Accentia drops on IPO debut; Point Therapeutics up on deal delay; Myriad Genetics falls

By Ronda Fears

Nashville, Oct. 28 - As earnings reports begin to dwindle, new deals continued to be a focus for biotech players. Another initial public offering got off deck, from Accentia Biopharmaceuticals, Inc., but market sources were still uncertain about what the remainder of the year will hold for biotech deals.

For the Aug. 31 week, however, the market is looking at three follow-on equity deals.

Myriad Genetics, Inc. added its name to the pack, joining Durect Corp. and Hythiam, Inc. for business in the week that starts off with Halloween. On Friday, all those stocks were weaker, as is typically the case ahead of a follow-on sale due to dilution to existing shareholders. Durect shares Friday slipped 13 cents, or 2.03%, to $6.27. Hythiam shares lost a dime, or 1.82%, to end at $5.40.

Yet, buysiders remind that lots of deals have floated in and off each week's slate.

Point Therapeutics, Inc. on Friday, for example, shelved plans to price a follow-on offering of 6 million shares at this time because of difficult market conditions. The deal was launched a week prior, with proceeds estimated at $23.7 million based on an offering price of $4.30 per share. The stock on Friday closed at $3.64, up 4 cents on the day, or 1.11%.

In addition to a handful of equity deals this week, including a couple of IPOs, there were a couple of big venture capital transactions on the wires. Cytokinetics, Inc. receives $75 million equity line from Kingsbridge Capital. And, Surface Logix, Inc. raises $42 million in venture capital to advance clinical programs.

Accentia ends off by 9%

Going south out of the gate, Accentia Biopharmaceuticals Inc.'s debut shares closed the session Friday lower by more than 9%.

Accentia priced its IPO of 2.4 million shares at $8.00 - at the low end of a sweetened guidance range of $8 to $10, which had been reduced from original price talk of $11 to $13 - via bookrunner Jefferies & Co.

The stock ended Friday lower by 75 cents, or 9.38%, at $7.25 - the low point for the stock in Friday's session. Some 714,633 of the debut shares traded Friday.

The size of the IPO had been revised twice before, as well, reduced from 5.25 million shares, which was a reduction from initial plans for 6.25 million shares.

Tampa, Fla.-based Accentia plans to use proceeds to repay in full an outstanding loan from McKesson Corp., complete phase III clinical trials for SinuNase, complete a phase III clinical trial for Biovaxid, complete the design and prototype for an automated production and purification system for the manufacture of Biovaxid, fund milestone payments to partners and for general corporate purposes.

Myriad Genetics loses 5%

On Myriad Genetics, Inc.'s launch of a follow-on stock sale for the Aug. 31 week, the shares lost 5% on Friday. Salt Lake City-based Myriad Genetics plans to sell 7 million shares off the shelf via bookrunner J.P. Morgan Securities Inc.

Myriad shares lost $1.02, or 4.99%, on Friday to close at $19.44.

There is a greenshoe of 1,050,000 shares available.

Myriad Genetics, which has developed various gene-based drugs in the fields of cancer, Alzheimer's and infectious diseases such as AIDS, estimates net proceeds at $138 million, assuming a price of $21.01 per share. The company plans to use proceeds for general corporate purposes, preclinical studies and clinical trials, to further its predictive medicine product strategy, develop or in-license new technologies, for working capital and for possible acquisitions.

On Wednesday, the company reported a fiscal first-quarter net loss of $9.2 million, or 30 cents per share, compared with a loss of $10 million, or 33 cents per share, in the same period a year before. Revenue climbed to $25.1 million from $16.7 million.

Millennium Pharma up 3%

Millennium Pharmaceuticals, Inc., advanced Friday in reaction to its plans to curtail development of inflammatory drugs and increase spending to advance clinical trials for its cancer program. Millennium, which has already undergone significant restructuring this year, also plans to cut its work force to 1,100 by year-end, a 27% drop from the end of 2004.

