Acorda skyrockets on trial data; GPC, Pharmion, Spectrum rise; Dendreon steady on rivals' news

By Ronda Fears

Memphis, Sept. 25 - Acorda Therapeutics, Inc. shares nearly quadrupled in value intraday before easing slightly in the afternoon on astronomical volume as buyers swarmed in after reporting positive late-stage news on its multiple sclerosis drug Fampridine-SR.

Moreover, traders said the session was an impressive one for biotechs with many players working on window dressing matters as the end of third quarter approaches. Traders said, though, there was a distinctive bend toward growth stocks within the sector, such as Acorda.

Spectrum Pharmaceuticals, Inc. was one of three biotechs collaborating on prostate cancer drugs with news out that sent the stocks soaring, but Spectrum more pronounced than the other two: GPC Biotech AG and Pharmion Corp.

"With the elections coming, the politicos in office have put all their resources in play to keep the interest rates low, keep oil prices declining and keep the market climbing. Folks are putting some of this cash to work," remarked a sellside biotech stock trader.

"There is a window dressing effect in commodities and oil stock sales already under way, albeit quite modestly. With next Monday being the start of the fourth quarter, I will be quite surprised if we [biotechs] do not close higher this week. Who would want to be in this sector in the fourth quarter? I think it is almost a universal expectation that biotechs are going to be hot this fall."

With the improvement in biotech stocks, not to mention the clock running out on raising capital for 2006, deal flow is expected to pick up in fourth quarter as well.

Acorda seen tapping markets

Acorda, the skyrocketing biotech stock Monday on positive phase 3 trial data for its multiple sclerosis drug Fampridine-SR, was at the top of the list of biotechs rumored to be considering a new deal soon. On the trial news, Acorda shares zoomed in unbelievable volume, but traders said the rally, combined with noise of a new deal, sparked profit taking late in the day.

"I bought in at $7.80, so I feel pretty good about it. Some people are saying there will be a big sell-off, profit taking," said a buyside market source in Boston.

"I don't think there will be a big dump, not in any huge numbers any way. There is so much more good news to come that I, anyway, don't plan on going anywhere anytime soon."

Acorda shares (Nasdaq: ACOR) were higher in premarket activity and opened at $6 - almost triple from the $2.22 level the stock went out Friday for the weekend, after hitting a new all-time low of $2.20 on Thursday.

The stock went as high as $8.68 before easing back to settle the day with a whopping $6.28 gain, or 282.88%, at $8.50. Some 23.7 million shares traded, versus the norm of 28,847 shares.

A sellside trader said there was a surge in selling in the afternoon, which tempered the stock's rise, but he said speculation that the company would launch a capital-raising effort was the impetus behind the selling.

"They will have to do a secondary [follow-on stock offer] very soon, no doubt about it. The money they raised in February is gone, or about gone. They will be knocking on everyone's door with their hat out again very soon," the trader said.

"On that thinking, and there was a fair amount of chatter along those lines, there was a big rush to get out the door before that happens because once a deal is launched the stock will come under a lot of pressure from the dilution.

In mid-February, Acorda priced its initial public offering of 5.5 million shares at $6 each - the low end of revised price talk of $6 to $7, which had been lowered from $11 to $13 per share. Of the $33 million in gross proceeds from the IPO, Acorda earmarked $20 million to $25 million to complete the phase 3 Fampridine-SR clinical trials.

"I think it [a follow-on stock deal from Acorda] is a good thing. Don't get me wrong," the trader added.

"I think a secondary will go much better than the IPO did. They have had a steady flow of positive news and I think they will be well-received."

Hawthorne, N.Y.-based Acorda focuses on multiple sclerosis, spinal cord injury and other central nervous system disorders. It has a marketed product, Zanaflex Capsules, approved for spasticity. On Monday, the company reported that in a phase 3 trial, Fampridine-SR achieved its main goal, which was to improve walking speed in MS patients taking the drug compared with patients taking a placebo.

The company said it will meet with the Food and Drug Administration as soon as possible to discuss the next steps for the Fampridine program.

GPC, Pharmion, Spectrum up

To a lesser degree, but impressive nonetheless with 20% to 45.5% gains, GPC Biotech, Pharmion and Spectrum were all sharply higher on positive results from a phase 3 trial of the prostate cancer drug Satraplatin in which they are all participating to some extent.

As for GPC Biotech's spike, one trader remarked, "It's a growing company, a good time to get in."

GPC Biotech shares (Nasdaq: GPCB) gained $4.77, or 34.07%, to $18.77.

Munich-based GPC Biotech is heading the effort to get FDA approval for Satraplatin, which has been granted fast-track designation by the FDA as a second-line chemotherapy treatment in hormone-refractory prostate cancer. The company said it expects to complete the New Drug Application by year-end.

Boulder, Colo.-based Pharmion said it plans to file for approval of the drug in Europe in the first half of 2007.

Pharmion shares (Nasdaq: PHRM) shares added $3.60, or 19.99%, to $21.61.

On Pharmion, he commented, "It might be a little late getting to this party but there is still some upside left."

"Spectrum was where there was a rush to get in," the trader continued. "Everyone was wanting in on the action, as this one has the most growth potential."

Satraplatin was licensed from Irvine, Calif.-based Spectrum. Milestone payments due to Spectrum, on acceptance and approval of regulatory applications in the United States and Europe, will be about $20 million with further payments due on achieving certain sales targets. In addition to milestones, Spectrum will receive royalties on worldwide sales of Satraplatin, and the company has co-promotion rights in the United States.

Spectrum shares (Nasdaq: SPPI) shot up $1.59, or 45.56%, to $5.08.

Dendreon steady at $4.49

Dendreon Corp., also with a prostate cancer drug in development - Provenge - and with a presentation coming up mid-week, was steady on the news, which one player thought was impressive in light of the Satraplatin news.

"Dendreon's Provenge has survival data already for HRPC [hormone refractory prostate cancer] and is also filing with the FDA by the end of 2006," said a buyside market source in Boston.

"Provenge has been proven to extend survival more than anything else in androgen independent prostate cancer with minimal side effects of mild fever and chills for a day or two. Provenge will be at least a $2 billion drug in the U.S. alone."

Dendreon shares (Nasdaq: DNDN) closed unchanged at $4.49.

"There were lots of bidders at $4.50 and buying at $4.51 - looks like this is the cover range for shorts," the buysider added. "It's only a matter of time before the stock really starts to move upwards as news proliferates about advancements in prostate cancer treatments. Smart money is adding and covering here as the news begins to spread."

He said Dendreon's presentation later this week may be a catalyst for a rise in the stock price.

Seattle-based Dendreon is scheduled to present at the UBS Global Life Sciences Conference in New York on Wednesday at 1:30 p.m. ET.

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