Antigenics up 11% on data; Discovery Labs dives 19%; Incyte up; VaxGen slides

By Ronda Fears

Memphis, June 7 - Antigenics, Inc. recovered Wednesday most of the losses from earlier in the week after encouraging results for its cancer vaccine Oncophage in kidney cancer patients.

Antigenics shares (Nasdaq: AGEN) added back 23 cents on the day, or 11%, to settle Wednesday at $2.32 after trading as high as $2.67 on the news. On Monday, Antigenics shares dropped 14% after Oncophage results in skin cancer patients were not positive enough to impress onlookers.

In the kidney cancer trial, the company said that patients with better-expected outcomes getting Oncophage and removal of the kidney were 43% less likely to have a recurrence than those who had a kidney removal alone.

The company also said it met with the Food and Drug Administration on May 23 to discuss a marketing application strategy with the agency. As a result, Antigenics said it will follow patients for overall survival rates and collect missing information.

Antigenics lost 50% of its market cap in March when the company suspended part of the Oncophage study pending analysis of preliminary data.

Antigenics view wide-ranging

Antigenics said the FDA is very encouraged by the trial results but the company will need to do additional work in order to satisfy the needs of the agency, which elicited a mixed reaction from players in the story.

"I hope that this optimism is not misguided as I still have stock that is deeply underwater," said a biotech fund manager in Boston.

"However, Garo's [Antigenics chief executive Garo Armen] opinion that the FDA are encouraged and that the next three to six months will determine what further work they have to do could mean anything. In fact, if they have further work to do, this suggests that this trial will not do."

Another buysider saw a positive angle to the news.

"The paragraph about the FDA discussions is very significant for what they did not say, that a complete new trial is needed," he said. "They appear to be looking for a way to allow the company to file."

Discovery Labs drops 19%

Discovery Laboratories Inc. took another dive Wednesday after saying it was pulling its application for Surfaxin in Europe, sending its stock reeling yet again.

"Investors figure they are not getting the full disclosure upfront of what might be even more dismal news and concomitant issues ahead related to the manufacturing debacle," said a trader, who referred to the sell-off as a "massive bailout."

Discovery Labs shares (Nasdaq: DSCO) fell 38 cents, or 19.29%, to close Wednesday at $1.59.

"Those shares I thought were a steal at $2.40 are looking might skanky now," said a buysider who was among the sellers Wednesday. "I was picking this as a turnaround, but it went too far for me."

The Warrington, Pa., company said late Tuesday it withdrew an application for Surfaxin for respiratory distress syndrome in premature infants from the European Medicines Evaluation Agency because Surfaxin had not met certain stability parameters in several validation batches.

Discovery said it cannot resolve the issues within the agency's review timetable but will have to produce additional validation batches of the treatment and intends to discuss the issue further with the European agency.

Discovery also must produce additional validation batches to support its application for Surfaxin with the FDA.

XenoPort loses another 4%

XenoPort, Inc. was off again Wednesday in reaction to its plans to sell 4.5 million shares in a follow-on offering, but players involved in the story said it was a smart move.

"Grab the money while you can, I say," one sellside trader said. "With the current price they have done very, very well, especially in this market. Take the money and run, huh."

XenoPort shares (Nasdaq: XNPT) lost 88 cents, or 4.28%, to close Wednesday at $19.70, after losing 4.28% on Tuesday.

Santa Clara, Calif.-based XenoPort is focused on developing a portfolio of product candidates that use the body's natural nutrient transport mechanisms to improve the therapeutic benefits of existing drugs.

XenoPort's most advanced product candidate, XP13512, has begun a phase 3 trial for the treatment of Restless Legs Syndrome and has successfully completed a phase 2a trial for the management of post-herpetic neuralgia. XenoPort has also completed two phase 1 trials of its second product candidate, XP19986, and reported preliminary positive results of a phase 2a clinical trial of XP19986 in Gastroesphageal Reflux Disease, or GERD, patients.

VaxGen slides despite data

VaxGen Inc. presented a poster at a biology conference this week showing some positive animal test results for a new smallpox vaccine, but it failed to move the stock much Wednesday.

