POST OF THE DAY
Acusphere, Inc.
Why I'm not Buying Today

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By fedka78
June 7, 2006

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I've been looking at ACUS for a few weeks now, and figured that if the RAMP1 results were favorable I'd jump in just after they were announced, at least assuming the price didn't skyrocket before I could. I saw the PR last night, and went to bed fairly impressed, figuring that in the morning I'd make sure there weren't any lingering concerns and then take a position if the price looked fair. Well, the price is far below where I would have imagined it would be, but I'm still not biting, and I think it might do the board a bit of good to hear from an outsider why he's choosing to remain one.

The point that I can't get past is that we're talking about a screening test here, and although Senior did wax eloquent on the CC about the dangers of sending someone in for a coronary catheterization that they don't need, no one seems to dispute that the primary priority for a screening test is to avoid false negatives. As Dr. Ed himself said in post 831, the big question being answered by the all-important RAMP2 trial is "Is it safe?" (in the sense, as I read it, of whether it won't miss potential heart attacks) Not, "Is it accurate?" which is a related but not identical question.

Management hasn't really laid out all the numbers for us (though during the CC one of the speakers seemed to be referring to some slides that I wasn't seeing which might contain some of them). They've provided a selected few nice-sounding numbers, though, and luckily by playing with those one can tease out some less nice-sounding ones. What they've told us is that 43% of the subjects had the disease (according to the truth standards); that the accuracies of the three AI700 readers ranged from 66-71% (compared to 70% for nuclear); that one of the AI700 readers had a sensitivity of 77%; and that the other two had specificities of 75% and 88%. So high school probability seems to give the following (with the error bars coming from the fact that they didn't say which reader had which accuracy):

          Sensitivity         Specificity
Nuclear       78                  63
AI700 1       77                 58-66
AI700 2      54-66                75
AI700 3      37-48                88

The flipside of the statement that two of the readers were statistically significantly better on specificity than the nuclear stress test is that if their accuracies were only about the same as nuclear (which they were) then in all likelihood two of the three AI700 readers performed worse, by a statistically significant margin, than the nuclear reader on the crucial task of avoiding false negatives. One of them even missed over half of the positives that were put in front of him!

Now I'm not disputing that it's conceivable that with proper training all of the readers could be taught to read just like the first reader listed above did, which would be great. But I'm not going to invest based on what might happen in the best of all possible worlds; I'm going to invest on what we know now, and what we know now does not indicate to me that there's enough of a margin of safety here. If four months from now the RAMP2 results come out and look good, I'll be very interested.

I've lost money before by wanting to see only the best aspects of the mixed results of a biotech trial, and I'm not interested in making the same mistake again. Everything may well turn out great for ACUS, and it's surely absurd to imagine that it's worth 30% less today than it was yesterday, but at this point I still see the risk as too high.


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