Seattle Genetics' Boosted Secondary… Takeover Defense? (SGEN, BMY, MEDX, BAY, CRGN, PGNX, AZN)
Seattle Genetics, Inc. (NASDAQ: SGEN) is one of those companies in the world of biotech and biohealth which some have believed would be an ultimate takeover target. The issue is that some companies either do not have enough funding on their own to secure a deal under the terms they would prefer. Other companies want to grow and thrive on their own in the quest to become the next mega-blockbuster producer on the block. So the news of an offering of common stock from Seattle Genetics, Inc. would now put the company in the second category, or so it may seem.
Seattle Genetics priced a secondary offering of 11,000,000 shares of common stock at $10.75 per share. The gross proceeds from the sale are expected to be approximately $118.2 million and should close on or about August 17, 2009. The good news is that all of the shares in the offering are being sold by Seattle Genetics. The other bit of good news is that the demand must have been strong. The announcement was made Monday that it would sell 9 million shares, yet this pricing is for 11 million shares.
The company said that the use of funds will be used to fund R&D, including manufacturing activities and clinical trials for its proprietary product candidates, build-out of a commercial infrastructure and for general corporate purposes, including working capital.
The company also has a very high profile group of companies as the underwriters.
J.P. Morgan and Goldman Sachs are the joint book-running managers; Needham, Oppenheimer, RBC Capital Markets, and William Blair are all listed as the co-managers of the offering. The underwriters have a 30-day option to purchase up to 1,650,000 additional shares of common stock to cover over-allotments.
Back in July this stock was under $10.00. Then came several developments. It reported earnings, Bristol-Myers Squibb (NYSE: BMY) announced the acquisition of Medarex (NASDAQ: MEDX), then the company announced the initiation of Phase II trials of brentuximab vedotin (SGN-35) for lymphoma. Then this week came the announcement that Seattle Genetics had achieved a milestone under its antibody-drug conjugate (ADC) collaboration agreement with MedImmune, LLC, a wholly owned subsidiary of AstraZeneca, after MedImmune’s initiation of a phase I clinical trial of MEDI-547 for solid tumors.
Seattle Genetics has an exclusive worldwide collaboration agreement with Roche’s Genentech for the development and commercialization of dacetuzumab (SGN-40). Under the agreement, Genentech paid us $60 million upfront, and has agreed to pay potentially more than $800 million in milestones and escalating double-digit royalties starting in the mid-teens on annual product sales. In addition, Genentech funds research, development, manufacturing and commercialization costs. Seattle Genetics also has an option for co-promotion rights on dacetuzumab in the U.S.
The company has licensed its antibody-drug conjugate (ADC) technology to Genentech, Bayer (NYSE: BAY), CuraGen Corp. (NASDAQ: CRGN), Progenics Pharmaceuticals Inc. (NASDAQ: PGNX), Daiichi Sankyo, AstraZeneca’s (NYSE: AZN) MedImmune, and Takeda’s Millennium. These collaborations all involve upfront cash payments, milestones and royalties on net sales of products incorporating Seattle Genetics’ ADC technology. The licensees are responsible for development, manufacturing and commercialization of any ADC product candidates that result from the collaborations.
Another deal is in place as a co-development agreement with Agensys, a wholly-owned subsidiary of Astellas Pharma. In this the companies will jointly develop ADC products where Agensys provides proprietary targets and monoclonal antibodies to be utilized with Seattle Genetics’ proprietary ADC technology. The companies share research and development costs on up to two ADC products, and share equally in any profits.
Shares closed down over 7% at $10.99 in anticipation of the secondary offering and the stock’s 52-week range is $6.81 to $13.40. The company has been public since 2001 and has spent the bulk of the time from early 2007 to now trading in a range of $8.00 to $12.00. Its market before the effects of any secondary offering was $947 million after Tuesday’s drop. SGEN is also a stock with a high short interest: in mid-July it had over 5.5 million shares in the short interest, about 13.9 days worth of average trading volume.
This is still very much a research and development stage company. Analysts are only looking for about $38 million in revenues for 2009 and about $54 million in revenues in 2010. Until its products are closer to commercialization, losses are expected well beyond this year and next.
JON C. OGG
Early ASCO Winners & Losers (IMMU, ONTY, MEDX, HGSI, EXEL, OSIP)
We have captured the big biotech movers from the ASCO conference over the weekend or related news moving the stocks in the biotech sector this morning. Here these are grouped by name and ticker, and the first price is Friday’s close and the second price is the pre-market price snapshot at 9:00 AM EST. After that is the percentage of the price change and the appropriate volume seen as of the 9:00 AM EST cut-off.
