12:00 AM
Jul 01, 2002
 |  BioCentury  |  Finance

Ebb & Flow

The first regulatory setback isn't the knockout punch for Oxford GlycoSciences(LSE:OGS; OGSI), which fell 92.5p (24%) to 300p on Monday after receiving a non-approvable letter from the FDA for its Vevesca (OGT 918) to treat Gaucher disease. But with the company's current market cap now approximating its cash on the balance sheet, Vevesca's value has been virtually removed from the stock.

According to OGS, the FDA said there was not sufficient support for the safety and efficacy of the compound (see B6). Nevertheless, Vevesca is still under review in Europe, and OGS expects a decision in the third quarter.

"We do still have grounds on which to move forward and will meet with the FDA at the earliest occasion," CFO Stephen Parker told Ebb & Flow. "We have additional data that FDA has not yet seen that may prove to answer some of its concerns. The additional data includes neurological baseline measurements from some of the patients entering the New York trial which started last July and now has all 11 patients enrolled."

But if Vevesca isn't approved, there's nothing behind it in the clinic. "We do have a gap in our pipeline and have for some time been looking at the possibility of either product or company acquisitions," said Parker. "Our core therapeutic areas are cancer, infectious diseases and glycolipid storage disorders."

OGS has some cash to work with. At the end of 2001, it had £176.6 million ($260.8 million) in cash and an expected burn rate of £30 million ($45 million) for 2002.

OGS closed Friday down 125p (32%) at 267.5p and a market cap of £148 million ($221 million). On NASDAQ, OGSI was down $1.61 (30%) to $3.79 on the week.

Genzyme (GENZ) got a slight bump from the news, trading up $0.30 to $19.24 on the week after adding $0.32 to $19.26 on 10.6 million shares on Monday. The news means less fear of a near-term threat to GENZ's Gaucher product, Cerezyme imiglucerase. GENZ is on track to post $600-$610 million of sales of the product this year. GENZ also was supported on Monday by additional Phase III data for Aldurazyme for mucopolysaccharidosis I, which is partnered with BioMarin (BMRN) (see below).

IPOs, but no window

The bad news is that the IPO market continues in its virtual non-existence, with only three U.S. deals pricing in the second quarter. The good news is that the deal flow pace has "picked up" because the industry only priced one U.S. deal in the first quarter (see "Halftime," above).

Last week, one tiny biotech IPO got out as BioDelivery Sciences (BDSIU) raised $10.5 million through an IPO of 2 million units at $5.25 through Kashner Davidson.

But BDSIU got some help from its friends. Helping price the deal was a $3.6 million investment by discovery and development services company PPD (PPDI), which purchased 690,000 units in the IPO. There's no deal between the two companies, but the prospectus says they're mulling one over.

BDSIU originally filed last Nov. 7 to sell the units at $5-$9. In February, the offering was amended to $5.25-$6 per unit. Each unit consists of one share and warrants to purchase additional shares. The units closed Friday at $5.05, valuing the company at $35.4 million.

Meanwhile, pricing of IPOs for Innovative Drug Delivery and Aderis are listed as "day-to-day." Aderis, which is developing small molecules for CNS, cardiovascular and renal disorders, is looking to raise $66-$77 million through the sale of 5.5 million shares at $12-$14. Innovative Drug Delivery hopes to raise $44.8-$56 million through the sale of 5.6 million shares at $8-$10.

Checking the bad news box last week was Merck's Merck-Medco spin-off, which didn't price. Some brakes were put on the road show the week prior when the news wires ran stories about the unit's...

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