12:00 AM
 | 
Jun 28, 2004
 |  BioCentury  |  Finance

Ebb & Flow

When FDA grants Fast Track designation or an SPA, investors need to remember that the FDA action is related to an indication where there's unmet need on the one hand, or to a trial design on the other - not to the compound being tested.

A case in point is IntraBiotics (IBPI), whose stock had more than tripled from $3.72 since it received Fast Track designation last September for its iseganan to prevent ventilator-associated pneumonia (see "IBPI's Round Trip").

IBPI jumped 106% the week it received Fast Track designation for the compound, and shortly popped an additional 89% on the week when it received an SPA. Not surprisingly, IBPI dove $9.45 (69%) to $4.23 last Wednesday when a Phase II/III trial in VAP was halted after an independent data monitoring committee saw higher rates of both VAP and mortality in patients receiving iseganan compared to placebo. The stock closed Friday at $3.95, down $9.81 (71%) on the week(see B10).

IBPI isn't the only company to have enjoyed a pop on SPA news. Six of seven biotech companies that received SPAs last year traded up, and three enjoyed a double-digit percent gain. This year, the responses have been more subdued (see "SPA Movers").

On a conference call, IBPI President and CEO Henry Fuchs called the VAP result a "complete surprise." The company said it wants to meet with the DSMB and discuss the results of the trial. IBPI said it hasn't seen the committee's analysis and won't undertake any more clinical studies of iseganan until it completes an internal analysis.

Iseganan previously failed in two Phase III trials to prevent oral mucositis in radiotherapy and chemotherapy patients.

Indeed, iseganan is the company's only clinical compound. The good news for IBPI is that it has cash. During the run-up, the company raised $58.2 million in two financings: last October it raised $19.2 million in a private placement of stock at $10.85 plus warrants; and last month IBPI raised $39 million in a follow-on through the sale of 3 million shares at $13. IBPI's first quarter operating loss was $6.3 million.

Around the world in nine IPOs

The sun didn't set on last week's IPO news, which spanned four continents. Furthest east, drug development and reprofiling company Sosei plans to raise ¥10.2 billion ($95.3 million) in an IPO on the Tokyo Stock Exchange's market of the high-growth and emerging stocks (MOTHERS). Sosei expects its post-money valuation will be ¥50.4 billion ($471 million).

The company's four core clinical compounds include SOT-375 for prostate cancer, which is undergoing bioequivalency trials in Japan and is marketed in the U.S. and other countries as Eligard. SOH-075 (NorLevo) is an emergency contraceptive in a Japanese bridging study and approved in Europe and other countries; SOT-107 (TransMID) is in Phase III testing in the U.S. for glioma; and SOU-001, a treatment for stress urinary incontinence, is in Phase I testing in the U.K.

Underwriters are Nomura; Merrill Lynch; and Daiwa Securities SMBC. Trading is to begin around July 29.

European ZEN master

In Eastern Europe, branded generics company Zentiva (PSE:ZEN; LSE:ZEND) raised CZK2.7 billion ($102 million) in an IPO through the sale of 5.5 million shares at CZK485, giving it a post-money valuation of CZK18.5 billion ($700 million). Merrill Lynch is managing the offering. Warburg Pincus and other investors also plan to sell up to $100 million of shares in a secondary offering.

Post-IPO, Warburg Pincus, the majority shareholder, will own about 53%. "We have made about five times our money on the Zentiva investment, so far," said Nick Lowcock, managing director of Warburg Pincus Ventures.

ZEN, which is...

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