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Biotech Stock Mailbag: ASCO, Celldex, Obesity Drug Game-Changer

BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag focuses on two big topics, the upcoming ASCO cancer meeting and Celldex Therapeutics (CLDX) (with some Galena Biopharma (GALE) thrown in for kicks).

I also take a rare detour from biotech stocks to write about Zafgen, a privately held obesity drug company. Let's start with ASCO.

Phil K. asks, "What are your expectations for the ASCO meeting now that the abstracts have been released? What will you be focusing on when you get there?"

By this time next week, I'll be on a plane to Chicago to cover the American Society of Clinical Oncology's (ASCO) annual meeting. This is my 12th ASCO meeting. ASCO is the biggest, loudest cancer drug meeting of the year, although some are more investor-worthy than others. Based on recent chats with professional health-care investors, ASCO 2012 is a relatively low-priority affair because the number of stock-moving data presentations is limited.

ASCO meetings, just like life, have their ups and downs, and this year is definitely a more subdued ASCO.

Nothing wrong with that, and investors and scribes like me will still find plenty of interesting data presentations. I'm looking forward to ASCO this year because I may actually have the time to slow down and learn something new instead of sprinting from session to session trying to cover all the news as quickly as possible.

With that introduction, here is my take on the three ASCO data presentations most likely to make waves with investors when trading opens on Monday, June 4.

1. Johnson & Johnso (JNJ) , Medivation(MDVN) and Dendreon(DNDN) , also known as the prostate cancer triumvirate.

J&J will present data from the "302" study of Zytiga in pre-chemo prostate cancer patients. This phase III study was stopped early due to a statistically significant progression-free survival (PFS) benefit favoring Zytiga over the control arm. We also know that overall survival (the more important co-primary endpoint) favors Zytiga but is not statistically significant.

The key question for the ASCO presentation: What's the actual survival benefit in the Zytiga "302" study? The line of demarcation is four months -- that's the survival benefit of Dendreon's Provenge in basically the same prostate cancer patient population. If Zytiga's survival benefit is greater than 4 months (let's call it 5-7 months) J&J and Medivation win and Dendreon loses.

If the survival benefit of Zytiga comes in lower than Provenge, Dendreon wins and J&J and Medivation lose.

What does Medivation have to do with all this? Remember, Medivation is developing MDV3100, a drug similar to Zytiga but with efficacy that (so far) looks better. So, what's good for Zytiga should be even better for MDV3100.

One more important point of focus for the Zytiga "302" data: Why isn't the survival benefit statistically significant and what does that mean for the overall analysis and interpretation of the data? It will be interesting to hear from the presenters on this point and to see how oncologists react once all the data is aired publicly.