Biotech Zombie Alert: Neurobiological Technologies Calls It Quits (NTII)
Neurobiological Technologies, Inc. (NASDAQ: NTII) is becoming the next public biotech to effectively close up shop and liquidate the company. In short, this is now a biotech zombie but it has given up hope of resurrection. Its board of directors has determined to liquidate its assets and to dissolve the company, and it then intends to distribute the majority of its available cash to its stockholders.
At its meeting on August 27, 2009, the board of directors voted to approve the dissolution and liquidation of the company. It will redeem the 494,000 shares of its preferred stock currently outstanding for $0.50 per share and it intends to call a special meeting of the stockholders to seek approval of the plan of dissolution. If the dissolution is approved, it also plans to delist its common stock from the NASDAQ Capital Market, close its stock transfer books, discontinue recording transfers of shares of its stock, and cease its reporting obligations. NTI also announced the approval of the termination of its rights agreement.
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Unusual Number of 52-Week Highs in BioHealth Stocks (BCRX, CRIS, NKTR, OGXI, SCLN, SVA, SPPI, TRGT, VICL)
As you will see, there are many new 52-week highs out there in some drug and biotech names…. Some of this is on swine flu news despite a big drop in the stock market today, but here goes:
- BioCryst Pharmaceuticals Inc. (BCRX) hit $13.24 today…. 52-week low is $0.85.
- Curis Inc. (NASDAQ: CRIS) hit $2.25 today, the drug discovery company has a small cap at $140 million; 52-week low is $0.68.
- Nektar Therapeutics (NASDAQ: NKTR) hit 8.29 but on very low volume, 52-week low is $8.29.
- OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI) hit a high of $42.99, also on fairly thin trading volume…. The 52-week low is all the way down at $2.00 on this cancer company. In 2007, this was over a $100 stock…
- SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) is up big on heavy block trading as it hit $4.90 vs. a 52-week low of $0.63.
- Sinovac Biotech Ltd. (AMEX: SVA) is what led the flu names today after securing Chinese approval for its swine flu vaccine. Shares are up over 40% at $8.90… but it hit $9,44 today versus a 52-week low of $0.75.
- Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is up over 7% and hit $8.32 on strong volume… 52-week low is $0.55.
- Targacept, Inc. (NASDAQ: TRGT) hit $14.69 today, but on thin trading volume, compared to a 52-week low of $1.40.
- Vical Inc. (NASDAQ: VICL) hit a high of $4.93 versus a low of $1.04. This is on strong volume and is after a rise of flu awareness stocks in China.
JON C. OGG
August 31, 2009
360 Degree Review of Genzyme Ahead of FDA Event (GENZ)
Genzyme Corporation (NASDAQ: GENZ) is trying to recover from the woes of its Cerezyme and Fabrazyme drug shortages and delays from the Allston, Massachusetts plant, but the company has a date with the FDA this week that might be more important than the ongoing issues elsewhere. Last week, the company noted that FDA reviewers questioned a study meant to review the leukemia drug called Clolar ahead of this Tuesday’s panel meeting.
Clolar is currently used for treating leukemia in children and the company is seeking a broader use to treat adults with acute myeloid leukemia, which is a blood cancer called AML. It seems that the FDA is finding it difficult to interpret the study results because of a lack of a randomized study combined with the heterogeneous patient population regarding AML prognostic factors. The main study tested Clolar in elderly patients with previously untreated AML and at least one other factor that gave them a poor prognosis and it appears that the study did not include a comparison group of patients who were not treated with the drug.
There was a figure from Reuters, citing Sanford Bernstein’s biotech analyst, that showed over half of the drug sales in the U.S. already come from adult AML use. But this morning there was a downgrade by Robert W. Baird’s biotech analyst, who downgraded the firm to Neutral from Outperform and gave a price target of $58.00 from $64.00 as the prior target. It has also been about a week since Leerink Swann & Co.’s analyst upgraded the Genzyme rating to ‘Outperform” from “market perform.” And last week we also saw that Collins Stewart’s biotech analyst reiterated a “Buy” rating.
AML affects over 12,000 new patients a year and it appears that there have been no real first-line therapy choices for patients for years. There also appears to be no direct standard of care comparison. If the panel backing is in favor of the company, which is generally followed for formal FDA drug approval, then the formal decision on Clolar would be out by the end of December.
