What's the Dollar Value of Online Patient Chatter?

On the Internet, people talk about everything, even their illnesses. Treato, an Israeli data-mining company, monitors conversations on Facebook, Twitter, and patient forums for information on drug side effects and prescription patterns. It then sends weekly or monthly analyses of the chatter to hedge funds and money managers that invest in pharma stocks.

Ofir Levi, head of life-science research at Israel’s Adamas Healthcare Fund, turned to Treato with a hunch. The prostate cancer drug Xtandi, co-developed by Astellas Pharma and Medivation, is approved in the U.S. only for patients who’ve already had chemotherapy. Levi suspected physicians might be prescribing it off-label for use before chemo. “By looking at patient discussions, we figured that pre-chemo patients were also getting this drug,” he says. That appeared to confirm Levi’s guess that the market for Xtandi was probably larger than the approved patient population. His hedge fund bet on Medivation and was rewarded when the company reported better-than-expected first-quarter sales of the drug on May 8 and its shares gained as much as 8 percent in trading that day. “For the first time, investors don’t have to listen to the CFO” to find out how a drug is doing, says Ido Hadari, chief executive officer of six-year-old Treato.