Abgenix, Amgen stocks take off on successful phase III study; Merck wins legal battle over Vioxx

By Sheri Kasprzak and Rebecca Melvin

New York, Nov. 3 - After successfully concluding a phase III study of its jointly developed colon cancer drug panitumumab, Abgenix Inc. and Amgen Inc. both saw their stock take off on Thursday, with Abgenix's stock gaining more than 37%.

Abgenix was up more than 40% in pre-market trading with Amgen also making some pre-market gains. At the end of the day, Abgenix's stock had advanced $3.53, or 37.67% to end at $12.90, gaining another $0.25 in after-hours trading. Amgen finished the day up $3.61, or 4.88%, at $77.51.

The study showed that panitumumab decreased tumor progression by 46% in patients with colon cancer that had continued to spread under standard chemotherapy.

The drug is a potential competitor to ImClone Systems Inc.'s Erbitux. On the news, ImClone's stock slipped 17% in early trading and finally spiraled down 20.66%, or $7.46, to end the day at $28.65.

Abgenix's 1.75% convertibles surged to about 114.5, compared to levels seen below par recently.

The company also has a 3.5% convertible bond that is busted and wasn't reported in trade, but it was recently seen at about the 97.25 bid, 98.25 offered level.

Before Thursday, Abgenix shares were lagging and the convertibles had been lower for about two weeks. During that time, the 1.75s had dropped from 107 to the mid 90s, according to a Connecticut-based sellside source.

Meanwhile, "the 3.5s are so out-of-the-money that it won't move until the company can prove that the credit picture is improving. But it [Abgenix] is moving in that direction," a West Coast-based buyside health care analyst said.

The next numbers on the panitumumab study should come in a few weeks and that would be the next big push for the shares, the analyst said. "But I think the investors were saying that panitumumab should rule over Erbitux."

Amgen's 0% convertible traded at about 78, up between 1 to 2 points from 76.5 bid, 77 offered on Wednesday.

Conversely, ImClone's 1.375% convertibles traded down only a couple of points to 81.5, from about the 83 level.

Amgen chief medical officer Willard Dere said in a statement released Thursday that the successful trial will support a biologics license application with the U.S. Food and Drug Administration by the end of this year. The drug has already received fast track designation from the FDA.

"We are very encouraged by the results of this pivotal study and what panitumumab could mean for patients with advanced colorectal cancer," said Bill Ringo, Abgenix's chief executive officer, in a statement. "The improvement in progression-free survival shown by panitumumab in this study highlights the value of our proprietary technology and product development capabilities. We continue to work closely with our partner, Amgen, toward the regulatory filing and potential commercialization of panitumumab."

Abgenix is based in Fremont, Calif., and Amgen in Thousand Oaks, Calif.

The news of the successful clinical trial follows a particularly traumatic fall for Nabi Biopharmaceuticals, Inc. when, on Tuesday, the company reported that a phase III clinical trial for its StaphVAX vaccine failed. The news sent the company's stock diving almost 72%.

On Thursday, Nabi's stock continued to dip, losing $0.10, or 2.79%, to close at $3.49. The stock was off another $0.07 in after-hours trading.

Merck stock up 3.8% on Vioxx victory

Merck & Co.'s stock was nudged up 3.77% after a jury found that the Whitehouse Station, N.J.-based drug maker was not liable for the 2001 death of a man who took the company's painkiller Vioxx.

The New Jersey state jury found, after three days of deliberations, that Merck did not fail to warn customers about the risks associated with taking Vioxx.

At market close, Merck's stock had gained $1.07 to settle at $29.48 after gaining as much as 4.1% in afternoon trading.

Even though one sellsider said that the victory is a great thing for the company - and noted that the stock volume traded at four times the normal level - it's a temporary victory.

"They've still got other suits outstanding," said the market source. "I think it's probably a good sign of things to come in terms of the outcomes of those suits, but there's no way of knowing just what's in store for them in the coming months in terms of settlements or litigation costs."

Javelin secures $32 million in stock deal

New York's Javelin Pharmaceuticals, Inc. closed in on agreements for a $32 million PIPE on Thursday, sending its stock up almost 19%.

A group of U.S.- and Europe-based institutions led by NGN Capital agreed to buy 14,222,222 shares at $2.25 each. The investors will also receive five-year warrants for 711,111 shares, exercisable at $2.25 each.

Rodman & Renshaw, LLC and Riverbank Capital Securities, Inc. were the placement agents.

The offering sent Javelin's stock up 18.93%, or $0.39, to close the day at $2.45.

"This equity financing will enable us to continue the development of our three exciting late-stage product candidates, Dyloject, Rylomine and PMI-150 through pivotal trials," said Daniel Carr, Javelin's chief executive officer, in a statement. "This is another important milestone for our company and after the successful submission of our marketing authorization application for Dyloject in Europe. This financing further validates our position as a leader in the development of product candidates in the pain management specialty pharmaceutical sector."

Following its investment NGN's managing general partner, George Nebgen, will hold an observer seat on Javelin's board of directors.

"Combined with its PMI-150 and Rylomine, Javelin is building an exciting franchise in the moderate-to-severe and breakthrough pain markets," Nebgen said in a statement.

Javelin develops treatments for pain.

SFBC convertibles below par

Heading to biotech convertibles, SFBC International Inc., a contract research services company, saw its shares "blow up" and its convertibles trade below par after the Miami, Fla.-based company reported sales and earnings were better than estimates, but showed a backlog in orders.

"But honestly that's [the earnings report and backlog] not the reason it sold off," an analyst said. Rather it was management's seeming disregard in putting investors at ease following a negative article published Wednesday on the contract researcher business by Bloomberg, the analyst said.

"President Lisa Krinsky was insincere on the call. That was not the time to read a prepared statement. Instead she should have been ready to answer investor questions and put people at ease," he said.

SFBC's third-quarter profit increased 74% to $9.2 million, or 48 cents per share, from $5.3 million, or 34 cents per share, a year ago. Excluding items, the company reported adjusted earnings of $10 million, or 52 cents per share.

Revenue nearly tripled to $109.9 million from $40.4 million last year.

However, backlog dropped sequentially because certain oral agreements had yet to be signed and therefore could not be counted in the third quarter.

SFBC's 2.25% convertibles traded down more than 17 points to 93.5 from a level of 110 bid, 111 offered on Wednesday.

Its stock fell $9.98, or 26.3%, to $27.91.

Hythiam shares slip, follow-on priced

After pricing its anticipated $38 million follow-on secondary stock offering Thursday, Hythiam, Inc.'s stock slipped $0.14 to end the day at $5.03.

The follow-on equity deal priced at $4.75.

It's "about where we expected," said one sellsider of the pricing of the deal. "The way some follow-ons have priced in the past week or so, it's pretty good. Given the way biotechs are trading compared to the broad market, it's not bad."

Hythiam said it plans to use the proceeds from the equity deal for clinical research and general corporate purposes.

Another follow-on equity offering, this one from Myriad Genetics, Inc., was expected to price by the end of the week. At the end of the day Thursday, Myriad's stock was down $0.19 to end at $18.95 but gained another penny in after-hours trading.

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