This is not directly related to teh FDA panel meeting tomorrow, but the review of the Allston plant from the European Union cited one major deficiency at the plant and cited several lesser deficiencies. Genzyme was forced to temporarily halt production at the Allston plant in June due to a contamination, which ultimately caused a shortage of its Cerezyme drug used to treat Gaucher disease, and Fabrazyme, for Fabry disease. Again, this is not directly tied to the FDA event tomorrow but it has been an ongoing thorn in the side of the company.
As a result f concerns and as a result of this morning’s downgrade, Genzyme shares were down as much as 3% early on. But now shares have recovered and are down only about 0.2% at $55.40 in early-afternoon trading. As a result of the ongoing problems, Genzyme has not participated in the market strength in recent months as shares are at the bottom end of the $47.09 to $82.99 trading range of the last 52-weeks.
Genzyme is also well capitalized with over $1.1 billion in cash and short and longer investments. It also has over $1.4 billion in total receivables, but this figure has grown substantially over the last year and has been rising.
Analysts still have an average price target that is north of $60.00 despite the woes, so there is some perceived upside. But that is also on the heels of many earnings estimates being trimmed sharply for fiscal-2009 and somewhat for fiscal-2010.
JON C. OGG
Rumors Abound in SEQUENOM (SQNM)
Sequenom, Inc. (NASDAQ: SQNM) is trading much higher and on active volume this morning, although not on official news. Traders are attributing this to rumors of positive developments in the company’s troubled Down’s Syndrome test, SEQureDx. It is hard to trust the company because it has avoided being specific in just what was mishandled as well as what the remedies, if any, are going to be. All we have so far is a hope of a launch date in 2010, and that is going to be heavily dependent upon the data.
We originally expected a summer 2009 launch on this before the company came out disclosing inconsistencies, and that took out almost three-quarters of the value of the company’s stock overnight.
The trading in call options has been significant on the hopes of this. Here is the SEPT-2009 CALL OPTIONS trading alone after just over 1 hour since the open:
STRIKE Volume OpInt
$5.00. 1,439 14,976
$6.00. 7,771 10,405
$7.50. 4,742 16,525
$9.00. 1,915 5,011
$10.00 1,341 3,555
Shares are up about 11% at $5.90 this morning on 11 million shares as of 10:38 AM EST and the 52-week trading is $2.86 to $29.14.
Be advised that the average volume here is about 10.4 million shares. This is not the first round of rumors that has been out on this one, and it probably won’t be the last round of rumors on it.
This stock is a true coin toss. The company is on a cash burn rate rather than on an income rate, and it may have to raise cash to keep operations running normal too far beyond the end of this year and to fund much higher legal costs as a result of its Down’s test issues. If it turns out that the test results were not mishandled or that this is the next holy grail in detecting Down’s, then this stock will be back significantly higher.
Conversely, if this turns out to be all hype and not the next major test for Down’s then this stock will be a much smaller fraction of today’s prices… regardless of its old highs above $20.00.
JON C. OGG
Trubion Pharmaceuticals (TRBN) Up Over 60%
Trubion Pharmaceuticals (TRBN) is up 63% to $6.43, a 52-week high. The move may be a little much for the microcap.
The company and Facet Biotech (FACT) announced an agreement for the joint worldwide development and commercialization of TRU-016, a product candidate in phase 1 clinical development for chronic lymphocytic leukemia (CLL).
Not very substantial news for such a big run
Douglas A. McIntyre
Immunomedics (IMMU) Giving Back Gains
Immunomedics (IMMU) is giving back some of the gains that it made yesterday after positive earnings news. The stock is down 8% to $6.28.
Along with earnings, IMMU reported successful clinical trial results for epratuzumab, a drug Immunomedics developed and licensed to UCB Pharma. In the last quarter, IMMU revenue was $8.3 million compared to $1 million in the same period a year ago. The company made almost $1 million.
Douglas A. McIntyre
Allos Therapeutics (ALTH) Dips Ahead Of FDA Decision
Allos Therapeutics (ALTH) is down almost 10% to $7 ahead of a September 2 announcement from a regulatory panel which is reviewing its cancer drug candidate pralatrexate.
