Discovery Labs bounces; Biomira looks for acquisitions; Curis hits new low; Human Genome higher

By Ronda Fears

Memphis, June 20 - Discovery Laboratories, Inc. got a shot in the arm Tuesday after announcing it had retained Jeffries & Co. to explore strategic alternatives - a catch phrase for putting itself on the auction block, among other things, for troubled companies - following a gigantic landslide in the stock price over the past six weeks or so.

"Discovery is considering multiple alternatives including, but not limited to, potential business alliances, commercial and development partnerships, financings, business combinations and other similar opportunities," the company said in a statement.

The stock has taken a pounding since April 25, when it announced it was abandoning further development of its respiratory treatment Surfaxin for premature infants due to ongoing problems with Food and Drug Administration approval over its manufacturing process. At the time, Discovery said that it would be looking for strategic partners.

Discovery Labs shares (Nasdaq: DSCO) on Tuesday gained 33 cents, or 24.63%. The stock lost more than 50% following the April news and has continued to lose ground ever since. In early May, the company cut its staff by 34% and earlier this month withdrew its application for European approval of Surfaxin. Last week, the stock added back more than 25% in one day as speculative buyers stepped in.

"I feel pretty good right now, you know, because this was one of the sinkers, or stinkers maybe, that I was buying throughout this ordeal," said a buysider. "There will probably be no positive spin on this for anyone who got in for over $4.50. There's no candy coating this situation. But I bought really cheap to that, and took a lot of guff because of it, but I'm happy now."

He added, though, that if the company goes belly-up, or the way of bankruptcy, he would be "screwed along with everyone else," and noted that Discovery Labs inked a three-year $50 million equity line with Kingsbridge Capital Ltd. right before the April 25 news. "Market chatter is that they [Kingsbridge] will not let the ship go down," he said.

Biomira looking to be buyer

Canadian cancer biotech concern Biomira, Inc. did not get as much play out of news it had retained Janney Montgomery Scott to explore in-licensing and acquisition deals as a buyer. The stock lost ground in Toronto while gaining slightly in the United States.

Biomira said that Germany-based Merck KgaA taking over phase 3 trials for its Stimuvax cancer vaccine product cleared the way for it to seek other opportunities. The Edmonton, Alta., company said it wants to focus on oncology products and is looking for mid-stage drugs with option rights or a license to earlier-stage product candidates.

"Our goal is to complete our due diligence in the next few months and then be able to discuss our expanded pipeline more fully," Biomira interim chief executive Edward Taylor said in a statement.

Biomira shares (Nasdaq: BIOM) added 3 cents, or 2.61%, to $1.10.

In Canada, the stock (Toronto: BRA) lost C$0.03, or 2.44%, to C$1.20.

Curis dive sparks buying

Curis, Inc. was off sharply to another new 52-week low amid light volume, which traders said brought in some buyers in the afternoon.

"Curis has lots of upside potential. It's simply oversold," said one market source. "Curis has more than 200 U.S. patents, strong alliances with major pharma companies, is supported by institutions (more than 43% of ownership in Curis) and has enough cash to sustain operations for the coming years."

The stock hit a new 52-week low on Monday, he added, and basically has "taken a beating during the sector routing."

Curis shares (Nasdaq: CRIS) fell 11 cents on the day, or 7.43%, to settle at $1.37, eclipsing the previous low of $1.46 set on Monday. The 52-week high for the stock is $4.94.

Earlier this month the company announced a new strategic focus on later-stage drug development programs and plans to de-emphasize its earlier-stage discovery research. As part of the shift away from early stage discovery research into later-preclinical stage drug development, its chief scientific officer, Lee Rubin, is to step down to take a position at the Harvard University Stem Cell Institute. Joseph Davie, a board member of the company, will serve as interim chief scientific officer and will help build a scientific team.

Human Genome rises 2%

Human Genome Sciences Inc. rose Tuesday after the biotech drug maker announced the federal government will buy $165 million worth of anthrax treatment for its national stockpile. The stock gained some, but a market source suggested it should go much higher as the news is digested and given proper due.

Under the agreement, Human Genome Sciences will supply 20,000 doses of its ABthrax anthrax treatment to the Strategic National Stockpile in 2008 as part of the Project BioShield program.

"This is a lot more than anyone anticipated, on a price per dose basis. The value of the contract is a lot better than expected," said a buyside analyst.

"Unfortunately, news is not always enough to make a stock soar, especially this one, as we see. Human Genome's annual revenues are $19 million or so and this contract is for $154 million. You see what I mean. I would recommend offsetting the shorting strategy by moving large blocks to the bid column and if you get a taker then buy them back immediately. The only way to get ahead on this story right now is in the margin."

Human Genome Sciences shares (Nasdaq: HGSI) added 16 cents on the day, or 1.63%, to close at $9.96.

Corgentech shares lose 3%

Corgentech Inc. shares lost a little ground Tuesday on news that it has received a two-year equity line for up to $30 million from Azimuth Opportunity Ltd., with the draws at an undisclosed discount to the prevailing market at the time of the drawdown.

South San Francisco, Calif.-based Corgentech, which is focused on pain management drugs, said it would use any funds for corporate and clinical development.

"Corgentech is moving 3268, our first product for pain management, toward commercialization," said company chief financial officer Richard Powers. "This equity commitment facility provides us with the flexibility to opportunistically raise additional capital over the next 24 months to pursue our business plan, including the potential product launch of 3268 next year."

A buysider in Boston said Corgentech was sliding in the face of the funding news because of concerns about competition for its capsaicin from NGX-4010, a pain treatment from San Francisco-based NeurogesX, Inc. that has shown great phase 3 results. NGX-4010 is closely held NeurogesX's first product candidate; it is described as a pure, high-concentration form of synthetic capsaicin, known as trans-capsaicin, delivered directly to the site of pain via a rapid-delivery dermal application system.

Corgentech shares (Nasdaq: CGTK) dropped 22 cents, or 2.67%, to end at $8.02.

Millipore preps new bond deal

Millipore Corp. was heard to be preparing to market a split-rated €250 million issue of 10-year senior notes to potential investors, high-yield syndicate sources said Tuesday. It will be the biotech laboratory services concern's second trip to tap bond investors in less than a month.

They said the bond issue will come off the European desks of joint lead managers Banc of America Securities LLC and UBS. The deal will have a roadshow from Wednesday through Friday, with pricing anticipated early next week.

The issue will carry a Ba2 rating from Moody's Investors Service and a BBB- rating from Standard & Poor's.

Billerica, Mass.-based Millipore, which provides analytical and research services to biotech firms, will use the new-deal proceeds for general corporate purposes.

The bond issue will be Millipore's second trip to the debt markets this month. The company recently sold $550 million of 20-year 3.75% convertible senior notes, using the proceeds to fund a portion of its $1.4 billion all-cash acquisition of Serologicals Corp., a consumable biological products manufacturer. That acquisition was announced in April and is expected to close by the end of this month.

Millipore shares (NYSE: MIL) slipped 9 cents on the day, or 0.14%, to $61.98.

Paul Deckelman contributed to this article.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.