Predix IPO put on hold; Amgen spiral continues; Abgenix climbs; generics off despite Tamiflu talks

By Ronda Fears

Nashville, Oct. 20 - Primary market action was more hope than heart, it turns out, as the Predix Pharmaceuticals Holdings Inc. initial public offering failed to get off and as of Thursday timing is "to be determined " - the market euphemism for some future date when buyers are friendlier.

Predix had planned to sell 5 million shares proposed at $10 to $12 per share. The Lexington, Mass.-based biotech, formerly Bio Information Technologies Ltd., has its roots in Israel and plans to use proceeds to fund clinical trials. The company is focused on small-molecule drugs that target G-protein coupled receptors and ion channels, with three drug candidates - one for generalized anxiety disorder, one for Alzheimer's and one for pulmonary arterial hypertension.

For all of 2005, the IPO market has been especially tough for biotechs, but investment bankers in the life sciences area had been optimistic that that would change in fourth quarter, as companies needing capital would need to tap the markets before year-end. A biotech IPO has not priced since Sept. 29, when Avalon Pharmaceuticals Inc. went public with the sale of 2.75 million shares at $10.50 - the low end of the guidance range of $10 to $12.

In secondary action, Amgen, Inc. was a focal point as the top biotech continued to reel from missing revenue estimates. Several generic names were busy, too, on litigation news as well as Roche Holdings AG saying it would entertain talks with generic drugmakers in an effort to increase production of the vaccine Tamiflu, which is being used on the avian influenza strain.

Amgen slide ominous

Amgen Inc. extended losses Thursday, after dropping big after Wednesday's close on its somewhat disappointing revenue figures.

"Amgen had its big run last quarter," said a trader at a sellside desk. "Now it's payback time."

For the day, Amgen shares lost $3.99, or 5.11%, to close at $74.10. The stock saw some wide swings, however, going as low as $73.42 and as high as $75.75 during the session.

Several sellside analysts had suggested the stock would rebound once the market digested Amgen's earnings report and saw that its revenue miss was slight.

Indeed, one buyside market source noted that on Thursday "a lot of short covering is taking place, yet the price will not go up. Given the amount of short covering the price should have popped."

Amgen's convertibles also were heavily traded, at least the zero-coupon issue, the buysider continued. The 0% convertible traded down to 77 on Thursday, he said, a loss of about 1.75 points to outright holders but a gain of 1.25 points for convertible arbitrageurs.

Believers in Amgen, however, are showing patience.

"The pipeline is there," one buyside analyst said. "Delivery takes time, so if you're not a long-term investor then Amgen can be very painful."

Panitumumab is one of Amgen's new drugs that is being closely watched by Wall Street.

In its earnings report, Amgen said that panitumumab interim results from two ongoing trials support its ability to provoke tumor shrinkage when administered as a single agent every other week in patients with colorectal cancer who had failed prior intensive chemotherapy.

Abgenix vol, options enticing

The panitumumab data will form part of a Biologics Licensing Application which Amgen and partner Abgenix, Inc. plan to file in fourth quarter, and the Food and Drug Administration has granted fast track status to panitumumab for this indication. Abgenix soared Thursday in contrast to Amgen's big slide, buoyed still by buyout hopes, but more prominent were volatility players.

Abgenix shares closed up by 46 cents, or 4.79%, at $10.07 but at one point in early afternoon were as high as $10.80, a 6.5% gain from Wednesday.

"These little biotechs almost always get bought out for nice premiums if they have something good in their pipe," said another buyside market source. "But the swings in Abgenix this week have been from the hedgies who are playing the volatility.

"The open interests on Oct 10 calls and puts are phenomenal," the buysider continued "It is very likely that Abgenix will close between $9.75 and $10.25 today and tomorrow, when the October options expire, because the deep pockets will certainly try to keep Abgenix right at $10 before next week. Many have sold both $10 put and call options and they are making big money right now. That also means there might be large price swings next week."

Flu flap to tap generics

Swiss drug maker Roche Holdings AG has agreed to meet with four generic drug manufacturers willing to increase production of Roche's Tamiflu vaccine in case of an avian flu pandemic, U.S. Sen. Charles Schumer of New York told a news conference on Thursday.

The companies are Teva Pharmaceutical Industries Ltd., Barr Pharmaceuticals Inc., Mylan Laboratories Inc. and Ranbaxy Laboratories Ltd. India-based Cipla Ltd. has said it plans to produce a generic version soon, as well.

Despite the news, most of the generics involved in the story were lower on the day, which one sellside trader attributed to the negative undertones from Amgen.

"So goes Amgen, so goes the market," the sellsider said.

Mylan was the only riser, albeit slight, among the names Roche plans to tap for the flu vaccine production. Mylan shares gained 16 cents, or 0.78%, to $20.80.

"I'm personally glad to see Mylan in the news and taking advantage of it," the sellside trader said. "Mylan has positioned itself very well for the short term."

Roche has agreed to sublicense Tamiflu production to any company that can produce it in sufficient quantities. Tamiflu, known generically as osteltamivir, is considered, so far, the first line of defense against the H5N1 avian flu virus. Governments have inundated Roche with orders, aiming to stockpile the vaccine in the event of a pandemic outbreak.

Gilead Sciences Inc., which developed the vaccine, has challenged Roche to return the marketing rights, asserting Roche was not aggressive enough in promoting it. Gilead shares were off Thursday, as well, dropping 80 cents, or 1.74%, to $45.21.

Barr, Impax Labs off on suit

Shire Pharmaceuticals plc said Thursday it has filed a third patent infringement lawsuit against Barr Laboratories Inc. and Impax Laboratories Inc. over generic versions of its attention deficit hyperactivity disorder treatment Adderall XR.

The latest suit, the third by Shire over Adderall XR, alleges infringement of a patent covering the sustained release of the drug's amphetamine salts. The patent was issued to Shire in July. The previous patent suits against Barr and Impax over Adderall are slated for trial in 2006.

Barr shares dropped 36 cents on the day, or 0.63%, to $56.96, and one buyside market source said late-day buying on the weakness helped it recoup earlier losses.

"We are expecting Barr will make high margins, increase sales and move more sales revenue from the unstable generic side of the aisle to the branded side," the buysider said. "It is long-term thinking and all about building a business. They are very smart, with several irons in the fire, or moving parts, as they put it."

Impax Labs shares fell 20 cents, or 1.9%, to $10.30.

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