Novavax, Nastech flu names on a tear; BioMarin higher on trial; Elite bobs, Titan slips on PIPEs

By Ronda Fears

Memphis, March 16 - Influenza vaccine biotech Novavax, Inc., which also develops products for several other health problems, extended its tear of new highs Thursday - the fourth in as many days - and virtually the entire pack of bird flu names followed suit. Many were making presentations at conferences or due to report results, as was the case for Nastech Pharmaceutical Co. Inc.

Generex Biotechnology Corp. and BioCryst Pharmaceuticals, Inc. were a couple of other flu names joining the rally.

Charles Bugg, chief executive of Birmingham, Ala.-based BioCryst, was making a presentation at the Birmingham Venture Club on Thursday, highlighting the company's financial health and drug development pipeline. Its lead flu drug, Peramivir, just launched a phase 1 trial earlier this month. BioCryst shares (Nasdaq: BRCX) added 27 cents, or 1.41%, to end at $19.36.

Generex also was closing in on a new 52-week high ahead of a presentation on its H5N1 avian influenza vaccine program at the upcoming DNA Vaccines Forum in London on Friday.

"I am hoping that this will get an end-of-the-day rally and break the 52-week high," said a buyside source involved in Generex. The stock did not quite make it, though. Generex shares (Nasdaq: GNBT) gained 23 cents Thursday, or 9.62%, to settle at $2.62. The 52-week high on the stock is $2.75, hit Feb. 27.

Novavax gains another 4%

Malvern, Pa.-based Novavax announced Thursday approval by the federal government for a third year of research in a 4.5-year program to develop an HIV/AIDS vaccine, which brought it a $1 million check, but its work in the flu vaccine area has been the source of its recent popularity.

Novavax shares (Nasdaq: NVAX) hit yet another 52-week high Thursday, adding 30 cents, or 4.29%, to close at $7.30.

The stock has been on a tear since earlier this week when a sellside analyst called its potential bird flu vaccine "the best" out there. Novavax, which has mainly focused on drugs for women such as prenatal vitamins, contraceptives and hormone replacement therapies, is now working on creating a vaccine for the H5N1 avian flu. Since the first of the year, the stock has gained more than 60%.

"In order to prove the efficacy of Novavax's vaccine, a large phase 3 trial will have to be accelerated with their seasonal flu vaccine. It is the seasonal vaccine that has the $4 billion per year market," said a buyside analyst. "The commercial potential of this company will be accelerated."

Nastech data pushes stock up

Ahead of a conference call after the closing bell, Bothell, Wash.-based Nastech presented results demonstrating the effectiveness of its small interfering RNA, or siRNA, therapeutics to broadly target and inhibit influenza viral production at a symposium on respiratory viral infections conference.

"It is HUGE! Nastech just hit a homerun," said a buyside market source in Boston.

In vitro and in vivo results were presented for siRNAs that are specifically designed to target conserved regions of the flu viral genome.

"Nastech's goal is to rapidly develop a safe and effective treatment that is broadly applicable against current and future influenza strains so that the medical community can be better prepared for an influenza pandemic, which has become an impending threat to worldwide public health," said Nastech chief executive Steven Quay, in a prepared statement.

On Wednesday, Nastech announced a deal to test several compounds for health care giant Novo Nordisk A/S to determine whether they can be delivered through the nose, but did not name the compounds or financial details of the agreement. Just a few weeks ago, Merck & Co., Inc. pulled out of a partnership with Nastech for an obesity spray treatment.

"This is a broad validation of our technology," Quay said, referring to the Nordisk deal and others, such as one with Procter & Gamble Pharmaceuticals Inc.

Nastech results rein in gains

Separately, Nastech also released fourth-quarter and 2005 results late Wednesday, but the conference call was not slated until after Thursday's closing bell, and that was a drag on the stock's rise, traders said. Some players were hesitant, one trader said, about more news coming out of the call.

Nastech shares (Nasdaq: NSTK) were higher by as much as 3% early in the session Thursday but eased way back to end the day higher by just 6 cents, or 0.38%, at $15.77.

"The battle of the options is alive and well, unless we get another after-hours conference call surprise," said a sellside trader, reminding that options expire Friday. "We were seeing a huge gap in the bid and ask [price] after-hours. Options say a run to $17.50 is more likely by [Friday] tomorrow."

Nastech's fourth-quarter loss grew to $8.9 million, or 44 cents a share, versus a net loss of $5.9 million, or 41 cents a share, a year earlier, while revenues fell to $1.3 million from $1.5 million.

For 2005, the company reported a loss of $32.1 million, or $1.72 a share, compared with a loss of $28.6 million, or $2.21 a share, as revenue rose to $7.4 million from $1.8 million.

BioMarin shares zoom on trial

BioMarin Pharmaceutical Inc. continued to climb Thursday after positive study data on its Phenoptin for mild-to-moderate forms of phenylketonuria, or PKU, a metabolic disease caused by a deficiency of the enzyme phenylalanine hydroxylase.

BioMarin shares (Nasdaq: BMRN) jumped $2.61, or 21%, to $12.45 in premarket action. The stock eased back in the regular session, settling the day higher by $1.47, or 11.81%, at $13.92.

