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12:00 AM
Dec 24, 2007
 |  BioCentury  |  Finance

Ebb & Flow

GlaxoSmithKline (LSE:GSK; GSK) lost £1.27 billion ($2.6 billion) in market cap Monday on news that FDA's Center for Biologics Evaluation and Research had issued a complete response letter for the company's Cervarix HPV vaccine.

The disclosure knocked 23p off the company's stock price to 1,294p a share, trimming its market cap to £71.3 billion ($143.8 billion). GSK shares slipped a further 22p on Tuesday to 1,272p - still higher than the 52-week low of 1,218p on Nov. 27 - before recovering towards the end of the week to 1,282p.

The news guarantees Merck (MRK) an extended U.S. monopoly for its Gardasil HPV vaccine, although how long will depend on what CBER is asking of GSK. Indeed, GSK's loss was not its competitor's gain, as MRK was off $0.42 to $59.15 on the week.

GSK declined to disclose the contents of the letter, although spokesperson Joss Mathiessen told Ebb & Flow "we believe that all the questions posed by the FDA can be answered by completed and ongoing trials."

Areas of potential FDA concern could include the use of the AS04 adjuvant in the vaccine. AS04 is used in GSK's Fendrix hepatitis B (HBV) vaccine, which is marketed in Europe, but the pharma hasn't submitted the vaccine for U.S. approval and the adjuvant isn't included in any FDA-approved vaccines. AS04 contains a detoxified lipopolysaccharide derived from Salmonella, as well as aluminum sulfate.

It is also possible FDA needs more convincing on the efficacy of the vaccine against HPV18-related disease. An analysis of interim results of GSK's ongoing Phase III trial, published in The Lancet last June, showed the vaccine had not achieved statistically significant prevention of HPV18 alone, although it did against HPV16 alone and HPV16/HPV18 together.

MRK's Gardasil, which is approved in Europe as well, demonstrated efficacy against both HPV16 and HPV18 individually (see BioCentury, Nov. 5).

MRK reported U.S. Gardasil sales of $925 million for the nine months to Sept. 30; global sales for the same time period were $1.14 billion.

EMEA approved Cervarix in the EU in September.

Pain relief

By taking up $25 million of a $45 million follow-on for pain company Anesiva (ANSV) last week, venture firm Alta Partners continued to support a company it has been involved with from the beginning.

ANSV has seen its shares erode since its lead candidate Zingo was approved in August, precisely in the middle of the meltdown of computer-driven "quant funds" that roiled so many small caps (see BioCentury, Oct. 1).

In the deal, ANSV sold 11 million shares at $4.05. The price was above the 52-week low of $3.95 the shares hit a few days before the financing, but 54% off its 52-week high of $8.71.

FDA approved Zingo to treat pain associated with venous access procedures in children ages 3-18. ANSV said it plans to launch the needle-free injection of lidocaine powder in 2Q08. The company also said that it hopes to submit an sNDA covering use of the product in adults in 1Q08.

Alta was an early investor in Corgentech, which reverse merged with AlgoRx in 2005 to become ANSV. Zingo came from the AlgoRx portfolio.

Alta Managing Director Dan Janney told Ebb & Flow that last week's PIPE was attractive given ANSV's low stock price, which valued the company's technology at about $70 million. ANSV's market cap was $113.5 million immediately preceding the financing; at Sept. 30 it had $52.6 million in cash.

"The reason to get involved now is the company is in a pre-commercial phase and has burnt off a lot of the clinical risk," said Janney. "Now it's got commercial risk, which is easier to manage and we have very good visibility on the next clinical candidate."

Next in the pipeline is Adlea capsaicin, also from AlgoRx, a Phase II non-opioid vanilloid receptor 1 (VR1) agonist to treat site-specific, moderate to severe pain. In 1H08, the company expects to begin two Phase III trials for the management of pain associated with orthopedic surgeries. One will be in patients undergoing bunionectomy and the other in patients undergoing total knee replacement.

Janney believes last week's financing could get the company to profitability, but noted additional financing might be needed for sales force expansion to market Adlea.

ANSV rose $0.44 (11%) to $4.44 on the week.

Valuing VXGN

Vaxgen (VXGN) responded last week to concerns voiced by investor MPM BioEquities about the company's proposed reverse merger with oncology company Raven, calling MPM's $2 a share liquidation valuation "very aggressive" and "unrealistic."

VXGN said it had pursued a range of potential strategic...

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