"There is just too much bad blood with this name," said a sellside trader in the stock.

VaxGen shares (Pink Sheets: VXGN) dropped 13 cents on the day, or 3.25%, to close Wednesday at $3.87.

VaxGen, which has struggled since its vaccine for HIV failed in November 2003, presented the results at the International Poxvirus and Iridovirus Symposia. The research showed that LC16m8 kept smallpox-infected animals alive for the 15-day study.

VaxGen is developing the drug jointly with Kaketsuken, a research institute in Kumamoto, Japan.

Earlier this month VaxGen shares fell more than 37% in one day after it said it might not be able to meet new requirements from the U.S. government in relation to 75 million doses of anthrax vaccine for protection against terrorist attacks. VaxGen said it might not be able to meet all the requirements of the $877.5 million contract.

Last week the company declined to develop a meningitis vaccine made by EndoBiologics.

Incyte reverses after-hours

Incyte Corp. shares gained Wednesday on its announcement that it has begun phase 1 studies for its INCB13739 as a new treatment for type 2 diabetes, but in after-hours activity it inexplicably gave up those gains and more.

"The rise was tepid, I suppose, because the markets are not feeling very steady right now," said a sellside biotech stock trader. "Then it gave it all back up after-hours, and I don't rightly know what that was about."

Incyte shares (Nasdaq: INCY) rose 11 cents, or 2.69%, to $4.20. In after-hours trading, the stock was down by 19 cents, or 4.52%, at $4.01.

INCB13739, an orally available small molecule inhibitor of 11beta-HSD1, converts inactive cortisone into the active glucocorticoid, cortisol, a natural antagonist of insulin action. Incyte said that selective inhibitors of 11beta-HSD1 may provide a new class of drugs to treat type 2 diabetes as well as conditions often associated with this disease, such as dyslipidemia, atherosclerosis and coronary heart disease.

Current treatments for type 2 diabetes typically address individual components of the disease and few therapies target the multiple risk factors that lead to the elevated cardiovascular risk associated with this condition, the company said. By selectively inhibiting 11beta-HSD1 and reducing the level of cortisol in key metabolic tissues, INCB13739 has the potential to provide a broad spectrum impact on the multiple components seen in patients with type 2 diabetes.

Charles River bond up, stock off

Charles River Laboratories International, Inc.'s new 2.25% convertible deal climbed off the blocks Wednesday, closing the day at 101.125.

The $300 million seven-year bond priced smack in the middle of guidance for a coupon of 2.0% to 2.5% and initial conversion premium of 22.5% to 27.5%. It had drawn mixed reactions ahead of pricing, with the deal described as fairly priced but hampered by a lackluster stock story.

Charles River shares (NYSE: CRL) on Wednesday dropped 25 cents on the day, or 0.63%, to close at $39.70.

A number of equity analysts have been neutral on the stock, and the convertible was expected to draw in more hedged buyers than outright players.

Charles River, a Wilmington, Mass.-based provider of animal research models for the biotechnology sector, said it will use proceeds to buy back $125 million of its common stock from purchasers of the notes and to pay for convertible note hedge and warrant transactions. Remaining proceeds will be used for general corporate purposes, including buying back shares from the open market.

Millipore shares, bond flag

Millipore Corp.'s new 3.75% convertible due 2026 failed to shine on debut, staying at par on a neutral basis while the underlying stock took a hit.

The $550 million 20-year bond priced at the cheap end of price talk, which called for a coupon between 3.25% and 3.75% with a 37.5% to 42.5% initial conversion premium. While the bond ended the day still at par, Millipore shares (NYSE: MIL) lost another 61 cents, or 0.63%, to $64.04 after dropping 5.55% on Tuesday when the deal emerged.

Billerica, Mass.-based Millipore, which provides products and services for biopharmaceutical manufacturing, clinical, analytical and research laboratories, said it will use proceeds to pay part of the consideration in its merger with Serologicals Corp., which was announced in April. Any remaining proceeds will be used as working capital.

The market has been split over whether the Serologicals merger is good for Millipore, and although Millipore expects to reduce its leverage by the end of 2007, the company's current debt level remains high.

Kenneth Lim contributed to this article.

© 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.