Monogram Biosciences stock jumps on $25 million Pfizer financing; Myogen releases 1Q earnings

By Sheri Kasprzak and Kenneth Lim

New York, May 8 - Monogram Biosciences, Inc. saw its stock skyrocket after receiving a $25 million investment from Pfizer Inc. and embarking upon a collaboration with Pfizer to develop Monogram's co-receptor tropism assay.

The stock gained 61 cents, or 36.09%, to wrap at $2.30 (Nasdaq: MGRM). The jump represents the single-largest gain in the company's stock so far this year. In pre-market action, Monogram's stock was up 28.4% at 8:50 a.m. ET.

Pfizer agreed to fund a 3% note due May 19, 2010 convertible into common shares at a 20% premium to the average closing stock price for five trading days before conversion.

Once a registration statement covering the underlying shares is declared effective, the note will automatically convert any time the stock price exceeds 150% of the conversion price for 20 of 30 consecutive trading days.

"This is really great for them," said one buysider familiar with the name. "Pfizer is a huge name. With the collaboration, the investment, it makes a big difference to them."

A sellside trader agreed.

"Everyone is going to want a piece of them now," the trader said. "It's buy, buy, buy."

Volume of Monogram shares traded Monday exploded with 15,880,180 shares traded compared with the average 524,764 shares.

Under the collaboration, Pfizer and Monogram will jointly develop and market Monogram's co-receptor tropism assay in the United States. Pfizer has agreed to market the assay internationally.

"Monogram and Pfizer have had an outstanding business relationship for a number of years," said William D. Young, Monogram's chief executive officer, in a news release. "In 2002, Pfizer made an equity investment in Monogram and since that time, we have provided sophisticated molecular diagnostic testing services and scientific assistance in the area of HIV drug resistance for many of Pfizer's HIV programs, including the ongoing phase 3 maraviroc clinical development program.

"We are now delighted to be significantly extending that relationship through Pfizer's investment of additional capital and through a collaboration to make our co-receptor tropism assay available globally."

"Pfizer's $25 million investment is expected to provide significantly greater financial flexibility to Monogram," said Monogram chief financial officer Alfred Merriweather in the statement. "At the end of the first quarter of 2006, we had $67 million in cash and investments. On a pro forma basis, including the anticipated proceeds of Pfizer's investment, these cash resources would be $92 million.

"This strengthening of our balance sheet gives us enhanced flexibility to address our business and financial opportunities and to facilitate Monogram's continued growth and development."

San Francisco-based Monogram develops treatments for infectious diseases and cancer.

Myogen stock climbs on earnings

Looking to Monday's earnings news, Myogen, Inc.'s stock advanced after the company announced its net loss dropped by $1 million on the year.

The company's stock gained 41 cents to end the day at $33.63 (Nasdaq: MYOG).

In the earnings statement released early Monday, Mygoen reported a net loss of $17.6 million for the quarter ended March 31, compared with a net loss of $18.6 million for the same quarter of 2005.

Among the highlights the company listed for the quarter was the acceptance by the Food and Drug Administration for fast-track designation of ambrisentan for patients with pulmonary arterial hypertension.

Looking ahead to the year ending Dec. 31, Myogen expects a net revenue of $3.5 million to $4.5 million from its Flolan product and total research and development contract revenue of $6.5 million to $7.2 million.

Denver-based Myogen develops treatments for resistant hypertension and other cardiovascular disorders.

In other earnings news, Spectrum Pharmaceuticals, Inc.'s stock dipped after its first-quarter earnings statement was released Monday morning.

The stock lost 3 cents, or 0.7%, to settle at $4.24 (Nasdaq: SPPI).

According to the earnings statement, Spectrum incurred a net loss of $5.9 million, compared with a net loss of $5.3 million for the first quarter of 2005.

Spectrum said it spent $3.7 million on research and development over the quarter and spent the same amount in the first quarter of 2005. The drug company spent $1.4 million in general and administrative costs, compared with $1.1 million in the first quarter of 2005.

"The increase in general and administrative expenses is primarily due to an increase in legal expenses associated with the litigation surrounding Spectrum's patent challenge of GlaxoSmithKline's Imitrex injection," said a news release from Spectrum.

Spectrum, based in Irvine, Calif., develops treatments for neurological disorders like Alzheimer's disease and Parkinson's disease.

Accentia rises on FDA news

After getting the nod from the Food and Drug Administration for abbreviated New Drug Applications for combination pain product Xodol, Accentia Biopharmaceuticals, Inc.'s stock climbed by more than 4.6%.

The stock gained 4.65%, or 30 cents, to close the day at $6.75 (Nasdaq: ABPI).

The FDA approved the applications for the Xodol brand, a combination of hydrocodone, bitartrate and acetaminophen tablets used to treat moderate to moderately severe pain.

Teamm Pharmaceuticals, Inc. holds the U.S. license to market the three new formulations used in Xodol.

Accentia, based in Tampa, Fla., develops treatments for respiratory diseases and cancer, as well as a pipeline of drugs used to kill pain.

Fisher Scientific convertibles up

Moving to biotech convertibles, Fisher Scientific International, Inc.'s convertibles were about half a point higher on Monday after the company said it would be taken over by Thermo Electron Corp. in a $10.6 billion share swap, a buyside convertible bond trader said Monday.

The company's 3.25% convertible due 2024 was seen at 115.375 against a stock price of $77, while its 2.5% convertible due 2023 was about 170 at the same stock price.

The Fisher Scientific floating-rate convertible due 2033, which currently has a coupon of about 2.16%, was seen trading at 144 versus the same stock price.

Fisher Scientific's stock (NYSE: FSH) closed at $75.95 on Monday, up 3.01% or $2.22.

Waltham, Mass.-based Thermo Electron on Monday said it would take over Fisher by exchanging two Thermo Electron shares for every Fisher Scientific share.

The new company will be based in Waltham, Mass., and Thermo Electron's president and chief executive Marijn Dekkers will be president and chief executive of the new entity.

Fisher Scientific vice chairman Paul Meister will become chairman, and Fisher Scientific chairman and chief executive Paul Montrone will leave the board but remain as an adviser.

A buyside convertible fund manager said the deal was unexpected.

"But it was a good surprise," said the buysider, whose fund has a significant position in Fisher Scientific. "When they first told me that they wanted to talk about Fisher Scientific, I said, 'Oh God, don't tell me if it's bad,' but they said, 'Don't worry, it's OK.'"

The merger will provide some healthy consolidation in the medical equipment sector, the buysider said. The buyside source said the deal takes some volatility out of convertibles' underlying stock, but the new company will have better credit, so the impact on the convertibles' valuations will not be significant.

The merger is also largely a stock deal, so there is no major concern in terms of credit.

"It's a good thing from my perspective," the buysider said.

The share swap initially valued Fisher Scientific shares at $78.90 apiece, or a 7% premium to Fisher Scientific's closing stock price of Friday, but Thermo Electron shares slid 2.31% on Monday, reducing the valuation to just $77.08 a share.

Fisher is based in Hampton, N.H.

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