When Researchers Attack, Investors Lose

Drug investors have to watch out for a lot of things that can change their stock's price: earnings reports, clinical trial results, competitor's results, and FDA decisions. Fortunately, most of them you can see coming.

Academic papers about drugs, on the other hand, are a little harder to predict. Worse yet, it seems like many academics are out to get drug companies. It's kind of in an academic's nature -- I know, I used to be one -- to prove someone wrong. It's second only to discovering something novel. And, for some researchers, sticking it to a rival is second to none.

Almost an analysis
The easiest way for a drug to get thrown into the fire is by someone running a meta-analysis of previously run clinical trials. By combining the results of multiple trials, side effects can often be seen that wouldn't show up in individual, smaller trials. Meta-analysis can also be used to compare two products, as was done in this study comparing Johnson & Johnson's (NYSE: JNJ) and Boston Scientific's drug-eluting stents.

Retrospective studies aren't very rigorous; forward-looking hypothesis-driven trials are much better. But that doesn't keep researchers from running them.

Perhaps the most famous of recent meta-analyses was Dr. Steven Nissen's study showing that GlaxoSmithKline's (NYSE: GSK) Avandia is associated with an increased risk of heart attacks. Sales subsequently fell, and three years later we're still arguing about the validity of the results.

Will the bleeding ever stop?
A new analysis of data used to get Eli Lilly's (NYSE: LLY) blood thinner Effient approved doesn't paint the drug in the best light.

The article published this week showed that patients taking Effient had a 43% higher rate of solid tumors, other than brain and some skin cancers, compared with Bristol-Myers Squibb (NYSE: BMY) and sanofi-aventis' (NYSE: SNY) Plavix.

Sounds bad, right? But we're talking about an increase in the rate of solid tumors, other than brain and some skin cancers, from 0.9% to 1.4%. In absolute terms, it's not very likely that you'll get cancer taking either drug.

Researchers think they have a plausible answer for the increase in cancer: Effient works by inhibiting blood platelets from sticking together, which may curtail their side job of trapping cancer cells before they have a chance to form a tumor.

Lilly says the Food and Drug Administration looked at the increase and wasn't worried about it enough to justify not approving the drug. (The agency also breezed over a higher -- but unexplained -- cancer risk in patients taking Merck's (NYSE: MRK) Zetia.)

Except for a mildly exciting pharmacy stocking when Effient launched last year, sales have been downright pathetic compared with Plavix. The newest data aren't going to help.

Source: Company releases.

Questioning researchers' motives
The Juniper trial, which demonstrated a benefit for AstraZeneca's (NYSE: AZN) Crestor in patients who don't have high cholesterol, has the potential to send sales to the moon. But a "critical reappraisal" of the study published this week is questioning the validity of the trial because nine of the 14 authors of the trial had financial ties to AstraZeneca.

Medical journals have gotten better about disclosures, but the fact that researchers have financial ties to companies is always going to be an issue for some. Fortunately, the data speaks for itself and AstraZeneca can continue its push to expand Crestor's use.

What's an investor to do?
The actions of researchers, sometimes with an ax to grind, can't be predicted. There's not much investors can do except to be prepared for the potential repercussions. Make sure you're being adequately rewarded for owning drug companies because they offer risks that aren't seen elsewhere.