Invitrogen, CV Therapeutics plunge; Osiris debuts higher, ends steady; Adolor gets eyed

By Ronda Fears

Memphis, Aug. 4 - Extending after-hours losses from the night before, Invitrogen Corp. and CV Therapeutics, Inc. plummeted Friday amid what traders referred to as an overwhelming selling spree.

"Biotech players were selling today, selling on bad news, selling into good news," said a sellside biotech stock trader. "It's a bummer, but if you take a position and have a strategy there is a way to make money even in this climate."

Late Thursday, Invitrogen reported disappointing second-quarter revenues although profits rose. But the kicker was that the company cut its 2006 guidance.

"The chickens are coming home to roost," said another sellside market source, referring to the company's new $500 million stock buyback plan that was announced with the second quarter - news which would typically provide an uptick to a stock price.

Invitrogen shares (Nasdaq: IVGN) fell $5.63, or 9.03%, to settle Friday at $56.70.

Carlsbad, Calif.-based Invitrogen, which provides products and services in genetic research, posted second-quarter net earnings of $19.7 million, or 36 cents a share, compared with $14.9 million, or 27 cents, a year prior on revenues of $313.6 million, up from $306.5 million but short of analysts' consensus estimate for $320 million.

Invitrogen cut its forecast for 2006 revenue to a range of $1.26 billion to $1.3 billion, down from the $1.3 billion to $1.35 billion it projected in April, and earnings-per-share guidance to $3.70 to $3.90 a share, lowered from its previous estimate of $3.90 to $4.10.

CV Therapeutics loses 11.5%

CV Therapeutics was pounded Friday, too, after posting a wider second-quarter loss, with the stock (Nasdaq: CVTX) falling $1.49, or 11.46%, to $11.51.

Late Thursday, the company posted a second-quarter net loss of $73.1 million, or $1.59 a share, widened from a loss of $51.6 million, or $1.43 a share, a year earlier. The Palo Alto, Calif., biotech, however, reported that revenues grew to $6.85 million from $5.75 million, falling far short of the First Call analyst consensus for $8 million.

Its chronic angina treatment, Ranexa, accounted for a spike in expenses, but onlookers are impressed with its marketing program.

"From listening to the conference call I was heartened," said a buyside market source in Boston.

"The company said that just yesterday it got an approval for coverage of 30 million people under Medicaid and Medicare. Plus 70 covered with co-pay. At the present time, 90% of all patients have access to Ranexa. This is a major achievement. We've heard from a few docs that one objection some patients had was Ranexa's price. Now it is affordable and we should see it in the number of script growth. CV Therapeutics also is going to hire 30 additional sales people and regroup its existing sales force."

Another buyside source, however, said he fears CV Therapeutics will be looking to tap the market again soon, to the detriment of those already involved. He noted the number of shares outstanding stood at 45.9 million at end of second quarter versus 36.1 million a year before.

"They are going to run out of money. There could be more dilution soon," the Boston-based fund manager said. "I would expect it. Revenues are just not happening here. They better try to raise some money [with the stock price] above $10, and soon. If they wait too long, it could really get ugly."

Osiris trades up, ends flat

Osiris Therapeutics, Inc. got its initial public offering off late Thursday and the stock traded up in the immediate aftermarket but settled the day back where it started - $11, where the 3.5 million shares priced, or the low end of guidance for $11 to $13.

The IPO got off amid market conditions that were described Friday by a syndicate source as an "uphill battle," after changing bookrunners earlier in the week - eliminating Deutsche Bank Securities from the roster to be replaced by Jefferies & Co., Inc.

"It's tough right now, so I think anything that prices within range is remarkable," said the syndicate source, who is at a desk away from both Deutsche and Jefferies.

Out of the chute, Osiris shares (Nasdaq: OSIR) opened at $11 and traded up to $11.48 but eased back to end the day at $11, after 633,019 shares changed hands.

Baltimore-based Osiris, focused on inflammatory, orthopedic and cardiovascular areas as well as adult stem cell therapy, fetched $35.8 million in net proceeds from the deal, which are earmarked to fund clinical trials and preclinical research and development and to repay a $20.6 million promissory note.

Adolor edges higher

There was not a huge price swing in Adolor Corp. on Friday but traders said there was nice buying interest matched with strong volume, fueled by positive drug trial news on the horizon and anticipation of a buyout from partner GlaxoSmithKline plc.

"For those looking to buy, I would buy half now and half if it breaks through the one-year high of $27.80, say when it approached $27.50," said a buyside trader. "The stock looks great. I am looking for a trade myself. I will be watching the action in the next few days."

Adolor shares (Nasdaq: ADLR) on Friday gained 2 cents on the day, or 0.08%, to close at $25.76 with 549,743 shares traded versus the norm of 423,114.

A sellside market source said buyout buzz is another source of the surge in Adolor.

"Entereg (alvimopan) is in the bag," the sellsider remarked. "Glaxo wants them. Watch for a move in November."

Adolor is developing Entereg with Glaxo as a treatment for postoperative ileus. The Food and Drug Administration in May resumed its review of the drug on positive study results in February, which was required by the FDA. The February news also sparked a spike in Adolor shares.

In mid-June, Wyeth and Progenics Pharmaceuticals, Inc. announced their intravenous form of methylnaltrexone, also being investigated as a treatment for postoperative ileus, has received fast-track status from the FDA.

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