Inspire sinks; Abgenix off, short interest on the rise; ViroPharma up; Nucryst IPO added to calendar

By Ronda Fears

Nashville, Dec. 2 - Six biotech deals are on tap for the first full of week of December's business, and amid mounting enthusiasm for a year-end rally, the spinoff of Nucryst Pharmaceuticals Corp. was filed Friday as an initial public offering for up to $93 million by its Canada-based parent Westaim Corp.

Nucryst shares are being proposed at $12 to $14 per share with listings anticipated on the Nasdaq as well as Toronto Stock Exchange. Immediately after the IPO, Fort Saskatchewan, Alta.-based Westaim, a biotech company, will own about 64.9% of Nucryst shares or about 59.8% if the greenshoe is fully exercised.

Wakefield, Mass.-based Nucryst has NPI 32101 in phase 2 clinical trials to relieve the symptoms of atopic dermatitis, a form of eczema that has no cure. Nucryst said the IPO proceeds will be sufficient to complete the phase 2 clinical trial and begin phase 3 clinical trials but additional financing will be necessary to complete the phase 3 trials and, if successful, to submit a New Drug Application and make a product launch.

The IPO of Voyager Pharmaceutical Corp. also is anticipated for the week's business. The 5.9 million common shares, proposed at $15 to $19 per share, are being priced in the OpenIPO auction venue of W.R. Hambrecht & Co.; Raleigh, N.C.-based Voyager's most advanced product candidate, in phase 3 trials, is Memryte, a small, biodegradable implant for mild to moderate Alzheimer's disease.

In addition, players are watching the secondary offering of Adams Respiratory Therapeutics, Inc. shares and follow-on offerings from Biopure Corp., Dendreon Corp., Oxigene, Inc. and ViroPharma, Inc. All of those stocks were lower Friday, except ViroPharma.

ViroPharma sees quite buying

ViroPharma shares saw a nice bounce Friday, although traders noted light volume. The Exton, Pa.-based company is selling 7 million shares, with proceeds earmarked for working capital and general purposes, including the possible repayment of all or part of its 6% subordinated convertible notes due March 2007.

"I'm waiting to see how it all pans out first," said one buyside market source, who was skeptical of the run-up because of the low volume.

"I could very well live to regret this," the buysider continued. "The day the earnings came out was my largest single-day gain, and I am a dummy for not booking it. Instead, I gave ViroPharma breathing room, figuring a small pullback was normal. I did not expect the large volume crash. I still believe in this company but am now extremely cautious about buying back in."

ViroPharma shares hit a new 52-week high of $24.36 on Nov. 7 when it announced third-quarter results. Since then the stock has dropped considerably but closed up Friday by 69 cents, or 3.85%, at $18.61 on volume of 1.97 million shares, versus the three-month running average of 2.54 million shares.

The ViroPharma 6% convertibles were quoted at the close Friday at 100, with little activity due to the buyback possibility from the stock issue.

Abgenix bets go south

Abgenix, Inc. shares were slightly higher Friday, but traders said the bets are still on the stock going south. The stock has been a volatility play for some time, too, one trader pointed out, and that may be skewing the charts on it.

The stock Friday seesawed, trading as high as $14.36, but ended the session with a loss of 3 cents, or 0.21%, at $14.07. Volume was 1.24 million shares versus the three-month running average of 2.93 million shares.

Short interest fell on the Nasdaq in November, according to data released by Nasdaq on Friday, as the index gained 5.6% over the month ended Nov. 15, but among companies with the largest increase in short interest during the period was Abgenix. The Nasdaq reported Friday that at Nov. 15, the number of short-selling positions not yet closed out fell to 5.91 billion shares from 5.94 billion shares in the previous month. Short interest in Abgenix rose sharply in fact, to 14 million from 8.53 million.

"This reminds me of that old song by Dean Martin, "Catch a Falling Star," but the whole [biotech] industry has been in a funk the last week or so," said a sellside market source. "Humph! I wish they had another category called StrongER Buy. That'd be where I'd put this one [Abgenix]."

Inspire plunges 34%

Inspire Pharmaceuticals, Inc. executives were ambiguous about the future of the company's lead drug, diquafosol tetrasodium - a dry eye treatment, after being dealt another harsh blow Friday by the Food and Drug Administration. The stock pulled back sharply, hitting a new 52-week low, after having run up ahead of the FDA meeting.

The stock on Friday fell $2.53, or 34.05%, to $4.90, diving past the previous 52-week low of $6.08 that was hit Monday before the stock began to rise sharply on expectations of a favorable FDA vote on the dry eye drug. The 52-week high for the stock is $18.82.

"The drug is dead and the stock doesn't look so good, either, now," said a sellside market source.

Another sellsider said, "I s**t my pants. What is a few million between friends?"

The exasperation with Inspire, mixed with shock in some cases, was primarily due to the stock running up earlier in the week on anticipation of positive action from the FDA as at least one sellside analyst was out with a report saying that approval was expected for the dry eye treatment.

Inspire Pharmaceuticals stock had surged Wednesday by 18.69%.

Inspire drug's future unclear

Inspire executives said the decision of whether to pursue approval for the drug will depend on the specific requests of the FDA for additional clinical trials. It was the second setback for the drug, following news in February from the company that the drug missed its primary endpoint of statistically significant improvement in corneal clearing in a late-stage clinical study, which caused the stock to drop to the $9 neighborhood.

"We recognize that, with the mixed results from our varied diquafosol clinical trials, gaining FDA approval for diquafosol would be an uphill battle," said Inspire chief executive Christy Shaffer in a conference call.

"It would depend on the size and scope of the trial in terms of whether or not we would want to proceed."

Durham, N.C.-based Inspire develops drugs in the ophthalmic and respiratory therapeutic areas. It has the rights to market Elestat and Restasis in the United States under co-promotion agreements with Allergan, Inc., plus five product candidates in clinical trials relating to specific receptors known as P2 receptors.

© 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.