Sunday, August 10, 2008

Follow-up Interview with Ken Kam (Part 1)

Last month, Larry and I had the opportunity to interview Ken Kam of Marketocracy ( about the drug industry and Elan Corporation PLC, currently conducting clinical trials on a drug, Tysabri, which could be used in the treatment of multiple sclerosis and Alzheimer’s disease, in particular. Ken predicted a bright future for Elan. Then came two pieces of bad news and Elan’s price came down 60% from its recent high.

Larry and I wanted to follow up with Ken and talk about what happened and what he thinks about Elan’s future. Ken graciously made himself available for us recently and what follows is a summary of our conversation.

When we asked Ken what happened, he replied that these things happen when a company’s value is tied up in clinical trial data, because a lot of investors react to just the headline He feels that when the dust settles people will have a different view when they look at the data. The confidence level for the trial results was at 92% instead of the expected 95%. But, despite trial data showing drug safety and being very close to efficacy at the top level, the stock began moving downward. That was the first piece of bad news. Then came the second.

An announcement came out later indicating that twelve cases of vascular edema and three deaths. As Ken put it, although the three deaths were unrelated to the trial and the cases of vascular edema were safely resolved, unexpected deaths and complications are never good when associated with clinical trial results. (Although, recently neither Ken nor Larry could retrieve that news item.) However, Ken feels that CNBC got the story right in Mike Huckman’s broadcast where he differentiated between those trial participants who had the gene for the disease and those who didn’t. The results for both groups would obviously be different which Huckman got but the market didn’t follow his lead. As the bad news was coming from a medical conference, Ken said, it is very important and can really drive the stock. And, in this case, a lot of people piled on. In addition, there were two cases of PML from the users of Tysabri in Europe. Although it looks like both patients will survive, one is already home from the hospital, PML can be deadly.

Ken went on to say that investors need to look past the headlines and get into the specifics to understand what’s going on. Analysts can be off the mark with knee jerk reactions. It takes a long time for a drug to build a reputation. In Ken’s opinion, Bapineuzumab warrants going to Phase 3 clinical trials. Phase 2 trials are to determine safety and how to dose. Phase 3 results are the ones that really count.

Ken told us that 14,000 patients have been taking Tysabri for over a year. 30,000 patients are now currently taking the drug. He believes that Tysabri is more effective than any other drug on the market for treating multiple sclerosis. His opinion is based on his review of the clinical trial results as well as from members of his online investment community at

I’m stopping here for now. I’ll continue our interview with Ken Kam in my next blog which will be posted in two days. In it, Ken will talk about his opinions on Elan’s future and another opportunity in the pharmaceutical sector.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

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