Trubion gets off, trips on debut; Siga skyrockets 130%; Illumina rises 19.5%; Anadys gains 10%

By Ronda Fears

Memphis, Oct. 18 - In another positive day for biotechs while the Nasdaq lost ground, Trubion Pharmaceuticals, Inc. got its initial public offering off and market sources said it is looking good for Asthmatx, Inc., BioVex, Inc. and Rosetta Genomics Ltd. to get done this week as well. A couple of others are said to still be struggling.

While Trubion tumbled in the immediate aftermarket Wednesday before ending in slightly positive territory, players said it was a tribute to pricing IPOs in a marketplace that has yet to solidly back new deals. It also was providing some hope to bankers pitching other IPOs on this week's line-up.

"We are more hopeful than we have been for a while," said a biotech banker working on a deal slated for this week's business.

BioVex hopes to sell 3.4 million shares talked at $11 to $13 per share. The Cambridge, Mass., biotech has slated proceeds to fund the development of OncoVEX for solid tumors, which is in phase 1/ 2 trials and ImmunoVEX, which is in phase 1 trials.

Rosetta Genomics is offering 3 million ordinary shares proposed at $11 to $13 per share. The Israeli biotech is an early stage front-runner in the emerging microRNA-based therapeutic field to treat cancer and infectious diseases. Proceeds will help fund development and general corporate purposes.

"There is still some resistance to the earlier-stage biotechs," said a buyside source focused on IPOs.

"We see these [BioVex and Rosetta] on the date book for this week but it may be close. Probably if they get off it will be below range. We'll see."

Medtech concern Asthmatx aims to price 5 million shares between $11 and $13. The Mountain View, Calif., medical devices firm has developed the Alair System to perform bronchial thermoplasty procedures for asthma patients. Proceeds are earmarked to fund clinical trials, to build a commercial infrastructure and for working capital.

ImaRx, Light Sciences maybes

There still are a couple of IPOs left on the calendar that sources said will likely get pushed to next week or beyond - ImaRx Therapeutics, Inc. and Light Sciences Oncology, Inc., both of which have been delayed previously.

"In these cases, ImaRx and Light Sciences, the biggest problem is understanding the technology," the IPO-focused buysider continued.

"They are maybes. I would not be surprised if one or both are pulled altogether."

ImaRx is pitching 5 million shares proposed at $10 to $12 per share with proceeds, estimated to net $49.6 million, to repay debt, to fund development and for general corporate purposes. The Tucson, Ariz., biotech is focused on therapies for stroke and vascular disorders associated with blood clots. It has the clot-dissolving drug Abbokinase approved for marketing, its SonoLysistm to break up blood clots in phase 1/ 2 trials as well as Open-Cath-R and Prolyse in phase 3 trials.

Light Sciences is marketing 5.25 million shares in a price talk range of $14 to $16 per share. The Snoqualmie, Wash., biotech plans to use proceeds, estimated to net $71.2 million, to fund research and development and for general corporate purposes. The company is developing Light Infusion Therapy, or Litx, an innovative light-activated treatment for solid tumors, currently in phase 3 trials.

Trubion a tribute to support

While Trubion also is an early stage biotech, onlookers said the success of getting its IPO off the ground Tuesday was due to support from its Big Pharma partner Wyeth in the form of a sizable purchase of stock at the IPO price. And, the stock was priced at the bottom of the price talk range.

Still, the stock (Nasdaq: TRBN) stumbled somewhat out of the gate, trading in a band of $12.70 to $13.30 before settling higher by 9 cents at $13.09 with some 1.28 million shares changing hands.

"The Wyeth angle pushed this over the top in terms of getting done or not getting done," the buyside source said.

Seattle-based Trubion expects to pocket $46.1 million in net proceeds from the sale of 4 million shares at $13 each - the low end of price talk of $13 to $15. Concurrently, Wyeth agreed to buy 800,000 shares in a private placement at the same price level for another $10.4 million.

Trubion and Wyeth have been partners since December 2005 when they inked a collaboration for the development and commercialization of certain therapeutics. The Wyeth deal included work on Trubion's lead product candidate TRU-015, which is in a phase 2a clinical trial for rheumatoid arthritis. TRU-015 also is to be tested on lupus.

The biotech focuses on autoimmune disease and cancer, developing drugs using highly specific, single-chain polypeptides designed with its SMIP custom drug assembly technology.

Illumina lights up on profit

In the secondary market earnings were keeping many players on the sidelines, traders said, but that was not the case with Illumina Inc., which zoomed after turning profitable in third quarter.

The San Diego maker of genetic-variation measuring equipment reported net income of $16.2 million, or 32 cents per share, compared with a loss of $1.4 million, or 3 cents per share, a year ago, as revenue more than doubled to $53.5 million from $19.5 million. For fourth quarter, the company expects EPS of 31 cents, excluding charges, on revenue between $54 million and $58 million.

