AnorMED snubs Genzyme bid; PDL higher as Roche backs out; Vasogen zooms 42%; Adeza up

By Ronda Fears

Memphis, Aug. 30 - Biotech trading picked up sharply Wednesday, and traders said they remained hopeful of more strong gains on merger news and collaborations. But the news of the day was Canada-based AnorMED, Inc. fighting off a hostile takeover bid from Genzyme, Inc., which nearly doubled the stock price in the United States and sparked a shorting frenzy.

AnorMED, of Vancouver, B.C., said it rejected an unsolicited bid from Genzyme to purchase all of its outstanding stock for $8.55 a share, or roughly $380 million, in cash - a premium of about 70% over the stock's $5.02 close on Tuesday.

"There is euphoria in the air, but no deal at present and a 100% gain overnight," said a sellside trader.

"A lot of guys are locking in short positions now to load up later on the pull-back."

AnorMED shares (Amex: AOM) rocketed up by $4.87, or 96.82%, to $9.90 on whopping volume of 5.5 million shares versus the norm of 28,293 shares. In reaction to the event, Genzyme shares (Nasdaq: GENZ) slipped by 39 cents, or 0.58%, to $66.28 but saw light trading activity.

"I am sure it [AnorMED shares] will retrace to $8.55 and go lower until a buyout becomes certain," the trader continued.

"So I'm short until $8.55 anyways. This isn't happening for some time yet, if at all."

AnorMED bidding war seen

But, a buyside market source, while acknowledging heavy shorting in AnorMED shares Wednesday, said he sees $8.55 as the trough in the face of a possible bidding war.

AnorMED said it is willing to negotiate with Genzyme by presenting a counter proposal to more "truly" reflect its stand-alone prospects and the potential strategic value of the company to Genzyme, but AnorMED said Genzyme has indicated it intends to forego further discussions and make an offer directly to shareholders.

"Genzyme doesn't want this out there, they are going to push for a vote and have a great argument at a 70% premium. That's pretty impressive," the Boston-based buysider said.

"But there could be lots of big interest in AnorMED with this situation coming to light. The company has partners already, including one big name, so I think we will see something else pop up.

The addition of AnorMED would bring Genzyme a leading late-stage product candidate in development for hematopoietic stem cell transplantation, according to AnorMED. The company said its most advanced product, Mozobil, could improve the viability of hematopoietic stem cell transplants and enlarge the pool of patients for whom transplantation is an option.

AnorMED licenses Picoplatin, an anticancer metal-based product to Poniard Pharmaceuticals, Inc., Fosrenol, an anti-hyperphosphatemia agent to Shire plc and Atiprimod, an anticancer product to Synergy Pharmaceuticals, Inc. under collaborative agreements.

PDL up on nice buying action

In another deal-gone-bad of sorts, PDL BioPharma, Inc. said Wednesday it is considering partnering with another firm to develop daclizumab for asthma after Swiss drug maker Roche Holding AG decided to step away from that project. Traders said PDL BioPharma shares gained, however, as the market saw it as a "non-event" and, moreover, a buying opportunity.

"Initially we were looking for the stock to be down, maybe as much as 15%, on the news," one sellside trader said.

"But with other partners for the drug, it was shrugged off and, rather, there was some nice buying action."

PDL BioPharma shares (Nasdaq: PDLI) settled higher by 17 cents, or 0.87%, at $19.66.

Roche discontinued its part in the development of daclizumab in asthma, which dated back to 2004, but that has no effect on a separate collaboration for daclizumab in transplant maintenance, PDL BioPharma said. The Fremont, Calif.-based biotech added that phase 2 studies for the transplant indication will proceed as scheduled in 2007.

In a separate deal, PDL BioPharma is collaborating with Biogen Idec, Inc. for daclizumab in multiple sclerosis and indications other than transplant and respiratory diseases. With the asthma program on hold, PDL BioPharma said it expects lower research and development expenses for third quarter.

Biogen shares (Nasdaq: BIIB) were up 37 cents on the day, or 0.83%, to $44.70.

Biomira higher on new CEO

Back to Canadian names in the news, Biomira, Inc. got a rise from naming a new chief executive, Robert Kirkman, and that Christopher Henney, has been named chairman of its board. The news left the stock unchanged for much of the session, however, as there was some selling into the uptick.

"It was definitely good news to have a changing of the guard. Henney is credible and a good choice. Kirkman's record also seems solid and that looks like a good choice too," said a buyside market source in Boston, who nonetheless was a seller in the stock.

