12:00 AM
Jun 01, 2009
 |  BioCentury  |  Finance

Ebb & Flow

On its face, the deal to take out CuraGen Corp. (NASDAQ:CRGN) is returning about $0.18 for every dollar the genomics-based oncology company has raised since it went public. But the $94.5 million all-stock offer announced last Friday by immunotherapeutics company Celldex Therapeutics Inc. (NASDAQ:

CLDX) may turn out to be good deal for current shareholders.

Celldex expects to net $54.5 million in cash, after paying transaction costs and assuming $14.1 million of Curagen's convertible preferred debt, resulting in a net acquisition price of $40 million.

Still, Curagen shareholders seemed unperturbed on a conference call outlining the deal. The company had a market cap of $71.5 million before the deal was announced, putting the potential premium at 32%.

Moreover, after unspecified adjustments, the payout to CuraGen shareholders also could amount to 58% of Celldex stock, with a floor of 32.5%. The deal is slated to close in 3Q09.

At March 31, CuraGen had accumulated a $464.3 million deficit since its formation in 1993. All told, it has raised $528.3 million since its IPO in March 1998. The biotech rode the genomics wave, raising $346.8 million in 2000 alone, after which it had a market cap of $1.8 billion.

CuraGen quickly fell to earth after the genomic bubble burst. Today, the company has a portfolio of 11 human antibodies, the most advanced of which is CR011-vcMMAE, a human mAb against glycoprotein NMB (GPNMB) linked to monomethyl auristatin E (MMAE). The compound is in Phase II testing to treat melanoma and breast cancer.

The company is reporting three sets of data on CR011 this week at the American Society of Clinical Oncology (ASCO) meeting in Orlando. These include Phase I and Phase I/II data in advanced melanoma and Phase I/II data in locally advanced or metastatic breast cancer.

In February, the biotech said it was trying to sell or partner CR011 and that it would retain an investment bank to examine strategic alternatives. At March 31, CuraGen had $79.8 million in cash and a 1Q09 operating loss of $3.6 million. At that time, the company said it had sufficient cash to last through 2011.

The combined company would have about $96 million in cash, enough to last through 2012.

Celldex's lead candidate, CDX-110, is in Phase II testing to treat newly diagnosed glioblastoma multiforme (GBM). It is partnered with Pfizer Inc. (NYSE:PFE). Its CDX-1307 is in Phase I trials for epithelial tumors and CDX-1401 is in preclinical development for solid tumors.

Major shareholders in CuraGen are CQS Cayman with 5 million shares (8.7%); Renaissance Technologies with 4.1 million shares (7.12%); and DellaCamera Capital Management with 4 million shares (6.95%).

WBB Securities and Brean Murray advised Celldex, while Piper Jaffray advised CuraGen.

CuraGen rose $0.27 (25%) to $1.34 on the week, giving the company a market cap of $76.6 million. Celldex also gained, tacking on $1.07 (13%) to $9.02.

Map's better route

It's been a volatile few months for Map Pharmaceuticals Inc. (NASDAQ:

MAPP), which gained $5.85 (186%) to close at $9 last Tuesday after reporting that Levadex (MAP0004) met the four co-primary endpoints in the Phase III FREEDOM-301 trial to treat acute migraine. The stock continued to climb before giving some back on Friday, closing the week up $8.94 (284%) to $12.09.

Three months ago, Map dropped $8.38 (76%) to close at $2.65 on Feb....

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