Invitrogen, Geron rise on pact; other stem cell names higher; Keryx up 8%; Nabi up over 2%

By Ronda Fears

Memphis, June 29 - As U.S. lawmakers were thought to be poised to vote on legislation in support of stem cell research, Geron Corp. and Invitrogen Corp. announced Thursday that Invitrogen has licensed Geron's intellectual property related to the growth of human embryonic stem cells for development of research tools.

"Timing is everything and now is the time," said a buyside market source.

He pointed to a news item on the wires Thursday from The Coalition for the Advancement of Medical Research saying it expects Senate majority leader Bill Frist (Rep.-Tenn.) to propose a vote on the Stem Cell Research Enhancement Act on Thursday as part of a unanimous consent package. No news on the vote was available by press time.

As for Invitrogen, the buysider said timing was in play as well, remarking, "The deal with Geron is great for Invitrogen. Geron is the future."

Financial terms of the deal were not disclosed, but both stocks gained ground. Geron shares (Nasdaq: GERN) added 44 cents on the day, or 7.06%, to $6.67. Invitrogen shares (Nasdaq: IVGN) gained $1.18, or 1.82%, to $66.01.

Most other stem cell names were up as well, which traders attributed to both the pending legislative vote and the Invitrogen pact with Geron serving to legitimize the prospect of luring partners to such work.

StemCells, Inc. shares (Nasdaq: STEM) were up 9 cents, or 4.76%, to $1.98. Aastrom Biosciences, Inc. shares (Nasdaq: ASTM) added 5 cents, or 4.24%, to $1.23. ViaCell, Inc. shares (Nasdaq: VIAC) gained 22 cents, or 5.58%, to settle at $4.16.

Genaera inks $25 million PIPE

Elsewhere a couple of biotech deals were on the tape. Genaera Corp. said it will close a $25 million private placement in which a group of institutional investors, including existing shareholders, have agreed to buy 35.6 million shares at $0.70385 each plus warrants for another 26.7 million shares with a strike price of $0.6101.

Plymouth Meeting, Pa.-based Genaera is focused on treatments for eye, respiratory and metabolic disorders, as well as cancer.

On the deal, Genaera shares (Nasdaq: GENR) took a hit, falling $0.0646, or 10.59%, to $0.5455.

But there were players adding to their positions on the weakness.

"I will keep buying on any further weakness, as Genaera has all the money it needs now to complete its pending trials, which are designed to demonstrate that Evizon's efficacy increases with higher dosages without compromising its already proven safety profile," said a buyside source. "Don't be surprised if the 160 mg Evizon dose proves to be far more effective and certainly safer than Lucentis and Avastin.

Vectura up 7% after stock deal

Higher on a deal, however, was London's Vectura Group plc after raising £43 million earlier this week through a stock sale to institutional investors.

The company, which focuses on inhaled drugs, said 53 million shares were placed at 85p each - Tuesday's closing mid-market price - with proceeds earmarked to progress key products such as VR315, a generic combination asthma drug.

Vectura shares (London: VEC) on Thursday gained 6p, or 6.98%, to settle at 92p.

"Analysts expect a slew of news from Vectura over the coming months as various trials are initiated," said a buyside source in London. He added that research reports suggest, "Although it operates in a high-risk industry, Vectura now looks likely to be one of the sector's safer bets and is worth a punt."

Vectura has already signed a European collaboration with an undisclosed "leading pharmaceutical company" for VR315 and has retained the rights for the U.S. and other territories. The drug is being developed to be used with Vectura's GyroHaler inhaler device.

The company said 30% of the new deal proceeds have been earmarked to develop VR040, currently in a phase 2a trial, for Parkinson's. Vectura is reformulating the drug for inhaled delivery, which will hopefully reduce side effects and make it work faster. Final stage phase 3 trials are expected to begin in 2008.

Remaining funds will be used to develop a second multi-dose dry powder inhaler device and new experimental products, the company said.

