Exelixis follow-on set for Oct. 2 week; ImaRx on tap; Biomira bounces; Labopharm, Pharmacopeia lower

By Ronda Fears

Memphis, Sept. 29 - The coming week's business will be the biggest slate of new deals for biotech players in months and may very well serve to test the waters of how fourth quarter will go as the clock ticks away for raising capital this year. That said, amid admittedly strained conditions, ImaRx Therapeutics Inc. pushed its IPO to the Oct. 2 week.

"There was no interest," said a buyside market source focused on IPOs, referring to the ImaRx delay. "And, the UBS conference has sucked all of the buyers out of their chairs."

UBS Investment Bank held its Global Life Sciences Conference all week in New York.

ImaRx's initial public offering of 5 million shares is still proposed at $10 to $12 per share, at least as of the end of the day Friday. Tucson, Ariz.-based ImaRx, focused on drug candidates for stroke and vascular disease proceeds, has earmarked proceeds to repay debt, fund development and general corporate purposes. The company has Abbokinase to treat pulmonary blood clots on the market, two others in phase 3 and four others in earlier stages of development. Joint lead managers are CIBC World Markets (bookrunner) and Jefferies & Co.

A couple of other IPOs that have shadowed the calendar are slated to price during the Oct. 2 week.

Light Sciences Oncology Inc. is pitching 5.25 million shares in a range of $14 to $16 per share. The Snoqualmie, Wash., biotech has slated proceeds to fund research and development. The company is developing Light Infusion Therapy for a wide range of solid tumors, with phase 3 trials for hepatoma and metastatic colorectal cancer under way and a phase 2 trial for glioma scheduled by year-end followed by a phase 3 trial in early 2007.Cowen & Co. and Wachovia Securities are joint bookrunners.

Rosetta Genomics Ltd.'s IPO of 3 million ordinary shares are proposed at $11 to $13 per share. The Rehovot, Israel, early stage biotech develops microRNA-based therapeutic and diagnostic treatments for cancer and infectious diseases. Proceeds are slated to fund development and general corporate purposes. C.E. Unterberg, Towbin is bookrunner.

Exelixis timing some concern

In addition to the trio of IPOs slated for the Oct. 2 week, Exelixis Inc.'s follow-on offering of 9 million shares is scheduled for Wednesday's business, according to market sources. While the deal is broadly expected to go well, players already involved in the story said there was some concern about the deal.

"The thing that worries me slightly is the timing of this offering. They had ample opportunity to sell shares in the $11s, but they didn't. Now, just a couple of months before they're going to be providing some updates on the results of the clinical trials of some of their most important drugs, they decide to dilute," said a buyside source in Boston.

"I hope the timing is not because management knows the results of some of the trials are not as good as expected, and they know this may be their last chance to raise cash at a decent price for a while. The timing just seems really strange. They could've done it a few months ago at a higher price, or if all of the trials are going well, they could have waited a few months and done it at a higher price then, especially since they have no immediate need for the cash.

"Thus far, management has run the business really well, so I guess we have to give them the benefit of the doubt and assume they'll continue to run the business wisely. The stock price held up really well after the news, so that's a positive."

Exelixis shares (Nasdaq: EXEL) closed Friday off by 32 cents, or 3.54%, to $8.71. On Wednesday when the deal was announced, the stock closed at $9.05.

The South San Francisco, Calif.-based biotech, focused on cancer, renal disease and various metabolic and cardiovascular disorders, plans to use proceeds for research and development. The company has drugs in various stages of clinical trials, including phase 3, and collaborations with GlaxoSmithKline plc, Bristol-Myers Squibb Co., Helsinn Healthcare SA, Wyeth and Genentech, Inc.

Meanwhile, in the secondary market, traders said on Friday that despite the empty seats because of conferences it was "chaotic" in terms of trading patterns as spikes in several stocks during the week increased ahead of profit taking Friday.

Onyx gains, gets fat equity line

Onyx Pharmaceuticals, Inc. announced after the close Friday that it has secured a $150 million two-year equity line with Azimuth Opportunity Ltd. with proceed proceeds to fund the commercialization and further development of its lead product, Nexavar, for advanced kidney cancer.

"You gotta love it," said a sellside trader. "Volume was almost four times the average volume, with no news until this [equity line] hit the wire after the close. It doesn't get much better than this."

After trading in a band of $16.78 to $17.88, Onyx shares (Nasdaq: ONXX) settled Friday's session at $17.29, a gain of 37 cents on the day, or 2.19%.

Emeryville, Calif.-based Onyx develops therapies that target the molecular mechanisms implicated in cancer. It has a collaboration with Bayer AG regarding Nexavar.

BioSante bounces back by 20%

Lincolnshire, Ill.-based BioSante Pharmaceuticals, Inc. bounced back Friday from a big decline earlier in the week, and market sources attributed it to strong buying after the company's presentation at the UBS conference on Thursday.

BioSante shares (Amex: BPA) gained 32 cents, or 20%, to close Friday at $1.92. Earlier in the week, the stock took a 14.5% hit from tax loss selling, according to traders.

That was followed by "very strong hands buying the last two days," a trader said Friday. "They are looking for excellent news regarding partnering progress."

Acorda ends wild week higher

Extending gains throughout the week, Acorda Therapeutics, Inc. ended solidly higher Friday although traders said the stock saw extreme volatility following news Monday that phase 3 trial data for its drug Fampridine-SR was showing improved walking ability for multiple sclerosis patients.