"Sensible minds have now superseded the irrational exuberance of momentum-traders," said a sellside trader at around noontime. "The trade was in the volatility."

BioMarin and its partner, Serono SA, plan to apply for marketing approval for Phenoptin in the United States and European Union in 2007.

BioMarin convertibles join party

BioMarin Pharmaceutical's convertible bonds rose with the stock, but analysts said holders would not fare extremely well if the stock had continued on the upward spike seen early in Thursday's session.

The 3.5% convertible due 2008 was seen at 113.75 bid, 114.5 offered versus a stock price of $15.

"They're trading at about a 7-point premium, and they're callable in June 2006. Right now the stock is very close to the strike price [of $14.21]," said a sellside analyst.

"If the stock pulls back after the news, those traders on a 70 delta will do well on the stock and continue to collect on the coupon," he said. But if the stock goes past the strike price, "then they'll definitely be called and you risk losing your 7-point premium."

The stock closed out the day at $13.92, versus the strike price of $14.21.

Elite dips, bounces back

Elite Pharmaceuticals, Inc. wrapped up a $10 million private placement of series B convertible preferreds, which initially sent the underlying stock lower by more than 2%, but there was a late afternoon bounce that edged it just into positive territory.

"[It] Should be a good ride today," said a sellside trader Thursday morning, even as the stock was headed south.

After trading as low as $2.10 in the first hour of trade, Elite shares (Amex: ELI) ended Thursday higher by 2 cents, or 0.89%, at $2.27.

The company sold 10,000 shares of the convertible preferreds initially convertible into 4,444,444 common shares at $2.25 each - equal to the closing stock price on Wednesday.

Investors also will receive two five-year warrants for every share of preferred stock purchased - one exercisable at $2.75 and one exercisable at $3.25.

Northvale, N.J.-based Elite, which concentrates on oral controlled-release products, plans to use proceeds to develop its portfolio of pain products.

Titan slides 16% on PIPE

Another pain drug developer, Titan Pharmaceuticals, Inc., is gearing up to settle a $10 million direct placement of its stock, and that sent the stock sharply lower, but one buysider involved in the story said he was holding fast in anticipation of an upswing from here.

"Biotechs always need cash. At $3.25 for 3.1 million shares, it's a reasonable deal. Others have had PIPEs for half their current price with warrants also. They [Titan] need money so that they're not forced into a quick deal with a Big Pharma that hurts in the end. At least this one was for roughly 10% of outstanding shares and not for 40% or 50% as others have done," the Atlanta-based buysider said.

"Sure it's dilutionary; it can't be helped, but it will pass. To me this is an investment, not a day-to-day deal. With money you keep some independence. My view is that this will not go below $3.63 or $3.64, barring any other news. Anything above that is actually a positive day."

He pegged the stop almost exactly, as Titan shares (Amex: TTP) settled the session off by 70 cents, or 16.17%, at $3.63.

A group of institutions agreed to buy 3,077,000 shares at $3.25 each, a 25% discount to the closing stock price of $4.33 on Wednesday.

South San Francisco-based Titan develops treatments for central nervous system disorders. Its Probuphine is in late-stage clinical studies for the treatment of opiate addiction and chronic pain. It also has Iloperidone in studies for the treatment of schizophrenia and related psychotic disorders and Spheramine for the treatment of advanced Parkinson's, among other drug candidates.

Cerus slides 5% on deal

Cerus Corp. shares dropped Thursday to the pricing level for its follow-on stock deal, but traders were optimistic that the stock has struck a bottom and would be on the rise henceforth.

The company raised $39.375 million in gross proceeds from a follow-on offering of 4.5 million shares of common stock off the shelf priced at $8.75 each - discounted from Wednesday's closing level of $9.21.

"It may take some patience but I believe this to be the bottom," said a sellside trader. "The vaccine area is hot right now."

Cerus shares (Nasdaq: CERS) lost 46 cents on the day, or 4.99%, to close Thursday at $8.75 - smack where the stock deal priced.

Concord, Calif.-based Cerus develops cancer immunotherapies based on its Listeria vaccine platform combined with disease antigens. The company's Intercept Blood System targets and inactivates blood-borne pathogens, such as HIV and hepatitis B and C. Cerus also is developing a proprietary vaccine platform to stimulate the immune system to target and attack cancer cells and infectious diseases.

The company plans to use proceeds to fund research and development, commercialization activities, clinical trials, capital expenditures, working capital and general corporate purposes, including possible acquisitions.

Targacept sets IPO range

Targacept, Inc. set the price range for its planned initial public offering of 5 million shares of common stock at $11 to $13.

There is a greenshoe of 750,000 shares available.

At the midpoint of price talk, net proceeds are estimated at $63.1 million if the greenshoe is fully exercised. The money will be used for research and development and general corporate purposes.

The Winston-Salem, N.C.-based firm is a biopharmaceutical company engaged in the design, discovery and development of a new class of drugs to treat multiple diseases and disorders of the central nervous system by selectively targeting neuronal nicotinic receptors or NNRs.

NNRs are found on nerve cells throughout the nervous system and serve as key regulators of nervous system activity.

Deutsche Bank Securities is bookrunner. Pacific Growth Equities LLC, CIBC World Markets and Lazard Capital Markets are co-managers.

© 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.