Warburg Pincus Hikes Stake in Allos Therapeutics (ALTH)
Allos Therapeutics, Inc. (NASDAQ: ALTH) had already announced that its 10.8 million shares had priced at $5.64. That was old news.
But what isn’t old news is that in a Form 4 filing after today’s close, WARBURG PINCUS PRIVATE EQUITY VIII L.P. disclosed that took down 3,500,000 additional shares at $5.64 on May 29. This now gives the private equity fund a stake of some 26,124,430 shares. Our last data showed 78.88 million shares outstanding, but that may not reflect the new share issuance.
This last equity sale is a good indication that the market is willing to finance this molecular therapeutic company for cancer treatment further, particularly for a pre-clinical and pre-revenue biotech operation.
Allos said in its original filing that it plans to use the financing primarily for clinical and pre-clinical research and development of its candidates, manufacture of clinical trial material and pre-commercial scale-up activities for PDX, working capital and general corporate purposes.
Allos closed flat today, but shares are at $6.34. Its 52-week trading range is $3.91 to $7.70.
Jon C. Ogg
May 30, 2008
Pharmacopeia… When Biotechs Cut Jobs (PCOP)
Pharmacopeia Inc. (NASDAQ: PCOP) has announced this morning that it will implement a 15% reduction to its work force. The company is making an effort to save on expenses and to focus its liquid resources on clinical and later-stage programs.
The company is also reviewing other expenses and with the 15% headcount reduction it expects to save approximately $10 million per year. The company will take approximately $800,000.00 in charges from employee severance charges. While seeing a biotech go through cost cuts is rarely a good sign that is a very low one-time charge ratio compared to annual savings.
Pharmacopeia is going to focus its efforts on its lead mid-stage candidate to treat high blood pressure and diabetic kidney disease called PS433540, and it will also focus on its early stage drugs to treat muscular atrophy, Psoriasis, and rheumatoid arthritis.
The company had a $125.8 million market cap as of the close and the company’s latest cash balance as of March 31, 2008 was $61.465 million. If you average out its last four quarters, the company has had an average operating loss of about $14.3 million. Like it or not, even in biotech stocks some companies have to make job cuts to survive.
As a reminder, its CEO left the company back in April.
Jon Ogg
May 30, 2008
PDL BioPharma Inc (PDLI) Interim CEO Walks Out The Door
L. Patrick Gage, Ph.D. has resigned as a director of PDL (PDLI) due to differences of opinion among the board members over the prioritization of PDL’s objectives, and he will no longer serve as interim chief executive officer.
The firm already said that it would spin off its biotechnology assets into a separate publicly traded entity apart from its antibody humanization royalty assets and capitalize the new biotechnology spin-off company with approximately $375 million in cash at the completion of the spin-off transaction.
PDLI plans to retain the rights to antibody humanizatio royalty revenues from all current and future licensed products and plan to distribute this income to stockholders.
The Motley Fool recently described PDLI as on of biotech’s “badly mismanaged companies.”
And, it is a train wreck. Shares are down to $10.20 from a 52-week high of $27.90. The stock recently hit a five year low after losing almost $62 million. Fortunately, the company has a lot of cash.
Douglas A. McIntyre
Is It The End For Alfacell (ACEL)
Alfacell (ACEL) is down 55% today and has traded as low as $.70. Its 52-week high is $2.88.
According tothe AP, “Alfacell Corp. said Wednesday its lead drug candidate failed to improve the survival rate of patients with a special type of cancer, though the biotechnology company plans on asking for approval based on positive results from a secondary goal.”
Alfacel’s market cap is now down to $38 million.
The company may not last through the year. According to the company’s 10-Q, Alfacell lost $3.5 million in the quarter ending January 31, up from $2.5 million the previous year. The firm had a modest $10.2 million in cash on its balance sheet.
If the company needs to raise money, it is hard to see what it can show investors in return with its premier product on the ropes.
Douglas A. McIntyre
Analyst Research Calls Impacting Biotechs (ALXN, OSCI, SGMO, VVUS, CRA)
There were some research calls that are affecting many shares of biotech stocks this morning, as follows:
- Alexion Pharmaceuticals (NASDAQ: ALXN) started as Buy at Piper Jaffray, shares up almost 2%.
- Oscient Pharmaceuticals (NASDAQ: OSCI) started as Neutral at Piper Jaffray; shares flat as a thin volume stock.
- Sangamo Biosciences (NASDAQ: SGMO) Started as Sell at Brean Murray; shares down 11%
- Vivus (NASDAQ: VVUS) Cut to Market Perform from Outperform at Wachovia; shares down some 4%.
Elsewhere, Celera Genomics (NYSE: CRA) was started with a “Perform” rating at Oppenheimer. While Celera is a molecular diagnostic company, they are involved in the identification and validation of diagnostic markers using their own proprietary genomics and proteomics discovery platforms.
Jon Ogg
May 29, 2008
Kosan Acquired For Huge Premium (KOSN, BMY)
Bristol-Myers Squibb (NYSE: BMY) has just announced a definitive merger pact where it will acquire Kosan Biosciences Inc. (NASDAQ: KOSN). Bristol-Myers Squibb will pay $5.50 per share in cash for each share of Kosan. The biotech’s stock was only at $1.65 yesterday and its 52-week trading range is $1.28 to $6.49.
This will equate to a purchase price of approximately $190 million after deducting Kosan’s projected net cash balance at June 30, 2008. The deal has also been unanimously approved by the boards of directors of both Bristol-Myers and Kosan.
The acquisition of Kosan will enhance Bristol-Myers Squibb’s pipeline will get to enhance its pipeline with compounds in two important classes of anticancer agents, called novel Hsp90 (heat shock protein 90) inhibitors and epothilones.