Concurrently with reporting a bigger third-quarter net loss, the company advised of the restructuring on Thursday. For third quarter, the Cambridge, Mass.-based biotech posted a net loss of $73.8 million, or 24 cents per share, versus a year-ago a loss of $63.1 million, or 21 cents per share. Revenue surged to $201.7 million from $110 million, driven largely by a 35% rise in sales of its lung cancer drug Velcade.

On Friday, Millennium Pharma shares rose 27 cents, or 3.11%, to $8.96.

An expanded label for Velcade also gave analysts reason to cheer Millennium's new focus. Velcade continues to see increasing utilization in the first-line multiple myeloma setting as well as in other indications, said Thomas Weisel Partners analyst Maneesh Jain in a report Friday. Jain said also that the restructuring was "a positive development ... towards increasing financial transparency" at Millennium.

For the year, Millennium said it now expects U.S. Velcade sales of $190 million to $195 million, the upper end of its previous forecast for sales of $185 million to $195 million. But the company forecast a full-year loss of $200 million to $215 million, larger than its previous guidance for a loss of $155 million, because of anticipated restructuring charges.

The company has scheduled an analyst and investor presentation where it plans to discuss its "refined" strategy, clinical data and updates on its research and development programs for 9 a.m. ET Nov. 2 in New York City.

Flu names up on Tamiflu halt

Drug maker Roche Holdings AG halted supplies of its Tamiflu vaccine to the United States and Canada until the flu seasons hits, in order to head off private hoarding in fear of a pandemic of avian flu. Roche and Gilead Sciences Inc., the biotech that discovered the vaccine, were both higher Friday along with several other makers of flu vaccines.

Gilead shares climbed $1.54 on Friday, or 3.38%, to close at $47.12.

Meanwhile, worried that time was running out to pass legislation to fund any agenda, the U.S. Senate approved nearly $8 billion to help stockpile vaccines and drugs. The U.S. Health and Human Services agency has ordered 5 million doses of Tamiflu and a similar drug called Relenza, made by GlaxoSmithKline plc.

Work on other avian flu vaccines also is being supported with U.S. government funds as well as private efforts.

The U.S. health agency on Thursday announced a $62.5 million contract to Chiron Corp. to expand its production of an experimental vaccine against H5N1. This adds to a $100 million contract given to Sanofi-Aventis in September to make more of its H5N1 vaccine.

Chiron has battled production contamination problems at its Liverpool plant in an effort to get its Fluvirin shots back on the U.S. market for the past year. Chiron shares Friday gained 74 cents, or 1.73%, to $43.40.

Glaxo and MedImmune also have H5N1 vaccines under development, as do companies in Hungary, Australia and elsewhere. MedImmune, maker of the FluMist inhalant, saw its shares on Friday up by 23 cents, or 0.68%, to $34.00.

Invitrogen shares fall 13%

Invitrogen, Inc. took a huge dive Friday after posting a big drop in third-quarter earnings after Thursday's closing bell rang. The Carlsbad, Calif.-based biotech said the plunge in profits was chiefly due to charges associated with its acquisition of Oslo-based Dynal Biotech ASA.

The stock fell $9.02 on the day, or 12.74%, to end at $61.76, after trading as low as $60.14 on heavy volume. The credit weakened, as well, with the Invitrogen 2.25% convertible bonds due 2006 described as trading lower by 1.25 points to 97.5.

Invitrogen posted third-quarter earnings of $23.9 million, or 42 cents a share, compared with $28.2 million, or 51 cents as share, for the 2004 quarter. Revenue rose to $289.6 million, up from $256.3 million.

A would-be buyer on the weakness said he was hesitant but watchful.

"I suppose I'm a little shell-shocked after today, but still holding," the buysider said. "Long term, Invitrogen is the best biotech supplier. Any growth in the industry will positively impact Invitrogen. I'd be a buyer here, if I had a lot of nerve. But I don't. I'm looking to add, though, after the sell-off finishes sometime in November."

Looking forward, Invitrogen said it expects 2005 pro-forma EPS of between $3.42 and $3.45 a share and reaffirmed revenue guidance of $1.190 billion to $1.195 billion.

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