works better than a generic should benefit the company.

Why was the stock flat over the meeting then? The top-line results were already known, but more importantly, Novartis is a large company and, while Gleevec is a blockbuster, it still makes up less than 10% of Novartis' revenue. Replacing sales of such a drug just doesn't have the same impact as expanding sales of an existing drug or developing a new one as Cephalon and Ariad are attempting.

Did I miss any splashes or fizzle outs from ASH? Do you think any of these companies are undervalued at the moment? Let us know in the comments.