Progenics off on spot sale; profits taken on Celgene rise; Cubist off; Access dives on bankruptcy fears

By Ronda Fears

Nashville, Sept. 14 - Progenics Pharmaceuticals Inc. slipped in a spot sale after Tuesday's closing bell at a 4.5% discount, and the market's reaction was mixed on the event, but overall onlookers said Wednesday that it was a positive sign for other equity transactions.

"This [Progenics follow-on] was a nice pricing, very nice," said a syndicate source working on several deals coming up. "It makes us feel good about the calendar."

Looking ahead, players are eager to see how follow-on stock deals will go for Geron Corp. and Myogen Inc., both scheduled for Thursday's business. On Wednesday, Geron shares lost 63 cents, or 5.55%, to $10.73. But Myogen continued to gain, adding 8 cents, or 0.35%, to $23.11 as players like that the company is using funds to accelerate clinical trials and commercialization of its drug candidates.

There were some serious buyers out in force Wednesday, traders said, even though the biotech indexes were lower along with the broader markets.

"I like biotechs with small market caps and enough cash to take their lead drug candidate through the late-stage trials," one trader said. "There also is a surge of interest in any biotechs, like Nabi Biopharmaceuticals Inc., that may have blockbuster drugs coming within a year or so."

Buyout targets such as Abgenix Inc. also are becoming more prevalent on buyers' radar screens. The consensus, he said, still puts Amgen Inc. as the most likely buyer for Abgenix.

Sellers were seen for Celgene Corp. and Invitrogen Inc., however.

Celgene sellers were taking profits as the stock soared in response to a Food and Drug Administration panel recommending approval for its Revlimid - being developed for the treatment of anemia linked to a form of blood cancer - on Wednesday. The stock had been zigzagging earlier in the week ahead of the panel meeting but took off strongly after the positive vote hit the tape, ending the day up $1.86, or 3.52%, at $54.77.

Progenics deal reaction mixed

Progenics took a dive on the heels of its spot sale, with some players interpreting it as an ill omen for collaborative partners. The stock quickly drifted to the follow-on offering level, and lower, in mixed reaction from investors.

The company sold 2.5 million shares off the shelf at $23.90 per share, discounted from Tuesday's closing level of $25.02. In heavy trade Wednesday, the stock traded as low as $23.73 but ended the session off $1.17, or 4.68%, to close at $23.85 - still below the offering price. Some 840,703 shares changed hands, versus the three-month running average of 135,803.

"I guess this means no corporate sponsor for the foreseeable future. [It's] very disappointing," said one Progenics holder, who did not participate in the deal but, rather, was a seller of the stock Wednesday.

Another, who did participate, however, noted that just last Friday Progenics announced a new $10.1 million grant from the National Institutes of Health for its HIV drug that recently completed an early stage clinical trial.

Progenics fan likes the signs

"The cash position is definitely improving, as I see it," said the Progenics buyer.

"One other thing that has been impressive to me is that there are only about 21 million outstanding shares, not counting the additional shares to be issued. Progenics has been pretty judicious in how many shares they issue as you will notice that most early stage biotech companies have far more than 40 million outstanding shares even before any product reaches phase III and often even phase II. Progenics has two phase III products, although I don't consider their phase III anti-cancer vaccine [GMK] as having any good chance for approval."

Net proceeds, estimated by Progenics at $57.4 million, are earmarked to fund clinical trials of its investigational drugs methylnaltrexone and PRO 140 for HIV infections, to fund clinical trials of other product candidates and for other research and development programs.

Tarrytown, N.J.-based Progenics' cancer vaccine, GMK, is in phase III clinical trials for the treatment of melanoma.

Cytogen slips after meeting

In addition, Progenics also is developing immunotherapies for prostate cancer in collaboration with Cytogen Corp., but Cytogen shares were lower Wednesday following an investor and analyst meeting in New York to present an update on products and clinical programs.

"The conference [held late Tuesday in New York] wasn't very impressive," said a buyside market source.

Cytogen shares on Wednesday plunged 27 cents, or 5.25%, to close at $4.87.

In a Securities and Exchange Commission filing Wednesday that included the presentations, Cytogen said its drug candidate Quadramet is indicated for the relief of pain in patients with confirmed osteoblastic metastatic bone lesions that enhance on radionuclide bone scan, which differs from that reported in the Quadramet package insert.

Also, Cytogen said its ProstaScint is indicated as a diagnostic imaging agent in newly diagnosed patients with biopsy-proven prostate cancer, thought to be clinically localized after standard diagnostic evaluation and who are thought to be at high risk for pelvic lymph node metastases. ProstaScint also is indicated as a diagnostic imaging agent in post-prostatectomy patients with a rising PSA and a negative or equivocal standard metastatic evaluation in whom there is a high clinical suspicion of occult metastatic disease. This presentation, too, the company said differs from that reported in the ProstaScint package insert.

Access falls despite more time

Access Pharmaceuticals Inc. said it has received at least one extension on coupon payments that were due Tuesday, as well as a maturity extension, but onlookers are skeptical that the company will be able to avoid a more drastic restructuring such as bankruptcy.

"At the current stock price and available shares, they're already tapped out," said a buyside market source. "Noteholders are probably letting Access sell the assets, rather than forcing bankruptcy, for now."

Access shares plummeted 11.63%, or 10 cents, on Wednesday to close at 76 cents.

The company announced Wednesday that Oracle Partners LP, which holds $4 million of its 7% convertible subordinated notes, agreed to extend the maturity of the notes to Oct. 13, 2005 from the original Sept. 13 maturity date. Access did not make a payment on another $4 million of the 7% notes to another investor as well.

As previously reported a holder of the company's notes due September 2008 agreed to defer the interest payment due on the notes to Sept. 13, 2006 and to extend the maturity of the notes to Sept. 13, 2010.

The troubled pharmaceutical company said late last week that it is in talks to renegotiate some of its debt as it tries to sell some of its undesirable business units. Access is focused on the development of novel low-development risk product candidates and longer-term products, including a treatment for cancer.

Cubist declines on one big sale

Cubist Pharmaceuticals Inc. dropped sharply Wednesday in the face of a positive note from one analyst and sans any news on the wires, but a sellside market source said the decline was attributed to "a single holder selling out, big."

The stock lost 38 cents on the day, or 2.03%, to close at $18.33. A convertible trader said there was a trade in the Cubist 5.5% convertible bond due 2008 as well, with the issue losing about 0.25 point. He pegged the issue at 97.125 bid, 98.125 offered.

An outperform rating and price target of $23 a share was repeated Wednesday by Thomas Weisel Partners analyst Joe Slavinsky after surveying 88 leading infectious disease experts. Thomas Weisel expects rapid uptake of Cubicin in bacteremia and endocarditis prior to potential label expansion in mid-2006.

Another sellsider said onlookers are indeed expecting a rapid uptake in bacteremia and endocarditis to drive sales in 2006 and beyond. The catalyst, he said, will be Cubist's expanded filing for Cubicin labeling, which is expected by year-end. This, he added, could increase market potential for Cubicin to $1 billion from $300 million.

© 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.