"I'll be looking to sell because the rest of the story is they are looking to in-license new technologies and acquire technology/companies. Both of those cost serious money they don't have and that means dilution as they raise more than just amounts to cover internal cash burn. And it suggests they don't have confidence that they can ride their own in-house technologies very far.

"I think best strategy is to try to sell this news and buy back after the next financing, but before any Stimuvax phase 3 results are out.

In June, Edmonton, Alta.-based Biomira, which concentrates on cancer treatments, said it had hired investment bank Janney Montgomery Scott to help explore its pipeline development options, specifically identifying in-licensing and acquisition opportunities. That came after Germany-based Merck KGaA took over the phase 3 study program for the Stimuvax cancer vaccine product.

Adeza sees late-day dive

Adeza Biomedical Corp. shot up Wednesday after reporting that a Food and Drug Administration committee has recommended approval of its New Drug Application for Gestiva to prevent preterm birth, but the stock came sharply off the day's high during the last few minutes of the session.

A sellside trader described the sudden plunge in Adeza as "a case of the nerves" because the technical chart on the stock suggests further weakness.

Adeza shares (Nasdaq: ADZA) opened strong and reached $17.24 before pulling back sharply at the end of the day to $16.89, a gain of 98 cents, or 6.16%.

"Adeza has not traded above its 10-week moving average since mid-May. This means that the downward trend was established then and was very predictable when Adeza was trading at about $20.30. Unfortunately, those investors who never got out when the red flag was issued have lost a fortune," the trader said.

"I would watch the 10-week moving average because this appears to be solid resistance for the stock. It needs to clear this resistance on heavy volume for market observers to believe that the blood letting is done. Otherwise lower prices are very possible."

He noted that volume in the stock Wednesday was not that impressive with 430,712 shares moved versus the norm of 139,303 shares.

Sunnyvale, Calif.-based Adeza said it aims to complete the application review process for Gestiva by Oct. 20.

Vasogen up on short covering

In yet another north-of-the border skyrocket story Wednesday, Canada-based Vasogen, Inc. shares zoomed by nearly 42% a day after announcing that it will host a conference call on its Celacade technology in patients with advanced heart failure. But, unlike the case of AnorMED, traders said there was frantic short covering in Vasogen as positive results are expected.

Vasogen shares (Nasdaq: VSGN) added 18 cents on the day, or 41.86%, to close at 61 cents.

In late June, Vasogen shares were obliterated, losing 74%, when it reported disappointing initial results from a phase 3 trial of Celacade.

"The scuttlebutt is that the results that are going to be released in Barcelona will be positive," said a trader, who said that if the speculation pans out, then the stock could conservatively go to $1 and possibly $2.

Vasogen said it will hold a conference call Sept. 5 at 8:30 a.m. ET to discuss new data from a trial of Celacade, which also will be presented at a late breaking session of the World Congress of Cardiology 2006 in Barcelona.

"I've been crunching the numbers and seems like Vasogen would have to increase 175% to get to the level I think it should be before a major news announcement," the trader said.

"Here's my logic: Vasogen was at $3.03 right before the Simpadico [Celacade trial in peripheral arterial disease] results came out [in March] and BAM, it dropped to a low of $2.08 - a 30% loss. Of course it never quite recovered for the Acclaim [Celacade trial in chronic heart failure] results [in June], because right before the Acclaim results were released the price was $1.85. So, we're looking at a 40% reduction right before another major announcement.

"With that in mind, Vasogen would have to be at $1.11 to achieve that 40% threshold right before the September announcement, but that would mean the stock would have to increase 71 cents in three weeks. I guess the conservative estimate would be a 50% reduction from the pre-Acclaim price of $1.85, which puts the price at 92.5 cents - still a 52.5-cent increase in the next three weeks. Talk about a roller coaster! Strap in and keep your hands inside the car because it's going to be one heck of a ride."

Mississauga, Ont.-based Vasogen earlier this month received a letter from the Nasdaq Stock Market stating that for the last 30 consecutive business days its stock price has closed below the minimum bid price of $1.00 per share requirement for continued listing.

Also, the company announced it has filed an amended and restated prospectus with the Ontario Securities Commission and the U.S. Securities and Exchange Commission to increase by 30 million the number of common shares for possible sale. The shares may be issued in connection with the senior convertible notes issued in October 2005 by its subsidiary Vasogen Ireland Ltd. As of Aug. 1, the outstanding amount owed on the notes was $14.8 million.

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