The latest biotech news or news surrounding small cap biotech stocks like Idenix Pharmaceuticals Inc (NASDAQ: IDIX), Dendreon Corporation (NASDAQ: DNDN) and TNI BioTech, Inc (OTCMKTS: TNIB) includes a merger, a CEO resignation and a steady stream of IPO filings:
Merck Buys Idenix Pharmaceuticals. On Monday, Merck & Co, Inc (NYSE: MRK) and Idenix Pharmaceuticals announced that the companies had entered into a definitive agreement under which Merck will acquire Idenix for $24.50 per share in cash in a deal worth approximately $3.85B. The deal is being seen as a way for Merck bolster its arsenal of potential drugs in the competitive arena of hepatitis C treatments – a space where Gilead Sciences, Inc (NASDAQ: GILD) is seen as a race leader with Idenix Pharmaceuticals being a laggard. It should be noted that winning the race is important given that at least 3 million Americans and 150 million people worldwide have hepatitis C. The Captain Abandons the Dendreon Corporation Ship. On Monday, Dendreon Corporation, the financially troubled seller of the Provenge prostate cancer vaccine, announced that John H. Johnson (who was hired to turn things around) had informed the Board of Directors of his plans to step down as president and CEO for "personal reasons." That's not a good omen because as Adam Feuerstein noted in TheStreet, Dendreon Corporation must repay $28 million in debt by June 15. That will not be a problem but with just $170 million in the bank at the end of the first quarter, Dendreon Corporation has no means right now to repay the $560 million in debt due in 2016. However and as Mad Money's Jim Cramer has observed, the Idenix Pharmaceuticals deal gives some hope that a buyout could save shareholders. Shortage of R&D at Big Pharma Creates Demand for Small Cap Biotechs. Joseph Pantginis, Ph.D., a biotech analysts with ROTH Capital Partners, was recently interviewed by The Life Sciences Report where he commented:One thing that will continue to bolster biotech is that big pharma continues to struggle with its pipeline. Companies are constantly looking for merger and acquisition (M&A) activity, and they need to be able to generate ideas and new drugs. Their internal research and development (R&D) platforms are not doing that anymore. Big pharma is constantly looking at both smaller biotechs and larger companies to fill in the gaps generated by the lack of R&D productivity.
He also said:
I think we are still in the environment where biotech and healthcare stocks should do well overall. By November 2013, biotech stocks were getting frothy. That included some high-quality stocks that had very quick run-ups. We like to see steady growth out of these names over time. A healthy letting-off of steam is a good thing.
Recent Biotech IPO Filings. Last Friday, Israel based Vascular Biogenics, a biotech developing gene therapies to target certain cancers and inflammatory diseases, filed to raise up to $75 million on the NASDAQ under the symbol VBLX while last Thursday, Zafgen, a clinical-stage biotech developing treatments for obesity, announced plans to list on the NASDAQ under the symbol ZFGN and raise $75 million by offering 5.0 million shares at a price range of $14 to $16 for a fully diluted market value of $330 million at its midpoint. In addition, Syndax Pharmaceuticals, a late-stage biotech developing a novel therapy for resistant breast cancer, announced plans to list on the NASDAQ under the symbol SNDX and raise $60 million by offering 4.3 million shares at a price range of $13 to $15 for a fully diluted market value of $179 million at its midpoint. A week ago, it was also reported that Clarus Therapeutics, which had pulled the plug in an IPO three years, plans to try again with a $86 million IPO. Its drug, Rextoro for low-testosterone, has already run the gamut on two Phase III studies and was submitted to the FDA in January. However, it also faces what could be a grueling review of safety issues as the FDA grows increasingly alarmed about the potential safety risks associated with low-testosterone therapies. This Week's Biotech Filings. On Monday, Ambrx, a biotech developing protein therapeutics to deliver large molecule drugs, announced plans to raise $70 million by offering 5.4 million shares at a price range of $12 to $14 for a mid point market value of $246 million. Ambrx has partnered with Bristol-Myers Squibb to develop a diabetes drug (in Phase 2 trials) and Eli Lilly for its animal health drug (expected to reach US markets by 2015) while primary shareholders include Roche and Merck. The company will list on the NASDAQ under the symbol AMBX. In addition, Ardelyx, a biotech developing small molecule treatments for kidney and gastrointestinal diseases, announced plans to raise $50 million by offering 3.6 million shares at a price range of $13 to $15 for a midpoint diluted market value of $252 million. Ardelyx will list on the NASDAQ under the symbol ARDX. Small Cap TNI BioTech's Spinoff and Other News. Small cap biotech TNI BioTech, which is focused on the development, marketing and distribution of opioid-related immunotherapies, has recently posted a Form 10-Q, but the big announcement came in early May about how its board of directors had approved a plan to spin off wholly-owned subsidiary, Cytocom, Inc - an entity established to operate TNIB's drug development business. After the spin off, Cytocom will initially focus on developing low dose naltrexone (LDN) and methionine-enkephalin (MENK) while TNI BioTech will continue to retain the rights to certain assets and will focus on manufacturing, distribution and marketing of these LDN and MENK therapies for the treatment of both humans and animals in certain territories. TNI BioTech shareholders will receive one common share of Cytocom for every one share of TNIB common stock held as of 5:00 p.m., Eastern Time, on July 15, 2014. It should be mentioned that the company spent last year developing a manufacturing and distribution network for the sale of LDN into emerging markets and has had discussions with the FDA and EMA to begin clinical trials in the United States. On Monday, TNI BioTech closed at $0.580 for a market cap of $50.10 million.
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