CoTherix off on follow-on deal; Human Genome slide unabated; Cytogen higher; flu names soar

By Ronda Fears

Nashville, Oct. 7 - CoTherix Inc. rounded out the week by getting its follow-on offering off deck at a 3.2% discount, and next week the market is looking for Threshold Pharmaceuticals Inc. and Dynavax Technologies Corp. to price follow-ons alongside a couple of hopeful initial public offerings.

Syndicate sources were quiet, perhaps superstitiously, about which IPOs might step up to the table in the Oct. 10 week, which matched what buyside sources said they have been told for the coming week.

"We have been 'put on alert' sort of regarding a couple [of biotech IPOs on the calendar], but that has been the case with several of the biotech IPOs recently," said one fund manager. "Most of us aren't really paying attention to that. In other words, I'm not expecting anything."

CoTherix priced the 4.5 million shares at $13.00, a 3.2% discount from Thursday's close of $13.43, for gross proceeds of $58.5 million for the South San Francisco cardiopulmonary biotech. The stock trended lower in tandem with the pricing, trading even lower to $12.75, but closed Friday with a decline of just 13 cents, or 0.97%, at $13.30.

In the PIPEs market, LaJolla Pharmaceuticals Co. and Vasogen Inc. had a couple of whoppers that made up for a somewhat slim week for PIPEs transactions.

LaJolla Pharmaceuticals pocketed $66 million from the private placement of 88 million shares at $0.75 each to a handful of investors, which also received five-year warrants for 22 million shares with a strike price of $1.00 and conditional warrants for up to 5% of outstanding shares as of Oct. 6. San Diego-based LaJolla is focused on therapeutics for antibody-mediated autoimmune diseases. The stock gained 6% on the news.

Vasogen fetched $40 million in a private placement of two-year 6.45% convertible notes, convertible at $3.00 each, plus five-year warrants for 3.3 million shares with a strike price of $3.00. Toronto-based Vasogen, focused on chronic inflammation from cardiovascular and neurological diseases, said proceeds would be used for ongoing drug development and general corporate purposes. Vasogen shares dropped 13% on the deal.

Avian flu vaccine names fly

Most major influenza vaccine makers were higher Friday, in addition to several smaller ones like Gilead Sciences Inc., on discussions initiated by the U.S. government with top executives on ways to avoid a pandemic of the deadly avian flu.

According to White House reports, President Bush met Friday afternoon with executives from GlaxoSmithKline plc, Wyeth, Chiron Corp., Merck & Co., MedImmune Inc. and Sanofi-Aventis to discuss how production can be ramped up to produce greater quantities of the avian flu vaccine in a shorter period of time.

Glaxo announced after the meeting it would triple its flu vaccine production. Glaxo shares closed up 29 cents, or 0.56%, at $51.69.

Delegates from 80 nations and international health agencies began a meeting Thursday hosted by the U.S. State Department to brainstorm a plan to fight the growing outbreak of avian flu before it reaches pandemic stage.

NanoViricides a sleeper flu name

While not privy to the talks between Bush and Big Pharma first-hand, smaller vaccine makers like Gilead Sciences Inc., NanoViricides Inc. and Vical Inc. were all boosted by the event. NanoViricides specifically was touted by one buyside market source as a sleeper in this niche.

"There are not too many secrets on The Street anymore, but NanoViricides seems to be the best play with the whole bird flu thing. Volume is starting to pick up and the stock is starting to rise on more media attention in the biotech sector. The company in ongoing negotiations with many government and biotech officials," the buysider said. "I see the stock moving up strongly in the next several months. Potential upside is huge, and not much risk involved at these current prices."

NanoViricides stock Friday, though, was off 3 cents, or 14.29%, closing at 18 cents. The company announced Monday that it is moving rapidly forward with its strategy for combating avian flu with its developmental FluCide-I and said it has scheduled high-level meetings in December with Vietnam's senior government officials and scientists.

Gilead is the developer of antiviral drug Tamiflu, marketed by Roche Holdings AG, which the U.S. government has been stockpiling as a hedge against a major outbreak of the avian flu. Last week, the U.S. Senate passed a $4 billion bill to purchase TamiFlu, which has limited effectiveness but remains the only avian flu vaccine at present. Gilead Sciences shares rose $1.99, or 4.37%, to close Friday at $47.51.

Vical is working on an avian flu vaccine under a grant from the National Institutes of Health. On Friday, the stock soared, adding 42 cents, or 9.42%, to end at $4.88.

Chiron a laggard in flu moves

Chiron was one of the laggards among the flu vaccine makers gaining Friday on the government talks to boost supplies, as it has yet to overcome supply problems of its own.

Moreover, traders in stock and convertibles remarked Friday about their surprise that volume in Chiron securities was so low. The stock settled Friday up by a nickel, or 0.12%, at $43.32.

"We didn't trade any Chiron," said a convertible trader at a big sellside shop. A stock trader at that firm added, "We traded a lot of the other biotech names involved with flu vaccines, but not a lot of Chiron. Guess they missed this boat, too."

Convertible players over the past month have been shifting into the Chiron 1.625% issue from the 2.75% issue for more downside protection following lack of visibility in the Chiron story and its support from majority stockholder Novartis AG. Novartis has hinted at selling its stake altogether after Chiron directors last month rejected a $40-per-share bid, or $4.5 billion, from the European drug company as inadequate.

Many onlookers have hoped for a possible bidding war to ensue over Chiron, but the regulatory uncertainty of its flu vaccine production, which was shut down in the previous flu season because of contaminated batched at its Liverpool plant, has been a barrier. There have been preliminary approvals to re-open the plant, but the company has said it still has more work to do in order to enter this year's flu season.

Human Genome off 5% more

Human Genome Sciences Inc. continued to spiral in the wake of its lupus drug showing disappointing trial results with the stock losing another 47 cents, or 5.08%, to end at $8.78 - off more than 40% for the week.

"Look, the institutions aren't selling, they're buying. But Human Genome is so thick, [has] so much stock outstanding, that it would be hard even for a large firm to have a measurable effect on the stock," said a sellside market source. "There are not many big blocks going through. In fact, the big blocks going through on Wednesday were a near even mix of buys and sells. You can realize this was oversold a bit."

But one buysider said he was seeing "still a lot of selling pressure and no meaningful buying" and added, "It looks to go lower."

On Thursday the stock lost another 6% after a 30% plunge on Wednesday.

Some convertible players in the name had hoped short covering would provide a lift to the stock, but that was not the case.

Cytogen reverses week's loss

Cytogen Corp. got a huge shot in the arm Friday with positive trial data that helped reverse losses from earlier in the week due to a warning about 2005 sales falling short of its guidance.

The stock Friday added 20 cents, or 5.85%, to $3.62.

Before Friday's opening bell, Cytogen reported positive trial data shows advanced bone cancer patients responded favorably when given a combination dose of its flagship cancer treatment Quadramet, which is designed to improve the effectiveness of radiotherapy, and Eli Lilly & Co.'s lead chemotherapy drug Gemzar.

On Tuesday, Cytogen said that it now expects sales of $3.5 million, an 8% increase from a year ago but less than expected. As a result, the company warned that full-year sales will fall short of $20 million, compared with its forecast in August of 2005 sales at the low end of a range of $20 million to $25 million.

The Princeton, N.J., company is scheduled to report third-quarter results on Nov. 8.

© 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.