STOCK GAINERS:
Immunomedics, Inc. (IMMU)
$2.49 $2.85 14.46% 13,500
Oncothyreon Inc (ONTY)
$2.61 $2.92 11.88% 212,479
Medarex, Inc. (MEDX)
$7.24 $7.80 7.73% 3,790
Human Genome Sciences, Inc. (HGSI)
$2.47 $2.65 7.29% 49,141
STOCKS TRADING LOWER:
Exelixis, Inc. (EXEL)
$5.55 $5.22 5.95% 123,953
OSI Pharmaceuticals Inc. (OSIP)
$33.80 $32.50 3.85% 22,220
Jon Ogg
Full 2009 ASCO Cancer & Oncology Primer (ABII, AEZS, ALTH, AMGN, APPA, ARQL, BMY, CLDX, CELG, CTIC, CGRB, LLY, EXEL, GHDX, GSK, IMGN, MEDX, MDVN, MITI, OGXI, OSIP, PPHM, PFE, ROSG, SNTA, TRBN, ZIOP, ZGEN)
We have already seen a massive round of abstracts ahead of the huge American Society of Clinical Oncology, or ASCO meeting for 2009, which is scheduled to start this weekend. ASCO is usually thought of as the Holy Grail of cancer conferences and these abstracts and presentations are viewed by investors, analysts, clinicians, doctors, and by cancer patients.
We compiled a brief synopsis for the following drug and biotech companies: Abraxis BioScience, Inc. (NASDAQ:ABII), AEterna Zentaris Inc. (NASDAQ: AEZS), Allos Therapeutics, Inc. (NASDAQ: ALTH), Amgen Inc. (NASDAQ: AMGN), A.P. Pharma, Inc. (Nasdaq: APPA), Arqule Inc. (NASDAQ: ARQL), Bristol-Myers Squibb (NYSE: BMY), Celldex Therapeutics (NASDAQ: CLDX), Celgene Corporation (NASDAQ: CELG), Cell Therapeutics (NASDAQ: CTIC), Cougar Biotechnology, Inc. (NASDAQ: CGRB), Eli Lilly and Company (NYSE: LLY), Exelixis (NASDAQ: EXEL), Genomic Health, Inc. (NASDAQ: GHDX), GlaxoSmithKline (NYSE: GSK) , Immunogen (NASDAQ: IMGN), Medarex (NASDAQ: MEDX), Medivation, Inc. (NASDAQ: MDVN), Micromet, Inc. (NASDAQ: MITI), OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI), OSI Pharmaceuticals (NASDAQ: OSIP), Peregrine Pharmaceuticals, Inc. (Nasdaq: PPHM), Pfizer Inc. (NYSE: PFE), Rosetta Genomics (NASDAQ:ROSG), Synta Pharmaceuticals (NASDAQ: SNTA), Trubion Pharmaceuticals, Inc. (Nasdaq: TRBN), ZIOPHARM Oncology (NASDAQ: ZIOP), and ZymoGenetics, Inc. (NASDAQ: ZGEN).
Be advised that some of the data may have been changed since the first abstracts came out, but this is an expansive list of companies with data.
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ASCO's Pre-Abstract Previews (ABII, ALTH, ARQL, CLDX, CTIC, CGRB, LLY, EXEL, GHDX, GSK, IMGN, MEDX, MDVN, OGXI, OSIP, PPHM, PFE, SNTA, ZIOP)
The first massive round of abstracts ahead of the huge American Society of Clinical Oncology, or ASCO meeting for 2009, is due out 6:00PM EST. This is thought of as the Holy Grail of cancer conferences and these abstracts are being picked apart all night by hundreds of investors, analysts, clinicians, doctors, and even by cancer patients. We have brief data here for the following biotech and drug companies, and you can bet there will be more than this: Abraxis BioScience, Inc. (NASDAQ:ABII), Allos Therapeutics, Inc. (NASDAQ: ALTH), Arqule Inc. (NASDAQ: ARQL), Celldex Therapeutics (NASDAQ: CLDX), Cell Therapeutics (NASDAQ: CTIC), Cougar Biotechnology, Inc. (NASDAQ: CGRB), Eli Lilly and Company (NYSE: LLY), Exelixis (NASDAQ: EXEL), Genomic Health, Inc. (NASDAQ: GHDX), GlaxoSmithKline (NYSE: GSK) , Immunogen (NASDAQ: IMGN), Medarex (NASDAQ: MEDX), Medivation, Inc. (NASDAQ: MDVN), OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI), OSI Pharmaceuticals (NASDAQ: OSIP), Peregrine Pharmaceuticals, Inc. (Nasdaq: PPHM), Pfizer Inc. (NYSE: PFE), Synta Pharmaceuticals (NASDAQ: SNTA), and ZIOPHARM Oncology (NASDAQ: ZIOP).
Be advised that there may be new data from many of these companies between now and the May 29 to June 2, 2009 meeting in Orlando, Florida. We have already compiled a pre-ASCO cheat sheet to get in ahead of some of these abstracts, and the brief notes are as follows:
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Medarex Proceeding to Phase III in Rheumatoid Arthritis (MEDX)
Medarex, Inc. (Nasdaq: MEDX) has yet to show any significant indications in either direct before 8:00 AM EST this morning, but the company announced that its MDX-1100 Phase 2 ‘proof of concept’ trial in patients with active rheumatoid arthritis met its primary endpoints for patients receiving methotrexate.
The top-line results are from a 70-patient multi-center, randomized, double-blind, placebo-controlled Phase 2 trial. The trial indicated that three-times the number of patients treated with 10 mg/kg of MDX-1100 every two weeks achieved at least a 20% improvement in RA signs and symptoms at 12 weeks when compared to placebo.