There is no other news that might move the stock
Douglas A. McIntyre
Sinovac Biotech (SVA) Make Big Move On Flu Vaccine
Sinovac (SVA) is up 17% to $6.85 on the announcement that the Beijing Public Health Bureau has selected Sinovac as one of the four manufacturers to supply Anflu®, Sinovac’s seasonal influenza vaccine, for the benefit of the citizens of Beijing. The Beijing Public Health Bureau completed the bidding process for the purchase of flu vaccines and corresponding services for 2009 on August 26, 2009.
In order to prevent and control infectious disease and to avoid contracting both the seasonal flu virus and the H1N1 virus, 2.8 million Beijing citizens will receive free inoculations against the seasonal influenza.
Sinovac recently reported top-line preliminary results of H1N1 vaccine clinical trials. The results show the H1N1 vaccine developed by Sinovac is quite safe and has a good immunogenicity profile.
Sinovac shares are up almost 10x from their 52-week high.
Second quarter 2009 operating income was $10.7 million, compared to operating income of $7.0 million in the prior year. Net income for the second quarter of 2009 included $126,000 in net interest and financing expenses and $2.1 million in income tax expenses. Net income for the same period of 2008 included $541,000 of net interest expense and $1.6 million of income tax expense. Net income for second quarter of 2009 was $5.8 million, or $0.14 per diluted share, up 75% compared to net income of $3.3 million, or $0.08 per diluted share, in the same period of 2008.
Sinovac has about $47 billion in cash on its balance sheet
Douglas A. McIntyre
Ligand's Largest Holder BVF Lightens Up Stake (LGND, NRGN, MRK)
LIGAND PHARMACEUTICALS INC. (NASDAQ: LGND) has been one of the small cap low-priced biotech stocks for some time, and it is a fraction of what it once was. This week the company said that it would acquire Neurogen Corporation (NASDAQ: NRGN) for $11 million plus some contingent value rights. But what is interesting is that Ligand’s largest holder, a BVF Partners (BVF Investments and BVF Inc.), trimmed its stake by roughly one-third. The sale of 4,552,550 at $2.57 per share took place on August 24, 2009.
Ligand’s news this week was that it entered into a definitive merger agreement where Ligand will acquire Neurogen, where Neurogen holders would receive an estimated $11 million in Ligand common stock and will be granted Contingent Value Rights under four agreements. The CVR’s entitle Neurogen shareholders to cash payments for the sale or licensing of certain assets and the achievement of a specified clinical milestone. The deal has also been approved by both boards of directors.
Ligand stockholders will gain access to a partnership with Merck (NYSE: MRK) for Vanilloid Receptor Subtype 1 (VR1) Antagonists, additional pipeline assets and drug discovery resources, and approximately $7 million in net cash. Neurogen also has more than $180 million in net operating loss carryforwards. Today’s filing shows that on August 24, 2009, which is roughly when the news came out about the merger, BVF Inc. sold some 4,552,550 at a price of $2.57 for a value of about $11.7 million. If you review the entire day’s trading volume, there were only about 5.8 million shares that traded all day and you have to go to the end of June before you can find a single day where 1 million shares or more traded hands.
Current filings with data as of June 30, 2009 show that WELLINGTON MANAGEMENT COMPANY, LLP is now the largest holder of Ligand with some 15,814,671 coming to a take of 13.99%. The FORM 4 filed with the SEC shows that BVF now holds some 10,617,400 shares of direct/indirect ownership. We have placed a call into BVF to see if further sales are coming or if this was over any specific reasons. BVF sold shares worth back in June worth some $2.4 million as well.
JON C. OGG
August 27, 2009
Immunomedics (IMMU) Surges 63% On Study Results
UCB and Immunomedics (IMMU) announced today top-line results from UCB’s phase IIb clinical study comparing epratuzumab to placebo in patients with systemic lupus erythematosus (SLE, also commonly known as lupus). The data from the 12-week dose and regimen-ranging study demonstrated clinical meaningful treatment effect of epratuzumab over placebo in SLE patients. The 227 patients in this study had moderately (30%) to severely (70%) active disease in multiple organ systems.
The company’s shares moved up 63% to $6.95, near a 52-week high.
In the third quarter, IMMU made $758,000 on revenue of $8.3 million and had $32 million in cash and cash equivalents.
Douglas A. McIntyre
