Introgen's stock lifts on Colgate-Palmolive alliance; Cytori, Olympus enter into joint venture

By Sheri Kasprzak and Rebecca Melvin

New York, Nov. 4 - Introgen Therapeutics Inc. led biotech news Friday with word that it has entered into a collaboration with Colgate-Palmolive Co. to develop therapies for oral cancer.

The alliance boosted Introgen's stock, with the Austin-based company's shares gaining $0.42, or 7.6%, to close at $5.96 Friday.

On the other hand, Colgate-Palmolive's stock slipped $0.15 to end at $51.85.

Under the terms of the collaboration, the two companies intend to develop topical treatments for oral cancer and pre-cancerous conditions of the mouth.

Colgate-Palmolive, for its part of the agreement, is developing a mouthwash formula with a tumor-suppressing agent.

"The tissues lining the oral cavity may be particularly well-suited and accessible targets for molecular therapies that can arrest abnormal cell growth without harming normal cells," said David G. Nance, chief executive officer of Introgen, in a statement.

As part of the agreement between the two, Colgate-Palmolive agreed to buy $20 million in Introgen stock in a direct placement.

Introgen intends to sell 3,610,760 shares at $5.539 each, the company's closing stock price on Nov. 3.

The shares will be sold under Introgen's shelf registration.

Introgen develops treatments for cancer and other diseases. New York-based Colgate-Palmolive is a consumer products company.

Cytori, Olympus enter into joint venture

In another collaboration announced Friday, Cytori Therapeutics Inc. and Olympus Corp. said they were joining up to develop stem cell therapies.

The joint venture sent Cytori's stock up 10.71%, or $0.75, to end at $7.75. Olympus's stock, however, remained unchanged at $20.70.

Under the terms of the 50-50 joint venture, the two companies will develop and manufacture devices based on Cytori's Celution system, according to a news release.

Olympus agreed to license its device-related technology to the joint venture and pay $30 million. Cytori, for its part, will license its therapeutic device technology, including Celution and will receive an initial $11 million payment.

"Olympus Corp., through its leading medical life science business, recognizes the potential of regenerative medicine and the enormous role that adipose stem and regenerative cells could soon play in healthcare," said Yasunobu Toyoshima, general manager of Olympus, in a statement. "Cytori's technology represents a novel approach to regenerative medicine as it enables real-time delivery of autologous stem and regenerative cells. Based in Cytori's progress in the development of therapeutic applications of these cells, we look forward to collaborating on next-generation designs of these state-of-the-art devices."

Celgene converts up

Looking to biotech convertibles Friday, Celgene Corp.'s converts traded higher a day after the Summit, N.J.-based biotechnology company reported positive results from a mid-stage trial of an ovarian cancer therapy using thalidomide. On Thursday, the company also posted earnings, which missed earning and sales estimates, but raised 2005 guidance.

Celgene convertibles were up three to five points Friday - capping off a climb for the week of about 20 points. On Thursday the company reported positive clinical data for its flagship thalidomide drug and standard chemotherapy treatment. The company said that patients taking this treatment had a 50% response rate, more than double the 20% response rate of chemotherapy alone.

"Our clinical findings have shown that thalidomide may slow down the growth of ovarian cancer, which could mean more options for physicians treating ovarian cancer, though further clinical studies are warranted," Levi Downs, MD, assistant professor of gynecologic oncology and researcher at the University of Minnesota's Medical School and Cancer Center who led the study, said in a release.

A larger percentage of the combination therapy group also posted a complete response and the preliminary results suggest that the Thalomid combo increased median survival to 19 months from 15. The study included 69 women who had received prior treatment for ovarian cancer.

Earlier Thursday Celgene reported that its third-quarter profit sank on a combination of charges, higher spending on its late-stage cancer drug and lower-than-expected sales growth.

Net income dropped to $668,000, or break-even per share, from $19 million, or 11 cents per share, a year ago. Excluding certain investment charges and other non-operating items, the company said it would have earned $10.5 million, or six cents per share. Sales grew to $113.9 million from $83.8 million.

During the quarter, Thalomid sales increased 26% to $99.1 million; but that was slightly short of analysts' estimates.

Thalomid's sister drug, Revlimid, is being reviewed by the Food and Drug Administration as a cancer therapy. In addition, Celgene increased research spending on Revlimid during the quarter by about 23% to $49.3 million.

The company forecast yearend adjusted earnings of about 55 cents per share, on sales of $535 million. Celgene previously predicted lower sales of $525 million.

