Dynavax says flu vaccine effective on divergent viral strains; Inverness to wrap $151.25 million PIPE

By Sheri Kasprzak

New York, Aug. 21 - Heading up the week in biotech, Dynavax Technologies Corp. saw its stock climb by 4.5% after announcing preclinical data that shows its influenza vaccine TLR-9 provides immunity for divergent viral strains.

The stock gained 4.52%, or 18 cents, to end the session at $4.16 (Nasdaq: DVAX).

According to a statement from Dynavax, preclinical tests in mice determined that the company's agonist-based immunostimulatory sequence flu vaccine "demonstrated the potential to confer cross-protective cellular and antibody-induced immunity against widely divergent flu strains."

"We see good things for Dynavax and their flu vaccine," said one buyside market source reached Monday for comment on the news. "Their stock responded very nicely, considering where drug stocks have been today."

Biotech and drug stocks were off along with the broader stock market on Monday, the market source noted.

"The unique advantage of Dynavax's flu vaccine is our proprietary conjugation technology that chemically links the ISS [immunostimulatory sequence] molecule with highly conserved viral antigens to confer to potent immunogenic and cross-protective effect regardless of the viral strain," said Gary Van Nest, Dynavax's vice president of preclinical research, in a statement.

"We believe that our flu vaccine represents a potential breakthrough in the prevention of disease caused by serious widespread viral outbreaks and may be a first line of defense against the event of a flu pandemic."

Located in Berkeley, Calif., Dynavax develops agonist-based products to treat and prevent allergies, infectious diseases, cancer and chronic inflammatory diseases.

Inverness stock dips on PIPE

Elsewhere, Inverness Medical Innovations, Inc. announced its plans to close a $151.25 million private placement of its stock, and on Monday, the stock slipped by more than 3%.

The company intends to sell 5 million shares at $30.25 each, an 11% discount to the company's $33.98 closing stock price on Friday.

"It surprises me," said one sellside market source when asked about the Inverness offering. "A lesser company would sell at this [discount]. They're a pretty decent company. I honestly can't tell you what may have forced them to sell at this [price]."

The stock on Monday slipped by 3.04%, or $1.04, to close at $32.94 (Amex: IMA).

A group of 17 institutional investors agreed to buy the shares, and the offering is scheduled to close later this week.

Proceeds will be used for debt repayment and future acquisitions.

According to Inverness's latest earnings statement, released Aug. 9, the company reported net revenue of $139.7 million for the quarter ended June 30, compared with net revenue of $102.3 million for the corresponding 2005 quarter. The company incurred a net loss of $10.6 million for the quarter, compared with a net loss of $2.5 million for the same quarter in 2005.

Based in Waltham, Mass., Inverness develops in vitro diagnostic products and technologies to diagnose heart disease, infectious disease and women's health issues.

Oscient closes stock sale

In other private placement news, Oscient Pharmaceuticals Inc. closed a $10 million stock offering and announced that subsidiary Guardian II wrapped a private placement of senior secured notes for $20 million.

Oscient sold 11,111,111 shares at $0.90 apiece to Paul Royalty Fund Holdings II, LP.

The investor came away with warrants for 2,304,147 shares, exercisable for seven years at $0.8680 each.

Guardian sold 12% notes to Paul Royalty Fund Holdings. The notes are due in four years. Guardian may exercise an option to extend the maturity to six years.

Paul Royalty Fund also received warrants for 2,304,147 shares, exercisable at $0.8680 each for seven years.

The two financings were conducted as part of Oscient's agreement to buy exclusive rights to Antarar 130 mg and Antarar 43 mg capsules from Reliant Pharmaceuticals, Inc. The drugs help lower blood cholesterol and high triglycerides.

On Monday, the stock climbed by 7.2%, or 9 cents, to settle at $1.34 (Nasdaq: OSCI).

Based in Waltham, Mass., Oscient is a biopharmaceutical company focused on antibiotic products.

Alnylam climbs 2%

Alnylam Pharmaceuticals, Inc. saw its stock creep up on Monday after announcing that it granted Calando Pharmaceuticals, a subsidiary of Arrowhead Research Corp., rights to license and commercialize an RNAi therapeutic.

The stock gained 2.06%, or 27 cents, on the day to close at $13.39 (Nasdaq: ALNY).

Under the agreement, Calando may develop and commercialize the RNAi therapeutic using a synthetic siRNA with Calando's delivery technology as a therapeutic treatment for cancer.

The financial terms of the agreement include upfront, milestone and annual payments, as well as royalties on sales of the product.

"Alnylam established the InterfeRx licensing program to provide access to our leading intellectual property estate for disease targets in areas outside the scope of our current research," said John Maraganore, Alnylam's CEO, in a news release. "We are pleased to be granting this license to Calando to enable their efforts with Alnylam intellectual property, which we believe is critical for the development and commercialization of RNAi therapeutics.

"Calando is the seventh license for RNAi therapeutics under Alnylam patents and the fourth company to participate in our InterfeRx program, which represents an important part of our overall strategy to create value today by leveraging our intellectual property portfolio in RNAi through collaborations. We expect the recent strengthening of our intellectual property estate, with the issuance of the '704 and '196 patents in the U.S. and the upheld grant of our '623 patent in Europe, to accelerate these and other business development activities."

Cambridge, Mass.-based Alnylam develops novel therapeutics using RNA interference of RNAi to treat cancer and other diseases.

Teva stock falls

Teva Pharmaceutical Industries Ltd.'s stock dropped by 33 cents on Monday even though the company announced that its Azilect product for Parkinson's disease was approved by Health Canada.

The company's stock lost 0.96% to close the session at $34.01 (Nasdaq: TEVA) but gained 9 cents in after-hours trading.

The drug, according to a statement released Monday by Teva, was approved for once-daily oral treatment as initial monotherapy and as adjunct therapy with levodopa in moderate to advanced Parkinson's.

According to placebo-controlled clinical studies, the drug proved effective in more than 1,500 patients.

"This is a key milestone for our company, but more importantly a significant new treatment option for the more than 100,000 Parkinson's disease patients and their families in Canada," said Jon Congelton, general manager of Teva Neuroscience Canada, in a news release. "The approval of Azilect is another demonstration of Teva's continuing commitment to helping people cope with neurological diseases."

Based in Jerusalem, Israel, Teva is a pharmaceutical company focused on treatments for diseases of the central nervous systems.

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