KV Pharmaceutical stock up on patent ruling; biotech offerings take a back seat to tech market

By Sheri Kasprzak

New York, Jan. 18 - KV Pharmaceutical Co. led biotech news Wednesday with word it won a motion for summary judgment in U.S. District Court in a patent infringement case filed against the company by AstraZeneca plc.

On Wednesday, KV's stock gained 9.82%, or $2.16, to end at $24.15 (NYSE: KV).

In the judgment, the U.S. District Court for the Eastern District of Missouri found that two patents held by AstraZeneca were invalid and unenforceable. KV had been seeking approval to market generic formulations of AstraZeneca's Toprol-XL for hypertension.

AstraZeneca has the right to file an appeal in the case.

"We have stated throughout the litigation process that we believed our legal position was meritorious," said Marc Hermelin, KV's chief executive officer, in a statement released Wednesday afternoon. "We are extremely pleased with the court's ruling in our favor.

"We look forward with anticipation to the pending approval of this product and the subsequent exclusive marketing of the two strengths for which we believe our company is first to file by our generic/non-branded division, Ethex Corp. We believe that Ethex has proven itself over the past 15 years to be an exceptional competitor in the generic marketplace, and we are excited about the significant opportunity this expected introduction should present to Ethex's growing business."

St. Louis-based KV develops branded and generic pharmaceutical products.

In the broader biotech market, volume in both convertibles and private placements was light, according to several sellside sources.

Activity in the convertibles of biotechnology names on Wednesday was particularly thin, though stabilized after profit-taking struck the sector at the end of last week.

"I didn't trade a single thing all day," said a Connecticut-based sellside trader, who focuses on the biotechnology sector.

"Biotech was slender, there was more a focus on technology," said one New York-based sellside trader.

Another source said, "Biotech was overshadowed by technology."

Any trades that were mentioned were mostly flat. Medimunne Inc.'s 1% convertibles traded a little, unchanged at 98, versus a share price of $33.70. In contrast its shares (Nasdaq: MEDI) regained 53 cents, or 1.57%, to $34.22 after slipping Tuesday amid no particular news.

In the wider health care space, Laboratory Corp. of America Holdings' 0% convertibles were mentioned in trade at a level little changed at 79. Cephalon Inc., which ratcheted up in December and early January, saw a little trading of its convertibles on Wednesday, with its 2% bonds tracing at 163.8, compared with trades a week ago at 170.5.

In PIPEs, Cytokinetics, Inc. announced a direct offering, but otherwise biotech activity remained light, according to one sellside source.

"There's not much going on today," he noted. "One or two really small things, from what I've seen."

Cytokinetics to raise $33 million

Moving back to the Cytokinetics deal, the company plans to issue 5 million shares at $6.60 each to Federated Kaufmann and Red Abbey Venture Partners, among other institutional investors.

The shares will be sold under the company's shelf registration.

The offering is slated to close on Jan. 23.

The offering was announced Wednesday afternoon, and the company's stock edged up 2.67%, or $0.184, to settle at $7.074 (Nasdaq: CYTK).

Based in South San Francisco, Calif., Cytokinetics is a biopharmaceutical company focused on the development of novel small-molecule drugs that target the cytoskeleton.

Arena stock closes up

Arena Pharmaceuticals Inc.'s stock closed up Wednesday just ahead of a follow-on offering of stock.

The company's stock gained 55 cents, or 3.38%, to end at $16.81 Wednesday (Nasdaq: ARNA).

The follow-on offering was set to price after close of market on Thursday, according to a source familiar with the deal.

Arena intends to sell 8.5 million shares with a greenshoe of 1,275,000 shares.

The offering is being placed through joint bookrunners CIBC World Markets Corp. and UBS Investment Bank and agents Needham & Co., LLC; Piper Jaffray & Co.; SG Cowen & Co., LLC; Morgan Joseph & Co. Inc.; and Montgomery & Co., LLC.

Targacept plans $59.8 million IPO

Targacept announced its plans to raise $59.8 million in an initial public offering.

Deutsche Bank Securities, Pacific Growth Equities, CIBC World Markets Corp. and Lazard Capital Markets Inc. are the underwriters for the offering.

If it does go public, Targacept intends to list its shares on Nasdaq under the symbol "TRGT."

Based in Winston-Salem, N.C., Targacept develops treatments for Alzheimer's disease and other neurological disorders.

Nanogen enters into joint agreement

Nanogen Inc. entered into a manufacturing and distribution agreement with Princeton Biomeditech Corp. on Wednesday, sending the company's stock up slightly.

Nanogen's stock gained 14 cents, or 4.76%, to end at $3.08 (Nasdaq: NGEN).

Under the terms of the joint agreement, Princeton Biomeditech may develop in vitro diagnostic assays in Nanogen's portfolio of products. Princeton also has the option to license and sublicense Nanogen's biology markers for congestive heart failure, stroke and traumatic brain injuries.

Nanogen, based in San Diego, develops diagnostic products for research laboratories.

Acadia stock closes up

A day after completing a $9,996,600 private placement with collaborator Sepracor Inc., Acadia Pharmaceuticals Inc.'s stock edged up Wednesday.

The company's stock closed up 3 cents, or 0.28%, to finish at $10.77 (Nasdaq: ACAD).

On Tuesday, when the deal closed, the company's stock gained 3 cents to end at $10.74.

In the private placement, Sepracor bought shares at $12.29 each, a 25% premium to the 30-day trailing average price as of the one-year anniversary of the collaboration agreement.

Back in January 2005, the two companies entered into the collaboration to develop drug candidates for Acadia's pre-clinical drug program for central nervous system disorders.

Based in San Diego, Acadia is a biopharmaceutical company focused on developing treatments for central nervous system disorders.

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