Separately, Vectura said a phase 2b trial of its inhaled treatment for erectile dysfunction, VR004, demonstrated a statistically improved erectile performance with a rapid onset of action that was both durable and well-tolerated.

Additionally, the company said a collaborative product with Sosei Co. being developed by Novartis AG - an inhaled once-daily treatment for chronic obstructive pulmonary disease, or COPD - has successfully completed a phase 2b multiple dose-ranging clinical trial.

Keryx higher on trial results

Nice trial news sent Keryx Biopharmaceuticals, Inc. shares soaring, along with some positive remarks on the event from sellside analysts. The company announced positive final results from a phase 2 dose-ranging study of Zerenex for end-stage renal disease.

"We are pleased with the positive results from this dose-ranging study of Zerenex as it represents a potentially new opportunity for Keryx," the company said in a statement.

Keryx shares (Nasdaq: KERX) shot up by $1.01, or 7.99%, to close at $13.65.

"I am very happy today," said a buysider in Atlanta. "I was loading up on Keryx when the whole sector was getting hit. I didn't think it would pay off so quick, but I'm not arguing."

Keryx will meet with the FDA in the second half of this year to plan the next steps in the clinical development of Zerenex. Importantly, Keryx would only have to make an immaterial milestone payment to its licensor at the end of phase 2 development and a small royalty if Zerenex is ultimately approved. Keryx in-licensed the rights to Zerenex from Panion & BF Biotech, Inc., based in Taiwan.

Analysts like Tom McGahren at Merrill Lynch & Co. estimate potential peak sales for Zerenex at about $150 million a year.

Nabi up on Kedrion pact

Nabi Biopharmaceuticals said Thursday it entered a development agreement with Italian biopharmaceutical company Kedrion SpA to develop and commercialize Civacir, Nabi's hepatitis C treatment candidate, in the United States and Europe.

"There was a good deal of short covering on Nabi today. Beyond this news, though, which really was a big deal for them, you can pull all the stops on this one," said a sellside trader.

"No one in the world does vaccines better. On this one, it's not the money but the company you keep."

Nabi shares (Nasdaq: NABI) gained 13 cents on the day, or 2.32%, to settle at $5.74.

Under the agreement, Kedrion will be the exclusive licensee to commercialize Civacir in Europe. In addition to milestone and royalty payments to be paid to Nabi, Kedrion will assume development costs in Europe and the United States through at least phase 2 clinical trials.

Civacir is Nabi's plasma-derived, polyclonal antibody product candidate, which when approved would be the first therapy for the prevention of the recurrence of hepatitis C-related liver disease in HCV-positive liver transplant recipients, or in patients who receive an HCV-positive liver.

Cytokinetics rises on trial

Positive trial results also boosted Cytokinetics Inc. on Thursday after the company said an early stage study of its heart failure treatment showed positive results.

Cytokinetics shares (Nasdaq: CYTK) gained 28 cents on the day, or 4.47%, to settle out the session at $6.55.

A buyside trader in Chicago said, "It's time to load up, between now and the Heart Failure Association meeting in September."

The Heart Failure Association is a branch of the European Society of Cardiology. The World Congress of Cardiology 2006 is to be held Sept. 2-6 in Barcelona, Spain, bringing together the European Society of Cardiology Congress 2006 and the World Heart Federation's 15th World Congress of Cardiology.

San Francisco-based Cytokinetics has strategic alliances with GlaxoSmithKline plc and AstraZeneca AB.

Cytokinetics said results from a first-in-humans phase 1 clinical trial evaluating CK-1827452, a cardiac myosin activator administered intravenously, were positive. The clinical trial was designed as a double-blind, randomized, placebo-controlled, dose-escalation trial conducted to investigate the safety, tolerability, pharmacokinetics, and pharmacodynamic profile of a six-hour infusion of CK-1827452 in healthy volunteers.

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