Vical falls 20% on PIPEs deal; Threshold, Dynavax off on stock sales; Pharma Product higher

By Ronda Fears

Nashville, Oct. 12 - Biotech players continued to run for cover Wednesday, hoping to weather the earnings season in positions with minimal risk, traders said. Most biotech players were not shifting into Big Pharma names, traders said, but Pfizer Inc. and its peers took off on Pfizer's win in a patent dispute over its cholesterol drug Lipitor in the United Kingdom.

As for traditional biotech players looking to the Big Pharma group, sellside market sources said that was not the case. Rather, they were selling off positions and going to the sidelines.

"It was really bloody today. People are looking for somewhere safe to hide until the earnings season is over, for a couple of weeks," commented the sellside trader. "There seems to be more people willing to hold onto cash and wait for a while before they plow that back into the market."

Human Genome Sciences Inc.'s downward spiral is "looking like there is no bottom," the trader said, pointing out that the stock hit another new 52-week low Wednesday. The stock has dropped roughly 50% since announcing early last week that its lupus drug showed disappointing trial results. On Wednesday, the stock lost 45 cents, or 5.5%, to settle at $7.75, eclipsing the previous low of $8.07 that was struck the day before.

There were a few gainers that stood out on the mostly red biotech screens, however.

Pharmaceutical Product Development Inc. was lifted by an upgrade to the stock by Jefferies & Co. Inc. to a buy from neutral, the trader said, adding though that the stock has been on the rise since the company decided to pay a one-time special cash dividend of $1.00 per share, and initiated an annual cash dividend of 20 cents per share. The record date for the dividends is Oct. 17, he noted, so the stock will likely drift higher before then.

"You don't find a lot of these biotechs that pay a dividend so something like that is huge," the sellsider said.

Pharmaceutical Product Development shares on Wednesday gained 99 cents, or 1.79%, to $56.40/

From the primary side of the fence, follow-on stock offerings from Threshold Pharmaceuticals Inc. and Dynavax Technologies Corp. got off and there was at least one sizable PIPEs deal from Vical Inc.

Vical taps PIPEs for $22.6 million

Gene-based vaccine maker Vical Inc. said it has received agreements from institutional investors for its $22.56 million direct placement. The company will issue 4.7 million shares by Oct. 17 at $4.80 each, slightly under the 30-day average closing price of $4.83.

But the stock Tuesday took a big hit and volume soared to 2.8 million shares versus the three-month running average of 151,438, which one trader said suggested that hedge funds were heavy players in the PIPEs transaction. Vical shares lost $1.21, or 20%, to close Wednesday at $4.84.

On Tuesday, shares of San Diego-based Vical hit a new 52-week high after announcing the beginning of a mid-stage clinical trial sponsored by the National Institutes of Health to test its HIV vaccine. In September, the company received a $12.1 million production order from the NIH for the vaccine and is currently making batches to be delivered through 2006.

"The [PIPEs] deal has been in the works for weeks, it's very positive long-term," said a buyside market source. "The direct placement involved large institutions, and when they want in it speaks highly of the company."

Going forward, the company plans to use NIH collaborations to develop vaccines for SARS, the West Nile virus and pandemic influenza. On Sept. 15, Vical was awarded a two-year, $2.9 million challenge grant from the U.S. National Institute of Allergy and Infectious Diseases, with funding in stages contingent on milestones, to develop a DNA vaccine against naturally emerging or weaponized strains of the avian flu.

Monday extended a trend from Friday in which the smaller biotechs involved in flu vaccine saw huge interest amid discussions between the U.S. government and top executives from Big Pharma on ways to avoid a pandemic of the deadly avian flu. Big winners in the story were the small niche players, like Vical and Gilead Sciences Inc., NanoViricides Inc., BioCryst Pharmaceuticals Inc. and Novavax Inc.

Threshold dips 4% on follow-on

Threshold Pharmaceuticals Inc. raked in $65.375 million in gross proceeds from a follow-on offering of 6.25 million shares at $10.46 each, pat with Tuesday's close.

Primarily in reaction to the dilution, according to one sellside market source, Threshold shares lost 45 cents on Wednesday, or 4.3%, to close at $10.01

Proceeds are earmarked for clinical trials, research and development and toward sales and marketing efforts.

Based in Redwood City, Calif., Threshold is focused on metabolic targeting technology to treat cancers in an approach that targets fundamental differences in metabolism between normal and diseased cells. Its three product candidates are glufosfamide in phase III clinical trials for the second-line treatment of pancreatic cancer, TH-070 in phase II clinical trials for the treatment of benign prostatic hyperplasia - a disease characterized by overgrowth of the prostate - and 2-Deoxyglucose for the treatment of solid tumors.

Dynavax flagging on follow-on

Dynavax Technologies Corp. shares slid in the wake of the upsized follow-on sale of 5 million shares, boosted from earlier plans to sell 4 million shares, at $6.25 per share. The deal was priced Monday after the close and the stock closed Tuesday at the $6.25 level but on Wednesday slid $0.35, or 5.60%, to $5.90.

Berkeley, Calif.-based Dynavax has earmarked proceeds for clinical trials, research and development and general corporate purposes. Gross proceeds were roughly $31 million.

Dynavax concentrates on products to treat and prevent allergies, infectious diseases and chronic inflammatory diseases that alter immune system responses. Its clinical development programs are based on immunostimulatory sequences, or ISS, which are short DNA sequences that enhance the ability of the immune system to fight disease and control chronic inflammation.

The company's pipeline includes: Tolamba, a ragweed allergy immunotherapeutic, currently in a large-scale phase IIb clinical trial, and in a supportive clinical trial in ragweed allergic children; Heplisav, a hepatitis B vaccine that is currently in a pivotal phase III clinical trial; a cancer therapy currently in a phase II clinical trial; and an asthma immunotherapeutic that has shown preliminary safety and pharmacology in a phase IIa clinical trial.

© 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.