DOR BioPharma stock jumps 15.6% on orBec news, equity line; Shire, Impax settle patent suit

By Sheri Kasprzak and Rebecca Melvin

New York, Jan. 20 - At the end of a week marked by sluggish activity, DOR BioPharma Inc. led biotech news on Friday as its stock advanced more than 15%.

DOR's stock gained 15.63%, or a nickel, to close at $0.37 (AMEX: DOR).

The increase comes on the heels of a $6 million equity line DOR received from Fusion Capital Fund II, LLC and on positive news regarding the company's orBec product.

"Probably a little of both," said one market source when asked if the equity line or the news impacted DOR's stock. "Obviously the cash infusion does help them so that's going to be a boost. The other stuff [news of the phase 3 trial] seemed to help them out a bit as well."

On Friday, the company announced that a review of long-term data from a phase 2 trial showed similar survival benefits to its phase 3 clinical trial of orBec.

The drug orBec is used to treat gastrointestinal graft-versus-host disease in bone marrow transplant patients. The phase 3 trial found that the drug provides a 70% reduction in deaths among those patients.

"These new findings give credence to our belief that orBec has a positive effect on survival in this patient population," said Michael Sember, DOR's president and chief executive officer, in a statement released Friday afternoon. "Since we missed our primary endpoint in the pivotal trial, the [Food and Drug Administration] has told us that a very high emphasis would be placed on our survival data. While the new preliminary phase 2 survival results were not a prospectively defined endpoint, they are nonetheless supportive and corroborate the results from our pivotal phase 3 clinical trial."

Under the terms of the equity line, Fusion Capital agreed to buy shares of DOR over the course of 15 months at a price equal to the then-current market price at the date of sale without a fixed discount - provided the price per share does not drop below $0.12.

On Thursday, when the equity line was first announced, the company's stock gained a nickel to close at $0.32.

Based in Miami, DOR is focused on treatments for cancer and the side effects of cancer therapy.

Elsewhere in the biotech space, Shire plc's stock advanced after the English pharmaceutical company settled litigation with Philadelphia-based Impax Laboratories, Inc.

Under the terms of the settlement, Impax will be allowed to market a generic version of Adderall XR in the United States no later than Jan. 1, 2010 and must pay Shire a royalty from those sales.

Shire had filed a suit against Impax on grounds of patent infringement.

The settlement of the suit was announced late Thursday, and on Friday, Shire's stock gained 2.68%, or $1.24, to end at $47.44 (Nasdaq: SHPGY).

The two companies have also entered into an agreement to promote Shire's Carbatrol to treat epilepsy.

Shire is based in Basingstoke, England.

AP Pharma stock up on royalty agreement

Another gainer on Friday was AP Pharma, Inc. AP's stock made slight gains on news that the company entered into a royalty interest agreement with an affiliate of Paul Royalty Fund II LP.

The company's stock gained 2 cents to end the day at $1.79 and lost a penny in after-hours trading (Nasdaq: APPA).

Under the terms of the agreement, AP sold its right to all future royalties and other payments for its Retain-A Micro and Carac products for $25 million.

AP may receive up to $5 million before Jan. 1, 2010 upon the satisfaction of certain milestones.

SuperGen Inc.'s stock dipped slightly Friday after news that it withdrew a European marketing application for its Orathecin product.

The company's stock lost 6 cents to close at $4.99 Friday (Nasdaq: SUPG).

Orathecin is an experimental treatment for pancreatic cancer.

The company is still conducting a phase 2 clinical trial of the drug in the United States.

Dublin-based SuperGen develops therapies for cancer.

Convertibles remain light

Looking to convertibles action Friday, most biotech names remained in their funk.

Oscient Pharmaceuticals Corp. was a notable loser, with its underlying shares (Nasdaq: OSCI) tumbling 18% after the Waltham, Mass.-based company said that the FDA had accepted its application seeking approval of its drug Factive to treat community-acquired pneumonia but refused its application to treat acute bacterial sinusitis.

Oscient's 3.5% convertibles, which are rarely seen in trade, changed hands at 78 in the session, after one source said the bonds had a 2-point wide market of 80 bid, 82 offered, at mid morning.

A New York-based sellside shop marked the bonds at 66.97 to close the day.

Shares of Alkermes Inc. dropped 5.58%, and its 2.5% convertibles dropped about 8 points.

HSBC downgraded the shares to "neutral" from "overweight," citing their valuation, which has increased by about 35% since Dec. 13.

Indeed, Friday's session left the shares with barely a scratch, a Connecticut-based biotechnology analyst said.

"The shares have gone from $18 to above $24, and now it's still above $23," he said.

Meanwhile its 2.50% convertibles changed hands at less than 170, compared to trades on Thursday at 178. The rise has been so strong that the bonds "aren't really a credit story anymore," the analyst said.

Driving the Cambridge, Mass.-based biotech's run are some potential blockbusters like its Vivitrol drug for alcohol dependence, and delivery systems like an inhalable form of a diabetes drug.

HSBC's downgrade was motivated by a view that the benefits of Vivitrol are already reflected in the share price.

On the upside Friday was CV Therapeutics Inc., which is a week away from potential FDA approval on its drug Ranexa for chronic stable angina.

"Ranexa is indicated for refractory angina patients (Erica trial), which is a population of just under 1 million in the United States," a West Coast-based buyside biotechnology analyst said.

A second trial, Merlin, is expected to conclude at the end of 2006, and, if approved, that would address all angina patients, which is a population of 6.8 million in the United States, he said.

"Approval is widely expected, but the potential for off-label use (before Merlin trial conclusion and subsequent approval) is unclear," he added. "The market opportunity is huge; and CVTX looks like a perfect acquisition candidate," he concluded.

CV Therapeutics' 3.25% convertibles due 2013, its latest issue, traded at 112.75, up about a point. Its underlying shares (Nasdaq: CVTX) closed up 65 cents, or 2.7%, at $24.69.

Oscient tumbles

Oscient Pharmaceuticals saw its shares rise briefly in pre-market activity, but the stock promptly sank after an early announcement that the FDA has refused to accept its supplemental New Drug Application for the five-day treatment of acute bacterial sinusitis (ABS) with Factive.

Oscient said that it will continue a dialogue with the FDA about its ABS claim.

In its refusal, the FDA indicated that Factive did not exhibit an acceptable risk versus benefit profile for the ABS indication.

In addition, the FDA said that it wasn't feasible to demonstrate an acceptable risk versus benefit profile given the FDA's view of the potential risk of rash in those patients. The FDA did accept Oscient's supplemental New Drug Application seeking marketing approval for the use of Factive (gemifloxacin mesylate) tablets for the five-day treatment of mild to moderate community-acquired pneumonia.

Oscient shares fell 49 cents, or 18%, to $2.26.

Endo stock weakens

Endo Pharmaceuticals Holdings Inc., which priced a $417.75 million secondary public offering Thursday, saw its stock close off slightly on Friday.

The company's stock slipped 6 cents to end the day at $28.09. The stock gained 9 cents in after-hours trading (Nasdaq: ENDP).

Under the terms of the secondary offering, some of Endo's shareholders will sell 15 million shares at $27.85 each.

Citigroup Global Markets Inc. is the underwriter for the offering and has an over-allotment option for up to 2.25 million shares.

Based in Chadds Ford, Pa., Endo is a biopharmaceutical company focused on treatments for pain.

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