Illumina shares (Nasdaq: ILMN) shot up $7.14, or 19.49%, to settle Wednesday at $43.78.

"This is still a high-risk play, but what's not to like with those numbers," remarked a sellside trader.

Illumina's performance, he said, was largely attributed to better-than-expected shipments of the company's genotyping BeadArray Reader instruments.

Siga skyrockets on data

It was an even greater gain for Siga Technologies Inc. as its shares soared on positive trial data for its smallpox vaccine.

Siga shares (Nasdaq: SIGA) rocketed higher by $2.57, or 130.46%, to close at $4.54, but that was a backdraft from the intraday high of $5.50 as traders could not help tapping into the profitable trade.

"What a day! This is a monster opportunity," commented one sellside trader.

"A lot of money was made today on this one. A lot of new buyers were in the mix, too. The story is just beginning."

Siga said its lead drug, SIGA-246, was the first drug to demonstrate total protection against human smallpox virus in a primate trial conducted at the federal Centers for Disease Control and Prevention. Smallpox is considered a bio-warfare threat.

"When they backed out of the PharmAthene merger everyone thought it was a negative," the trader added.

"I figured if Siga thought they were better off without them they must have something big cooking on the back burner. That appears to have played out."

On Oct. 4, New York-based Siga terminated its merger agreement with PharmAthene Inc., in part due to receiving $27 million in grants for its smallpox and arenavirus programs over the previous several months. PharmAthene was to go public through a reverse merger with Siga.

Another factor in the nixed merger was that Annapolis, Md.-based PharmAthene the previous week won a Department of Defense contract potentially worth $213 million to develop Protexia, a treatment for exposure to chemical nerve agents such as anthrax.

Now that Siga has a better footing on its smallpox vaccine, and with the PharmAthene merger nixed, the trader said some onlookers are expecting the company to tap the capital markets.

"It's time to issue some new stock and fix that balance sheet," he said.

"We've seen a huge gain but there's still huge opportunity left."

Memory bounces back

After a couple of rocky weeks, Memory Pharmaceutical Corp. got a nice shot in the arm Wednesday as biotech players bought into the story.

Memory shares (Nasdaq: MEMY) gained 10 cents on the day, or 7.63%, to $1.41. Some 383,659 shares traded versus the norm of 157,259 shares.

"This MEM3454 issue really is no big deal. The important thing is that Memory Pharma is now a well-financed company with around $55 million in cash. And the pipeline, including three phase 2 trials with two different drugs, is still WAY undervalued," said a buyside market source in New York.

"After listening to the conference call [Monday], it is clear that this is no big deal. It's just a simple misunderstanding between FDA and the company regarding changes in some previous provided documents, i.e. this is NOT a normal clinical hold situation, which usually would be due to toxicology concerns observed in the preclinical studies. All this should be solved beginning of December as FDA replies to the requested documents, which Memory Pharma will deliver to the agency early November. MEM 3454 should be back on track then."

On Monday, Montvale, N.J.-based Memory Pharma announced that the Food and Drug Administration has placed the proposed phase 2a clinical trial for its Alzheimer's drug MEM 3454 on clinical hold. But the company said it "believes that no additional studies or data will be required to address the FDA's questions and that, as a result, it should be able to provide to the FDA, by early November, the information necessary to facilitate the FDA's review."

On Oct. 5, the company announced a $31.3 million private placement with Great Point Partners and MPM Capital, among other investors, in which it issued 28.2 million shares at $1.11 each - a 2.6% discount to the previous day's $1.14 close. The investors also will receive warrants for 7.1 million shares, exercisable at $1.33 each.

The first tranche of the PIPE closed Monday for $26.7 million, and a second trance for the remaining $5.5 million, subject to stockholder approval, will follow a special stockholders meeting planned "as soon as practicable."

Anadys driven up nearly 10%

In another big gainer of the day, traders said Anadys Pharmaceuticals, Inc. shot up as word spread through the trenches on its presentation at the BIO Investor Forum on Wednesday in San Francisco.

Anadys shares (Nasdaq: ANDS) gained 29 cents, or 9.67%, to close at $3.29.

The stock has been on the skids since early July when is suspended human trial dosing for ANA975 for hepatitis C and hepatitis B due to disappointing toxicology data in previous animal studies. Shortly thereafter, the company brought a new chief medical officer on board to lead clinical operations, particularly it lead vaccine candidates ANA975, ANA380 and ANA773. ANA380 is also for hepatitis B, and ANA773 is a cancer vaccine.

But on Wednesday, sources said the news sparking the stock play was on its HIV drug compounds.

"They just announced they are the only company that has found an indication that will penetrate the HIV virus and they said that it is very validated," a sellside trader said, referring to the company's presentation at the BIO conference.

According to Anadys, the company has identified a novel mechanism which is potentially synergistic to existing HIV therapies. The company asserts its researchers were the first to crystallize this novel mechanism.

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