Amylin loses 3% after follow-on; Manhattan Pharma taps PIPEs; Momenta sold on news; ViaCell off

By Ronda Fears

Nashville, Aug. 30 - Amylin Pharmaceuticals Inc. headed up deal activity in yet a light load in the biotech sector, with a $157 million follow-on offering that some holders said suggests the company will not be embracing any takeover bids with open arms.

There also were a couple of PIPEs deals on the tape, too - both stock deals for respectable amounts. Manhattan Pharmaceuticals Inc. had a $12 million deal, and Boston Life Sciences Inc. raised $12.8 million. Additionally, there was a $25 million venture capital transaction from Inotek Pharmaceuticals Corp.

Biotech stocks declined almost entirely in line with the broader indexes, as the aftermath of Hurricane Katrina in the Gulf of Mexico sent shockwaves through the markets.

Viacell Inc. advanced by as much as 4% after the stem cell research firm announced an expanded agreement with giant biotech Amgen Inc. The company has licensed from Amgen rights related to the use of recombinant human granulocyte colony stimulating factor for the development of a product to treat hematological malignancies and genetic diseases, and now also for ex vivo therapeutic uses. ViaCell granted Amgen a warrant to purchase 200,000 shares, but no additional financial terms were disclosed.

ViaCell shares, however, retraced those gains and closed out the session off by 14 cents, or 2%, at $6.86. While federal regulators have debated stem cell research in Washington, D.C., including the fate of government-backed research, ViaCell shares have fallen from around $8.50 a month ago.

Amylin spot sale aggressive

Amylin priced a follow-on offering of 5 million shares of common stock off the shelf at $31 per share, discounted from Monday's closing level of $32.66, but at the aggressive end of guidance. It had been pitched late Monday at $30.50 to $31, according to market sources.

The shares opened Tuesday at $31.48, after diving more than 6% in after-hours trading Monday as the new deal circulated, but ended the day off by 96 cents, or 2.94%, at $31.70.

Goldman Sachs & Co. was sole bookrunner of the overnight deal.

The deal fetched $157.1 million in gross proceeds with net proceeds estimated at $152 million.

San Diego-based Amylin has drug candidates for the treatment of diabetes, obesity and cardiovascular disease in various stages of development.

Amylin had extended gains over the weekend after reporting positive trial data last week for a diabetes drug in development with Alkermes Inc. and Eli Lilly & Co. Amylin, which is leading the collaboration, announced encouraging preliminary phase II data from a small study for exenatide LAR, a once-weekly formulation of the twice-daily injectable Byetta, being developed to treat type 2 diabetes.

Proceeds are widely expected to be used for the phase III trials for LAR and build a manufacturing plant for the Byetta LAR product.

Amylin strength unflappable

In addition, Amylin has been considered a prime target for a takeover by Lilly, but not all holders think that the company is open to suitors or that a merger would be good for the company.

"Considering what Amylin has accomplished so far with limited resources and much adversity, imagine what they will accomplish now that a steady stream of revenue will be coming in of its own," said one equity holder. "I am hopeful and expect Amylin will remain independent and will eventually achieve Amgen [the biggest biotech firm by market cap] type recognition."

He pointed to a Bear Stearns report Tuesday that put a target on the stock of $34.

Quoting the research firm, he said, "While preliminary and from a small patient group, we found recent phase IIa data on LAR too profound to ignore. As such, we believe an eventual LAR launch is more likely than not. Given what we view as $2 billion-plus peak sales potential for LAR, we view Amylin shares as undervalued."

Amylin building a war chest?

Another holder based in Connecticut said that the funds raised by Amylin may be an even stronger signal that it will battle any takeover bid.

"Maybe the FDA told them they need to run trials on monotherapy. Maybe they are building a war chest to fight any unwanted takeover," the buyside market source said.

"Maybe they have calculated how much it will take to get Byetta LAR and Symlin for weight loss to market. Maybe they are going to announce a worldwide strategy for Symlin for type 1 diabetes.

"This all takes money, and it sure looks as if Amylin is going to do it themselves."

In any event, he said that based on Wall Street's price targets for Amylin shares the dilution from the follow-on sale was of no concern to him.

"This is good dilution...whoever bought those shares is getting less ownership per dollar than just about every existing owner of Amylin shares," he said.

Manhattan shares flat on deal

Manhattan Pharmaceuticals Inc. shares zoomed in heavy trade after the company announced a $12 million PIPEs transaction but ended the day unchanged.

The New York-based biotech sold 10.8 million shares at $1.11 each plus five-year warrants for 2,152,758 shares, exercisable at $1.44, versus the stock's closing level Monday at $1.45.

Manhattan Pharma shares on Tuesday traded as high as $1.53 but closed unchanged at $1.45.

Proceeds will be used for the development of the company's three lead compounds, working capital and general corporate purposes, the company said.

Its Oleoyl estrone is an orally administered therapeutic for weight loss. The company also is developing Lingual spray propofol used for sedation prior to diagnostic, therapeutic or endoscopic procedures, as well as PTH (1-34) for psoriasis and other dermatological conditions.

Momenta sold off of news

Momenta Pharmaceuticals Inc. fell victim to the investment thesis, "Sell the news," a market source remarked on Tuesday, diving more than 8% even as it announced a positive event for its generic heart medication.

The Cambridge, Mass.-based company announced that it had filed an Abbreviated New Drug Application seeking U.S. marketing approval of M-Enoxaparin - a generic version of Sanofi-Aventis' cardiovascular drug Lovenox. Momenta said it would market the generic drug in collaboration with Sandoz, a division of Novartis AG.

Momenta said that Lovenox, used to prevent deep vein thrombosis and acute coronary syndromes, had sales of $2.4 billion in 2004.

Momenta shares fell $2.18 on Tuesday, or 8.06%, to close at $24.88.

"This is just classic, brainless 'sell on the news' mechanical trading combined with weak longs panic selling," said a buyside market source. "The potential value of this stock is well understood. Shorting is just too risky."

Momenta focuses on the sequencing and engineering of complex sugars used for the development of improved versions of existing drugs and for the development of novel drugs. The company raised $130.5 million from a follow-on stock sale a month ago, with the proceeds earmarked to build manufacturing capacity, among other things.

© 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.