Titan zooms; Vanda slides; LAB goes public in Canada; Indevus up, NitroMed dives

By Ronda Fears

Memphis, Aug. 3 - Interest from earlier in the week finally gained enough steam to propel Titan Pharmaceuticals, Inc. shares by 13.5% Thursday with strong buying, a biotech stock trader said.

"There was just low-level noise about this name in the context of bargain hunting early on this week," he said. "Yesterday [Wednesday], we were getting a lot of calls, inquiries about it, and then today the buying started big time."

He said Thursday's low volume on the hefty price gain signaled "an accumulation movement, not your run-of-the-mill run-up." A lot of shares were for sale in the sub-$2 range, he added, and that lured in at least "one big buyer, maybe two" for fairly large blocks of stock. But the bulk of the buying took place before noon, he commented, and dried up almost entirely during the afternoon.

Titan shares (Nasdaq: TTP) gained 25 cents on the day, or 13.51%, to settle at $2.10.

"The stock crashed quickly and that means it could go sky high again quickly," remarked a buyside market source. "It has many more forces behind it now with an advanced pipeline matched by few others. So I would buy all I can under $3.25 for sure."

There is no special magic in $3.25, he said, other than it was the price on Titan's most recent stock deal. In mid-March, Titan pocketed $10 million from the direct placement of roughly 3 million shares at $3.25 each, a 25% discount to the then-current stock price of $4.33.

The buysider speculated that Titan's interest was precipitated by its upcoming earnings and the anticipation of news on a new schizophrenia drug. He said Titan is widely expected to report earnings next week, although a specific date has not been set by the company.

Vanda dips on wider loss

Titan is partners with Vanda Pharmaceuticals, Inc. on Iloperidone, in phase 3 trials for schizophrenia and related psychotic disorders. Vanda posted a wider net loss for second quarter before the opening bell, and the stock slipped in trade Thursday.

Vanda, which went public in April, reported a second-quarter net loss of $21.4 million, compared with a net loss of $18.1 million in first quarter and a net loss of $5.5 million in second-quarter 2005. The per-share loss in second quarter was $1.11 based on 19.2 million shares outstanding. The company recorded no revenues.

Vanda shares (Nasdaq: VNDA) lost 8 cents on the day, or 0.87%, to close at $9.16. The stock debuted in mid-April at $10 and has traded in a band of $7.21 to $11.35 over the last three and a half months.

"The [cash] burn rate is what floored me," said a buyside analyst. "Looks like VNDA will need to raise money again by the first quarter of 2007. That's not that far way. Heck, Titan probably has enough to mid-2007."

As of June 30, the company reported cash and equivalents of $60.2 million.

For the year, Vanda said it expects to have a net loss of $70 million to $75 million, or $4.38 to $4.69 per share.

Indevus gains over 2%

Better sales of Sanctura for overactive bladder and Delatestryl for male hypergonadism helped Indevus Pharmaceuticals Inc. boost revenue in its fiscal 2006 third quarter, and although a spike in research and development spending forced losses wider, the stock took off.

Rumors of partnership talks with the likes of Pfizer, Inc. for Indevus' experimental drug Pagoclone for stuttering was a big mover in the stock, a trader said, along with news Wednesday from its Sanctura marketing partner Esprit Pharmaceuticals, Inc. that it had raised $90.8 million in private financing.

"I like today's action," said a sellside trader. As for the second-quarter figures, he added, "The reports seem to be right in line with estimates so most of the move on that was already priced in."

Indevus shares added 13 cents, or 2.43%, to settle Thursday at $5.47.

The company posted a net loss of $13.4 million, or 28 cents per share, widened from a loss of $9.8 million, or 21 cents per share, a year before, while revenues grew to $11.9 million from $8.2 million on improved sales of Sanctura and Delatestryl. During the quarter, Indevus announced positive clinical results from two late-stage clinical trials for a new version of Sanctura as well as positive data for Pagoclone.

In July, Indevus raised a net of $34.8 million from a follow-on stock offering.

NitroMed plunges 24.5%

Although players were not surprised by NitroMed, Inc.'s disappointing second-quarter results, the numbers nevertheless sparked a big sell-off in the stock. The company has struggled for a year since its main drug BiDil - a heart drug for congestive heart failure in black patients - was launched but has yet to produce a big revenue stream.

"Nitro death," remarked a sellside market source, referring to the steep plunge in the stock price.

NitroMed shares (Nasdaq: NTMD) fell 92 cents, or 24.53%, to $2.83 - yet another new 52-week low, eclipsing the $3.49 mark established last week.

The company reported that second-quarter revenues - made up entirely of BiDil sales - shot up to $2.9 million from $400,000 a year before, but it recorded a net loss of $18.3 million, or 50 cents a share, compared with a loss of $22.6 million, or 75 cents a share last year.

"Still, bottom line is this drug is not producing the revenues we thought it would," a buysider said, noting that BiDil was launched in July 2005.

Another downer for the stock was that NitroMed also withdrew its 2006 sales guidance. Previously the stock was high by resignations from top executives Michael Loberg, CEO, and Bate's predecessor, Lawrence Bloch, in March.

"We are optimistic about our second quarter achievements in the priority areas of reimbursement and sales force productivity," said chief financial officer Kenneth Bate in a statement.

"However, because of the difficulty at this time of quantifying the impact of those achievements on BiDil prescription growth, as well as the variability in prescription numbers to date, we are withdrawing our previous net sales guidance of $20 million for 2006, at least until we are able to base such a projection on more consistent trends."

NitroMed player sees hope

For now, many NitroMed players feel stuck.

"It's not like it would be a huge loss to just sell out," the buysider commented. "Maybe I'm just stubborn, but I just don't want to mark that one off yet."

On the downside to holding NitroMed, he said, a big source of anxiety is that he feels dilution from a stock offering to raise money seems "almost a certainty to maintain financial viability. The timing of such dilution will depend on how fast and how much scripts increase, and on a change in market sentiment toward the sector in general."

On the positive side, he said there appears to be some success in NitroMed's efforts to get BiDil acceptance for payment in the Medicare program and research for a new version of the drug appears to be on track.

"The story for the next quarter or two is all about scripts. If they show greater increase than the 20% of the past quarter, there could be a happy ending, albeit far out in the future," the buyside source said.

"If script sales do not increase, the product will fade away, and the company will go bust. It's probably dead money, dead money, dead money, for at least the next two quarters. By the end of the year, we will know whether NitroMed will be around in 2007 as a stand alone company, or not. But, then, there is a buyout possibility in 2007 if scripts show sale increase and the new BiDil version meets FDA approval."

LAB shares up 8%

Laval, Quebec-based LAB Research, Inc. shares were up nearly 8% in trade in Canada on Thursday.

LAB Research shares (Toronto: LRI) gained C$0.29, or 7.73%, to close at C$4.04.

The company announced Thursday that its initial public offering - a spinoff from parent LAB International - of 10 million shares was priced at C$4 via joint bookrunners Desjardins Securities Inc. and Orion Securities Inc.

Of the 10 million shares issued, LAB International sold 6.25 million and received C$25 million in gross proceeds. LAB Research raised C$15 million with the sale of the remaining 3.75 million shares.

"We are proud to have succeeded in taking LRI public in such a challenging market. Through this transaction, we have secured the proper financial resources to enable LRI to implement its growth strategies as a stand alone entity," said Luc Mainville, chief executive, in a statement.

LAB research plans to use a portion of proceeds to support the expansion of its three main sites over the next 12 months and the balance will be used for working capital purposes and to support the growth of its activities. The company has five facilities in all, located in Canada, the United States, Denmark and Hungary.

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