These results were statistically significant when compared with placebo (p=0.0024). The antibody combination with methotrexate was generally safe and well-tolerated. Full results from this Phase 2 trial are planned to be presented at a future scientific meeting.
The company believes it may be able to offer a potentially important and novel treatment option for rheumatoid arthritis and potentially other inflammatory indications. It is now actively preparing for the next stage of clinical development for MDX-1100 in RA and will explore the broader potential of MDX-1100 in a range of inflammatory diseases, including ulcerative colitis in an ongoing companion Phase 2 study.
MDX-1100 is a fully human antibody that targets IP-10 (also known as CXCL-10). While Medarex is partners with many companies, the MDX-1100 product candidate is a wholly-owned Medarex asset and appears to not be tied to other drug or biotech firms.
Medarex also noted a figure from the American College of Rheumatology showing that some 1.3 million adult Americans have rheumatoid arthritis.
JON C. OGG
Weekend of Cancer and Ocology Data at AACR; semi-preview for ASCO (ALTH, AMGN, ARIA, ARRY, AZN, BIIB, CELG, CRIS, IMMU, IMGN, INFI, MEDX, MNTA, ONCY, PFE, PCYC, SUPG, TELK, THLD)
This weekend will kick off a rather important oncology meeting, and it has a chance of setting the expectations for the highly anticipated ACSO (American Society of Clinical Oncology) annual meeting next month. The American Association for Cancer Research Meeting will take place in Denver, CO. and many of the smaller and larger cancer and disease biotech and drug companies will be presenting data. Amazingly enough, this will be the 100th annual meeting.
Allos Therapeutics, Inc. (NASDAQ: ALTH) will present data from an in vitro study examining the potency of pralatrexate in colon, breast, ovarian, lung, prostate, and head and neck cancer cell lines.
Amgen (NASDAQ: AMGN) had industry news earlier this week about its experimental drug called AMG 479 shows promise against pancreatic cancer. Amgen will also be presenting lung cancer data.
ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) will offer new preclinical data on deforolimus, its investigational mTOR inhibitor, AP24534, its investigational multi-targeted kinase inhibitor, and its investigational anaplastic lymphoma kinase (ALK) inhibitor.
Array BioPharma, Inc. (ARRY) has eighteen abstracts being presented at the meeting and will disclose findings in 7 new anti-cancer programs. Lung and colon cancer data are in these presentations.
Read more
BioHealth Upgrades & Downgrades on Wall Street (GHDX, GENZ, GSK, ISPH, LXRX, MEDX, MRK, QLTI, SHPGY)
There have been other calls in drug, biotech, and healthcare stocks today but these are the key standouts that have been seen making an impact on stocks after the open of trading:
- Genomic Health (GHDX) Cut To Hold at Canaccord.
- Genzyme (GENZ) Started as Overweight at Morgan Stanley.
- GlaxoSmithKline (GSK) Cut to Sell at Goldman Sachs.
- Inspire Pharma (ISPH) Cut To Underweight at Morgan Stanley.
- Lexicon Pharma (LXRX) Cut to Underweight at Morgan Stanley.
- Medarex (MEDX) Cut to Equalweight at Morgan Stanley.
- Merck (MRK) Raised to Buy at Goldman Sachs.
- QLT (QLTI) Cut to Underweight at Morgan Stanley.
- Shire (SHPGY) Cut to Neutral from Buy at Goldman Sachs.
Jon C. Ogg
September 8, 2008
Short Sellers Lighten Up on Major Biotechs in May
We ran the short selling report that just came out on major NASDAQ biotech stocks to see what the change in short selling was. Interestingly enough, in almost all of the major and large US biotechs traded on NASDAQ.
STOCK (Ticker) MAY 30 MAY 15 CHANGE
Amgen Inc. (AMGN) 22,678,517 24,778,770 -8.48%
Biogen Idec Inc. (BIIB) 6,346,464 6,788,432 -6.51%
Celgene Corporation (CELG) 13,775,373 16,336,232 -15.68%
Genzyme Corporation (GENZ) 5,684,945 5,621,969 +1.12%
Gilead Sciences, Inc. (GILD) 32,478,444 32,690,603 -0.65
ImClone Systems Inc. (IMCL) 7,149,395 7,664,009 -6.71%
And below you can see the short selling changes on some of the smaller biotechs that are still rather active in daily trading volume. The results below are more mixed than they are in the major biotechs.
STOCK (Ticker) MAY 30 MAY 15 CHANGE
Amylin Pharmaceuticals, Inc. (AMLN) 23,855,471 23,642,854 +0.90%
Cell Genesys, Inc. (CEGE) 16,931,592 17,222,281 -1.69%
Dendreon Corporation (DNDN) 31,117,812 30,728,499 +1.27%
Illumina, Inc. (ILMN) 12,239,553 11,902,877 +2.83
Invitrogen Corporation (IVGN) 9,125,954 9,340,210 -2.29%
Medarex, Inc. (MEDX) 21,837,573 19,682,828 +10.95%
Jon C. Ogg
June 11, 2008
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