The company believes this will result in new treatment options for patients as another important milestone in becoming a next-generation BioPharma leader. Kosan evolved from a research platform to a development company and this should offer a timely opportunity to place its clinical programs in the hands of a much larger company to bring innovative cancer treatment options to patients.
Epothilones are microtubule stabilizers with multiple therapeutic applications in various cancers and potentially in neurodegenerative diseases.
The Hsp90 program includes a Phase III compound for the treatment of patients with multiple myeloma, which is still an unmet need.
Kosan has agreed to a provision not to solicit any competing offers for the company. Both companies also announced that they have entered into a separate license agreement where Kosan granted Bristol-Myers Squibb an exclusive worldwide license to Kosan’s epothilone compounds and related intellectual property. Kosan will assign to Bristol-Myers Squibb its epothilone investigational new drug applications for an initial payment of $25 million and is entitled to milestone payments in connection with the development of epothilone product candidates and royalty payments on net sales of such products. Credit Suisse Securities is serving as financial advisor to Bristol-Myers Squibb in this acquisition, and Lazard Freres & Co. LLC is the financial advisor to Kosan.
Jon Ogg
May 29, 2008
The Wreck At Ligand Pharma (LGND)
A sell-off in Ligand Pharmaceuticals (LGND), an early stage biotech, is managing to blow-up the dreams of many of its investors. The stock has fallen as low as $2.16 today, off about 30% to a new 52-week low. The high for the period is $7.37. Volume is running 5x to 10x normal.
The firm has a moderately good first quarter. Revenue rose from $235,000 last year to $4.84 million. Operating loss dropped from $16.9 million to $9.7 million.
LGND gave fairly strong guidance as well. Affirming its previous 2008 revenue forecast, the company expected to receive approximately $20 million in royalty revenue for the full year from King Pharmaceuticals for sales of AVINZA plus potential milestone payments from existing corporate partners. For the remaining three quarters of 2008, LGND anticipated total operating costs will be between $27 and $30 million.
Douglas A. McIntyre
Novadel Looking to Leave Pennyland (NVD, HNAB)
Novadel Pharma (AMEX: NVD) shares look ripe for the picking at these price levels, so much so that insiders can’t keep their hands off them.
The specialty pharmaceutical company develops oral spray versions of drugs already on the market, and has strong co-agreements in North America and Europe, including rumors of a potential oral spray formulation of Viagra in collaboration with Pfizer.
Despite the numerous products in development, strong cash position and relatively low debt the stock has been hurt substantially ever since its U.S. launch of Zensana was delayed after Hana Biosciences (NASDAQ: HNAB) had experienced manufacturing issues. The stock plummeted to a year low $0.16 per share, placing the stock deep into Pennyland.
But the company is moving forward with its plans, and continues to make strong collaborate and licensing agreements, including a manufacturing and marketing agreement with European BioAlliance Pharma for its anti-emetic oral spray formulation Ondansetron announced just two days ago. The stock was up to $0.30 and higher last week and now sits at $0.34.
Insiders continue to buy, and have been doing so ever since the stock went sub-$1.00 back in August of 2007. This is a strong signal that the company’s stock could be on its way out of Pennyland. If not, there could still be plenty of room to run from here.
Dr. Hisham S. Ayoub, DMD
May 27, 2008
Biotech Implosion: Favrille (FVRL)
Favrille, Inc. (NASDAQ: FVRL) may have just joined the realm of biotech zombies this morning, or close to it. The company announced Phase III results which failed to show statistically significant improvement in its primary endpoint, and this was the registration trial of Specifid following Rituxan in patients with follicular B-cell non-Hodgkin’s lymphoma.
The primary endpoint was to measure analysis of time to progression, and it failed to show a statistically significant improvement in the treatment arm. The arms were Specifid plus Leukine following Rituxan compared to the control arm of placebo plus Leukine following Rituxan.
Analysis of all subgroups also did not show any significant differences in primary or secondary endpoints when adjusted for prognostic factors.
This one was only a $71.8 million market cap before the implosion. Now shares are down 80% pre-market at $0.35.
The good news is that the $25 million in tangible book value may let it find some support after that huge drop. The bad news is that this lead candidate failure puts the company back into mostly pre-clinical stage for other products.
Technically this can’t be considered a zombie because it has other pre-clinical candidates. But try telling that to someone coming in from a 3-day weekend and seeing an 80% drop at the open. This was already down well over 50% in the last year before this.
Jon Ogg
May 27, 2008
Viva Vivus (VVUS)
Vivus (VVUS) took at 25% one-day jump recently after good
news about one of its treatments.
The interim results from the drug, Qnexa, were released in
an abstract to be presented at the American Diabetes Association
conference next month. Vivus is pursuing Qnexa in a lead indication
for obesity.
How good was the news? Rodman & Renshaw has an $11 price
target on the stock and RBC Capital Markets has an $8 target. The
shares are at $7.32, their 52-week high. And, they could move up
more.
Vivus recently filed for a $150 million stock offering. That is a lot
of potential dilution, but the firm has the financials to back up
asking for new capital.
Total revenue for the first quarter of 2008 was $22.7 million, as compared
to $1.7 million for the first quarter of 2007. The increase in revenue over the first
quarter last year was primarily due to the recognition of $20.9 million in
deferred license revenue earned from the sale in 2007 of Evamist to K-V
Pharmaceutical Company. Not the perfect way to earn on-going revenue,
but still very impressive.
Vivus lost $7 million in the quarter, but has $170 million in cash and
short-term securities. That makes the firm a rare biotech mix of real
progress against R&D milestones and a strong enough balance sheet
to stay in the game.
Douglas A. McIntyre