The stock was up 19% before the bell as research notes circulated with an upgrade from Piper Jaffray and the stock was firmly higher during the session but came off the highs of the day considerably. After trading in a band of $8.93 to $10.13, Acorda shares (Nasdaq: ACOR) settled Friday higher by 50 cents, or 5.78%, at $9.15.

"What a beautiful week! I bought in at $6.10 and sold at $8.20 on Monday, shorted at $11.40 (average) on Tuesday, covered at $8.60 on Thursday and went long at $8.50. I sold at between $9.90 and $9.98 today, and will finally, go long at around $9.00," said a sellside trader. "Fantastic! I can't believe it! Acorda is a good stock for trading. It's been a wild week!"

There was quite a bit of selling into the rally, though, and, indeed, traders said there was huge volume in the stock all week, but some were leery about holding the stock come Monday.

"I would be afraid to hold this over the weekend," said another trader. "One bad piece of press and it drops 50% easily. Remember they drop much faster than they rise. I would sell now and play it safe."

Labopharm slammed, off 23%

In another volatility trade, Canada-based Labopharm, Inc. was pushed lower as there may be a roadblock for U.S. approval of its painkiller Tramadol, which has been approved in Europe and is preparing to commercially launch there soon.

"Look at this volatility! I really think prices were being driven down to get shares on the cheap," said a buyside source in New York.

Labopharm shares (Nasdaq: DDSS) fell $1.66, or 22.69%, to close at $5.65 with 5.3 million shares traded versus the norm of 125,706 shares.

Laval, Quebec-based Labopharm said it received an approvable letter from the Food and Drug Administration for Tramadol, meaning that certain issues need to be addressed before the FDA gives the final approval but said it does not think additional data will be required. Labopharm plans to meet with the FDA soon to discuss the issues.

"The drug is already marketed in Europe. This was an over-reaction," the buysider continued. "I think maybe this loss is a buying opportunity."

Tramadol, Labopharm's lead in-house product, has received regulatory approval in 22 European countries and commercial launch of the product across Europe is underway.

Biomira wait a trying exercise

Another Canadian name, Biomira, Inc. was rebounding Friday from a drop the previous day on some "skittish" selling on news of its $100 million equity shelf getting clearance at the Securities and Exchange Commission, a trader said. But he said it may be a good entry point in the stock as a deal might signal that it was preparing to make an acquisition.

Biomira shares (Nasdaq: BIOM) gained 2 cents, or 1.92%, to close at $1.06.

"We know they are buyers, it's just been trying to wait this out," the trader said. "I am thinking they must have something specific in mind now."

In June, Biomira retained Janney Montgomery Scott to help explore pipeline development options, saying it was seeking mid-stage products with good safety and efficacy data with an immediate focus on oncology. The company noted that Merck KGaA took full control of the phase 3 study program for its lead cancer vaccine product, Stimuvax for lung cancer, on March 1.

Biomira has a collaboration agreement with Chiron Corp. for the co-development of Theratope for breast cancer and a license and development agreement with Prima BioMed, Ltd. for the development and commercialization of a Mannan-MUC1 fusion protein therapeutic vaccine.

"These guys are looking to expand their pipeline but with $26 million in cash left and three to four years before Stimuvax trials are completed (there will be a small milestone payment from MerckKGaA with start of phase 3) so they need some money to work with," the trader said.

"The problem is that there is nothing to prop the stock up past $1. Something that could change the outlook might be the sale of Theratope, but I don't think that's likely."

Pharmacopeia players sell out

To the other extreme, Pharmacopeia Drug Discovery Inc. players were taking profits Friday.

The stock made a run in the latter half of the week on news that a collaboration with Schering-Plough Corp. had been extended to April and that it plans to start human studies for a high blood pressure drug in first quarter 2007.

After a 9% gain the day before, Pharmacopeia shares (Nasdaq: PCOP) closed Friday off by 23 cents, or 5.72%, at $3.79.

"It was nice news, but not extraordinary," said a sellside trader. "This is still very early stage biotech stuff. And, it is not a drug they developed, so they will be paying out royalties on it."

By the end of 2007, the company hopes to have a second early stage trial under way, with a mid-stage trial started by the second half of 2008. The company licensed the experimental compound from Bristol-Myers Squibb Co. in March. Under the license, Pharmacopeia will make payments to Bristol-Myers at clinical and regulatory milestones, as well as royalties.

Terms of the Schering-Plough deal calls for the major pharma to pay Pharmacopeia for 10 full-time chemistry employees and fund preclinical, clinical and regulatory milestones of drug candidates resulting from the partnership.

Pharmacopeia's most advanced internal program is a dual-acting angiotensin and endothelin receptor antagonist for hypertension and diabetic nephropathy that is in preclinical development. It has other programs researching JAK3 inhibitors (immunomodulators for multiple potential indications, including transplant rejection, psoriasis and rheumatoid arthritis); CCR1 antagonists (with potential in inflammatory diseases such as rheumatoid arthritis and multiple sclerosis); adenosine A2A antagonists (with potential in neurodegenerative diseases, including Parkinson's and Alzheimer's); and avb3/avb5 inhibitors (with potential to block angiogenesis in cancer and inflammation).

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