CV Therapeutics gains after pricing follow-on; Acadia adds again; Accentia slides

By Ronda Fears

Memphis, Aug. 16 - As biotechs pitched higher again Wednesday, marching in sync with the broader market, traders said they remained optimistic, but there were some skeptics still lingering.

"Of course the broad markets can greatly influence overall sentiment at any given time. Right now the markets are in rally mode due to the no inflation hype. We'll see how far this can go before it runs out of gas. Sometimes it's best to utilize these mini rallies to sell into," said a buyside market source in Chicago.

"I'm just saying be careful with what seems to be a change in trend. Be aware of the much bigger picture. For a lot of individual biotech names, this is a small move up within a confirmed downtrend."

In that vein, Acadia Pharmaceuticals, Inc. was one he specifically mentioned. For a second consecutive day following a sellside buy recommendation, Acadia shares (Nasdaq: ACAD) gained, adding Wednesday another 58 cents, or 9.18%, to settle at $6.90.

"Fundamentally nothing has changed for this company [Acadia]. Thank the broad markets, short covering and speculation for this two-day retracement. By the way, here's something to think about, it's regarding the Bank of America initiation from yesterday [Tuesday], note the key words 'extreme volatility' and 'unprofitable,' " the buysider said.

Going on to reference the report, he added, "Risks for the company are risks seen with many early- and mid-stage biotechnology companies. They include the early stage of development with many of its treatment candidates and the company's need for external financing, as it is currently unprofitable. Also, [the Bank of America analyst] gives the company an 'extreme' rating for its volatility, citing the fact that it is unprofitable."

CV deal slightly discounted

After pricing an upsized deal that was only 2.5% discounted from the current market, CV Therapeutics, Inc. shares were higher on strong volume Wednesday.

CV Therapeutics shares (Nasdaq: CVTX) traded up by 14 cents, or 1.44%, to close Wednesday at $9.89.

The company raised $85.5 million in gross proceeds from an upsized follow-on offering of 9 million shares - boosted from 7.5 million shares - priced at $9.50 each, discounted from Tuesday's close of $9.75, via joint bookrunners Lehman Brothers Inc. and Merrill Lynch & Co.

A fan was enthused by the level of demand for the deal, indicated by the upsizing, noting the stock was sharply higher in pre-market activity.

"A great pricing for a great company, plus they got more cash with the extra shares, [it's] a great day for the CV Therapeutics longs and biotech aficionados," the buyside source said.

"There was so much demand for the secondary that they increased the size to 9 million at $9.50 per share. This company not only has the products but an awe inspired audience captivated by visionary management."

But, a nay-sayer who was disappointed with the deal when it was announced, because of the timing in relation to the stock's proximity of the 52-week low of $9.45, continued to disagree that it was a good thing to do.

"Issuing at $9.50 - Ha! Management clearly messed up, royally, by not doing this earlier and they clearly see the price going much lower," he remarked.

"Look out; I say this is going to get crunched!"

Palo Alto, Calif.-based CV Therapeutics plans to use proceeds to fund commercialization of products and clinical trials, among other general corporate purposes.

The company has Ranexa and Aceon approved as cardiovascular drugs but is in studies to expand the label indication for Ranexa. It also has regadenoson in phase 3 trials as a pharmacological agent in myocardial perfusion imaging in anticipation of filing a New Drug Application in 2007.

Accentia loses over 4.5%

Accentia Biopharmaceuticals, Inc. stock took a huge dive Wednesday as players signaled more downward pressure.

Accentia shares (Nasdaq: ABPI) lost 14 cents on the day, or 4.56%, to end at $2.93.

The downward movement followed Accentia reporting disappointing fiscal third-quarter results a day earlier. The results showed sharply dwindling cash resources in the face of launching what the company refers to as two potential "blockbuster" drugs.

On Tuesday, the company posted a quarterly net loss of $12.1 million, or 40 cents a share, widened by $2.2 million from the same period in 2005, as revenues grew by $100,000 to $5.7 million. The company said its capital resources at the end of the quarter were $9.1 million, in addition to an inter-company demand note in the amount of $7.1 million.

"It's a critical time for them [Accentia], and the numbers just stink," said a sellside trader.

In the 10-Q, the company said, "We may consider additional strategic financing options, including sales of assets or business units (such as specialty pharmaceuticals, market services or cell culture equipment) that are non-essential to the ongoing development or future commercialization of SinuNase, or we may be required to delay, reduce the scope of, or eliminate one or more of our research or development programs or curtail some of our commercialization efforts."

Accentia said its primary focus is threefold: the commercial launch of its dose-counting inhaler MD Turbo, development of SinuNase - which it described as a "potential blockbuster" inhaler for chronic sinusitis - and, through subsidiary, Biovest International, Inc., development of "another potential blockbuster" product, BiovaxID, a personalized vaccine for follicular non-Hodgkin's lymphoma.

At June 30, Accentia noted that it also owned Biovest common shares valued in excess of $50 million based on the market price at the close of the quarter.

Biovest shares (Nasdaq: BVTI) on Wednesday were unchanged at $1.19.

ViroPharma spikes over 10%

In anticipation of Wyeth buying ViroPharma, Inc. shares - following a milestone announced Monday that would trigger a $10 million equity purchase by the Big Pharma concern - the stock gained more than 10% on Wednesday.

Even with the Wyeth purchase gauged as a major factor in the stock's gain, traders said the stock was a "hot" pick right now.

"I personally feel that we are on the verge of a big momentum swing, and it may last until at least the end of September," said a sellside market source.

ViroPharma shares (Nasdaq: VPHM) gained 93 cents, or 10.65%, to close at $9.66.

Wyeth shares (NYSE: WYE) declined by 34 cents on the day, or 0.71%, to $47.30.

The two companies said Monday that the experimental hepatitis C drug they are jointly developing achieved a proof-of-concept milestone under their research agreement, which will trigger a requirement that Wyeth purchase $10 million worth of ViroPharma stock.

Phase 1 data on HCV-796 is anticipated by the end of August with phase 2 studies expected to begin in fourth quarter.

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