Biotech Stock Mailbag: AVI, Aveo, Spectrum

BOSTON (TheStreet) -- Renton L. opens this week's Biotech Stock Mailbag: "Was there anything noteworthy in the AVI BioPharma(AVII) update announced this week? Are you still optimistic about this drug's chances; maybe the market is getting this drug all wrong?"

AVI's eteplirsen is the first drug ever to significantly increase the production of dystrophin in boys with Duchenne muscular dystrophy (DMD). That's pretty darn remarkable, so yes, I believe there is reason for optimism.

The problem is that eteplirsen's ability to generate dystrophin has not yet translated into a meaningful clinical benefit for DMD patients. AVI presented new data this week showing small improvements in walking ability in some patients. The data were highly variable, however: Two patients with increased dystrophin production actually performed significantly worse on a six-minute walk test.

The riddle AVI needs to solve is how to bridge the gap between new dystrophin production and demonstrating a clinical benefit for patients. Six-minute walk tests are notorious for producing confounding results, so maybe an alternative measure needs to be used. Or perhaps the increase in dystrophin levels that eteplirsen is able to produce is just not robust enough to improve the outlook for DMD patients.

What AVI has demonstrated with eteplirsen is very important but more is needed and risks remain. I think that fairly explains why AVI shares sold off after the eteplirsen data were announced earlier this month.

AVI's tenuous cash position doesn't help matters. This is a company in desperate need of a partner.

Two emails on Aveo Pharmaceuticals(AVEO) : Nico asks, "What in the world is going on with AVEO? Is there anything new driving the stock down? Do you expect a run into ASCO?"