Research and general expenses will be higher than previous guidance to support the final clinical trials and launch of Revlimid, the company said. The company excluded Revlimid items from its adjusted earnings forecast.

Celgene's 1.75% convertibles changed hands on Friday at 252.5, compared to a share price of $59. Shares closed slightly higher at $59.69, a gain of 84 cents, or 1.43%, on the day. On Monday, the Celgene 1.75s were marked at 235.5 bid, 235.9 offered by one sellside shop.

Elsewhere, biotechnology remained mixed, with the convertibles of Chiron Corp., Human Genome Sciences Inc., and King Pharmaceuticals Inc. mentioned in trade on Friday.

Ahead of its earnings report expected early in the coming week, King saw its 2.75% convertibles change hands at 97.125, little changed compared to a level earlier in the week at 98.

Nektar Therapeutics Inc., which has been cheapening in recent days, was characterized as stabilizing, but Watson Pharmaceuticals Inc. was seen as weaker.

NPS Pharma eyed after earnings

The convertibles of NPS Pharmaceuticals Inc. were quoted higher at 92 bid, 93 offered, according to one sellside shop on Friday, compared to a previous level of 86, 87 after the Salt Lake City-based biotechnology company reported a slightly narrower third quarter loss that edged estimates.

The company said increased royalty revenue from Amgen Inc. on increased sales of cinacalcet HCI helped lift results.

NPS lost $38.3 million, or 95 cents a share, for its third quarter, compared with a loss of 39.2 million or $1.02 a share, for the same period a year ago.

Revenues were higher at $4.7 million compared to $710,000 a year earlier.

Analysts surveyed by Thomson Financial expected a loss per share of $1.17 on revenue of $3.3 million.

"They can possibly be profitable in a year," a sellside research analyst said, referring to positive indications for another drug that the company is developing for osteoporosis.

The NPS 3% convertibles due 2008 were quoted at 92 bid, 93 offered. Its shares slipped $0.05, or 0.5%, to $10.40.

Myriad stock off on pricing of follow-on deal

After pricing a follow-on secondary equity offering late Thursday, Myriad Genetics Inc.'s stock dropped about 2% Friday.

The stock was off $0.38 at the end of the day Friday, settling at $18.57.

"So many [Myriad] shareholders are up in arms about the dilution this [follow-on offering] is going to cause them," said one sellside source who saw the pricing. "The pricing itself is okay compared to the way these have been pricing, but the stock is off because the dilution seems excessive."

Another sellsider said he agreed about the dilution that this deal will cause, but noted that the company's pipeline has a lot worth looking at and believes that there are long-term benefits to Myriad.

"It's a small company but it's a growing small company," he said. "I think it's worth keeping an eye on."

After market close on Thursday, Myriad priced the $129.5 million follow-on deal at $18.50 per share.

J.P. Morgan Securities Inc. was bookrunner with Bear Stearns & Co. Inc. and UBS Investment Bank as joint lead managers.

The Salt Lake City-based company that is developing gene-based drugs for cancer, Alzheimer's disease and infectious diseases like AIDS, plans to use proceeds for preclinical studies and clinical trials, to further its predictive medicine product strategy, to develop or in-license new technologies, for working capital and for possible acquisitions.

ICAgen's net losses grow in 3Q2005

Despite a report that its net losses for the third quarter of 2005 increased by almost 40% of the same quarter of 2004, ICAgen Inc.'s stock advanced 3.45% on Friday.

The company on Friday reported a net loss of $4.8 million for the third quarter of 2005, compared to a net loss of $3.5 million in the corresponding quarter of 2004, representing a 37% increase.

In a statement, ICAgen listed higher expenses from increased research and development costs related to its lead drug candidate ICA-17043 for sickle cell anemia.

Even so, the company's stock on Friday rose $0.20 to finish at $6.00.

Based in Research Triangle, N.C., ICAgen is a biopharmaceutical company focused on novel orally administered small molecule drugs that modulate ion channel targets.

Cell Therapeutics' stock slips

On the completion of its much-chattered $82 million convertible senior notes due 2010, Cell Therapeutics, Inc.'s stock dipped slight on Friday.

The Seattle-based biotech company's stock lost $0.02 to end the day at $2.41.

As previously reported, the Rule 144A deal was priced with a 6.75% coupon and a 10% conversion premium.

On Friday, the company also completed an agreement with two institutional investors to convert $38.38 million of Cell Therapeutics' outstanding 5.75% conversion senior subordinated notes due June 15, 2008 and 4% convertible senior subordinated notes due July 1, 2010. Cell Therapeutics issued 3.3 million shares in the conversion.

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