The Changing Landscape of Biotech Valuations (ACOR, CBST, MNKD, INCY, SGEN, ITMN, IPXL, MRX, SVNT, VPHM)
The biotech and biohealth universe is changing in size. In 2008 and 2009, partly due to mergers and partly due to market valuations, there had become a surprisingly small number of biotech stocks which had market capitalization rates of more than $1 billion. At one point there were only about 10 or 11 in our universe of biotech stocks that actually had market caps which were very far north of $1 billion, or at least out of the biotech stocks which followed at BioHealth Investor.
We have recently seen Acorda Therapeutics, Inc. (NASDAQ: ACOR), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), MannKind Corporation (NASDAQ: MNKD), Incyte Corporation (NASDAQ: INCY), Seattle Genetics, Inc. (NASDAQ: SGEN), InterMune, Inc. (NASDAQ: ITMN), Impax Laboratories Inc. (NASDAQ: IPXL), and Medicis Pharmaceutical Corporation (NYSE: MRX) either get into or get back into the $1 billion market cap club. And then we have Savient Pharmaceuticals Inc. (NASDAQ: SVNT) and ViroPharma Incorporated (NASDAQ: VPHM) that have been in the club and are currently just short of it.
Due to waves of big emerging drug news and due to strong performance we now have 16 of the biotech and related stocks (at least of those which we cover as pure biotechs) which have market caps north of $2 billion. More importantly, the biotech news flow and he bull market has suddenly helped many stocks rise or at least get back above the $1 billion mark. Many of these had been there before, but the market has helped many new names get back above the $1 billion market capitalization level. And waves of mergers in the last two and three years sort of thinned out the group.
In these we did not take into consideration revenues, earnings, and not even cash. This has largely been news-driven and momentum-driven. Below is a review of each.
Biotech IPO Filing From Anthera
Anthera Pharmaceuticals Inc. is the latest of the biotechs that has filed to come public in an initial public offering. The company has applied to take the ticker “ANTH” on NASDAQ.” No financial terms were set, but for filing purposes it did note a figure of up to $70 million in common stock.
Anthera is a San Mateo-based developer of anti-inflammatory drugs, including cardiovascular and autoimmune diseases. The company currently has one “Phase II-ready” clinical program, A-002, and two Phase II clinical programs, A-001 and A-623. A-002 and A-001 inhibit a novel enzyme target known as secretory phospholipase A2, or sPLA2. Elevated levels of sPLA2 have been implicated in a variety of acute inflammatory conditions, including acute coronary syndrome and acute chest syndrome, as well as chronic diseases such as stable coronary artery disease.
Deutsche Bank Securities serving as lead underwriter, and additional syndicate members are Piper Jaffray, Wedbush PacGrow Life Sciences, and Merriman Curhan Ford.
The company has raised around $75 million in venture capital funding from Mitsubishi International Corp., VantagePoint, Sofinnova, Caxton Advantage Life Sciences Fund, HBM BioCapital, and Pappas Ventures. It recently raised $10 million more in financing but for all practical purposes is in the pre-revenue stage as it is a clinical-stage company at this time.
Jon C. Ogg
September 16, 2009
VIVUS Becomes THE New Weight Loss Target (VVUS, OREX, ARNA)
Emerging drug player VIVUS Inc. (NASDAQ: VVUS) is soaring to new heights on what is already exponential trading volume on its key weight loss study results. The company’s interim update showed that two studies covering more than 3,750 patients may become the new weight loss target of all weight loss drugs, and therefore which could be used for diabetes and heart disease patients in some or many cases.
Those taking Qnexa reduced their weight by up to 14.7% on average in one trial, and the drug also showed improvement in blood pressure and diabetes symptoms and risk factors. Vivus’ second study showed an average weight loss of about 13.2%.
Those taking the placebo lost only about 2.5% of their weight in the first study and about 2.4% in the second study. Vivus indicated that it will seek FDA approval by year end.
Vivus reported that the side effects included dry mouth, tingling, constipation, altered taste and insomnia. Some reported drug-related instances of depression and depressed mood and adverse events of moderate to severe nature were observed in less than 2% and were actually similar to that seen in the placebo group. Unfortunately, these mood and depression instances are very common instances in those trying to lose significant weight.
There is an important aspect here, and that is that it puts two other drug companies in the hot seat. Orexigen Therapeutics Inc. (NASDAQ: OREX) met its weight loss targets in late stage studies and it has previously given an early-2010 for when it seeks FDA approval. Arena Pharmaceuticals Inc. (NASDAQ: ARNA) is also developing a weight loss treatment which it said earlier this year met endpoints.
This new study result has shares of VIVUS up over 50% to $10.60 in pre-market trading and at 9:50 AM EST there has already been 4.15 million shares trading hands. More importantly, this takes the stock to highs of this entire decade now.
Orexigen Therapeutics is also up almost 4% at $8.50 on the news, while Arena Pharmaceuticals is up almost 7% at $4.94.
This and other studies in the war against diabetes and obesity was mentioned in a much broader and much larger piece including stocks: NVO, AMLN, LLY, MNKD, PFE, SPEX, VVUS, GNBT, BMY, AZN, ARNA, GERN, STEM, OREX, HDIX, PODD
JON C. OGG
Dendreon's Quarterly Report Shows Assets & Updates (DNDN)
Dendreon Corp. (NASDAQ: DNDN) has made its quarterly SEC filing with its earnings results. We are not interested in revenues as they are too small to count. But we wanted to review its full assets, its cash burn, and its updates which have been talked about and have been tossed around in many local media reports over the recent weeks and months. We have included these broken down and taken data out of its SEC filing.
Assets are as follows: Cash and cash equivalents $ 266.122 million; Short-term investments $21.334 million; Restricted cash $4.882 million; Prepaid antigen costs $18.975 million. The company also noted that prepaid expenses and other current assets $2.692 million. Total current assets were listed as $314.005 million.
Dendreon’s total current liabilities were listed as $130.179 million and the company did still have $52.535 million convertible notes listed as liabilities as of June 30. Those notes are what is remaining from the $85.3 million issued in June and July of 2007.
As of June 30, 2009, there was $19.0 million of capitalized costs associated with the purchase of the antigen used in the manufacture of Provenge, which antigen Diosynth RTP, Inc. is obligated to manufacture and delivery is expected to begin in 2010. It later noted that in may 2009, it placed an order for $39.5 million with Diosynth, amended under a December 22, 2005 agreement, which covers the commercial production of the antigen used in connection with Provenge. Dendreon’s remaining obligation to pay Diosynth as of June 30, 2009 is $20.5 million upon the delivery of antigen.
Operating expenses were $13.321 million for R&D, $7.608 million for general & administrative, and total operating expenses were $20.929 million.
There are also many more items in the notes…
Boston Scientific Very Promising New Defibrillator Statistics (BSX)
Boston Scientific Corporation (NYSE: BSX) has been down and almost out for almost as long as memory serves. The company can’t even blame a bear market for its share price woes. But the company has some solid news in its cardiac resynchronization therapy defibrillators showing a great reduction in death. If this holds up, it could be one of the best things for the company in recent periods.
The company and the University of Rochester Medical Center have announced that the landmark MADIT-CRT trial has met its primary endpoint, where the preliminary results showed the cardiac resynchronization therapy defibrillators with a significant 29% reduction in death or heart failure interventions when compared to traditional implantable cardioverter defibrillators.
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