Biotech Roundup: Judgment Day for Dendreon; Just Say No to Pfizer-Wyeth Combo
Large-cap biotech outperformed the market in 2008, performing slight better than half as bad as the rest of the market. The development-stage companies we cover fared much worse. Bio-Century noted in their year-end review of the space that the smaller-cap biotech companies were down around 60%. The performance of my own firm’s model portfolio was not that bad, as it was more in line with the performance of the major market averages. I don’t take comfort in that at all. There is no way around the idea it was a terrible year for biotech and we weren’t immune.
I wanted to circle back to give some updates on companies I’ve written about previously and share some thoughts on what people in the sector are thinking about 2009.
Repros Therapeutics
At the end of September, I wrote about Repros Therapeutics (RPRX) and a recent financing deal. I was hopeful the deal would start a new trend in financing in the space. In the deal, the current investors decided to make a meaningful additional financing commitment to the company at a price that did not represent a significant discount to the stock price. This is unusual in the biotech space, where even current shareholders often like to extract a pound of flesh from companies they already own.
My hope that this might start a trend in the sector has not yet been borne out – though I’ve heard the performance of the stock since the deal was done (up over 58% from the deal to today) has turned some heads in the investment space. I’ve even read at least one fund manager suggesting this financing might be a model going forward. Let’s hope so.
Repros itself is doing well. It released updated data on a successful Phase II trial in endometriosis, and is demonstrating good progress on enrollment for pivotal trials for their lead drug Proellex. Some folks who have fallen in love with a competitive drug from Neurocrine Biosciences (NBIX) called Elagolix are sniping about the Proellex data, but that’s OK. That’s what makes a market. Elagolix, essentially a reformulation of Lupron, is an improvement over current therapy in this disease. It will sell, but more like an improved buggy whip sold in the age of the automobile.
MDRNA/Nastech
Over the last year or so I’ve been cautioning investors on MDRNA (MRNA), formerly known as Nastech. Word today from Luke Timmerman at Xconomy is that the company is about done. They’ve cut executive pay and frozen salaries. They’re about to be delisted. When their nasal drug development effort predictably cratered, they didn’t aggressively cut cash fast enough to give themselves enough run time to get their mRNA platform advanced.
I can’t say enough how much management matters. About 5-10% of the time a company’s product or technology can overcome management mistakes. The rest of the time investors get burned. It’s a lesson all of us who invest in the space find ourselves relearning from time-to-time.
JPMorgan Conference
JPMorgan holds the most important healthcare investment conference of the year each January. This year was a good one. It was the first time since I started going that the conference was late enough for me to spend my birthday with family. Plus, it was in the upper 60s and sunny in
As far as the business at hand, the sentiment was one of wry realism. Nobody would give a plugged nickel for the sector’s chances in 1H-2009, even though nearly everyone thought stocks were undervalued. Clearly, nobody wants to be the first one into the deep end of the pool in this market climate.
Opinions on a rebound varied from 2H-2009 to mid-2010. The number one metric for investing? Winning by a dozen lengths was cash on hand. Not science, not product, not regulatory prowess. Cash.
This, of course, sets up something of a vicious circle. The only companies who are likely to get cash from investors are those who already have it. That leaves the about 30% of the biotech space with less than six months cash in a world of hurt.
As we saw in the last down cycle in 2001-2002, expect to see mergers of convenience, bankruptcies, and a few buyouts at losses during the year. The lucky companies will be able to partner their drugs to offload development expense and/or gain new cash.
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http://www.hcvdrugs.com
What, like the guys who sold SNRA to Merck for over a Billion and are now running MRNA aren't worth a mention?
Stop living in the past with NSTK, this is a new company birthed from NSTK and although you are right about their cash position, these guys didn't come aboard to MRNA to waste time; their IP is 1st rate, just watch.
Todays close was $.26, I bet it triples before it drops 30% and I expect that within the next month.
Mike Levin
EARNINGSWHISPERS,PREDICTWALLSTREET, AND TOPIX. YOU ARE ONE OF A FEW WHO ACTUALLY TELL IT LIKE IT IS, AND SHOULD BE COMMENDED FOR IT. AS A FORMER STOCK HOLDER I SAW THE LIGHT IN DECEMBER 2006. SINCE THEN I HAVE REPEATEDLY TRIED AS A STOCK HOLDERS ADVOCATE, TO INFORM & EDUCATE OTHERS.
AS I TRIED TO POST LOGIC, COMMON SENSE, AND POINT OUT THE FACTS, THE STOCK HAS GONE FROM $20 DOLLARS TO $.28 CENTS.
I HAVE BEEN MORE ACCURATE ON 'MRNA' ON MANY SITES, THAN ANY ANALYSIS, RESEARCH FIRM, THEIR SO CALLED EXPERTS, AND EVEN STAR MINE EXPERTS. YOUR SOBERING ARTICLE,
SHOWS THAT YOU MR. MILLER, AND MINYANVILLE, DO YOUR JOB WELL AND INVESTORS SHOULD APPRECIATE 'TRUTH', RATHER THAN TYPICAL HYPE&TOUTING LIKE ALL THE OTHER SITES.
THANK YOU AGAIN, WELL DONE!
I get a fair amount of e-mail from people telling me this stock will be in the dozens of dollars. $0.75 on a bankruptcy-induced buyout wouldn't be out of the question as you note, but I highly doubt this company will carry on as an operating entity.
As far as IP is concerned, Merck is pretty sure they have the space sewed up. One good argument against that is why the former SiRNA people would have bothered with MRNA if that were the case? The IP on these drugs will be litigated if any of them make it across the finish line in an indication that throws off enough cash to matter.
The nice thing about Interferon Lambda is it should be compatble with most of the other drugs on that list, especially those in the top category which are likely going to be used in combination with interferon alpha.
MORE RED FLAGS THAN FLOWN IN THE CITIES OF RUSSIA!
The collateral damage has been already inflicted to most of the investors and left them financially decimated. So in conclusion, Mr. Levin, you may be less than 1% of all the investors who is so fortunate, happy, and confident about this stock & management.
BUT THIS DOES NOT ERASE THE INJUSTICE DONE TO MOST OF THE FORMER INVESTORS
THAT HAVE BEEN HURT FINANCIALLY & THEIR FAMILIES HAVE BEEN EFFECTED BY THIS AS WELL. YOUR LOGIC ABOUT NEW MANAGEMENT,
SHOULD BE CONSIDERED MORE LIKE THIS FOR YOU TO UNDERSTAND.
OLD MANAGEMENT DROVE A CAR INTO YOU AND YOUR CHILDREN CAUSING EACH OF YOU EITHER DEATH OR WHEELCHAIR BOUND NOW. AND YOU STAND ON THE CORNER TELLING EVERYONE, THAT THERE IS A NEW DRIVER OF THE SAME OLD CAR THAT LOST CONTROL, SO DON'T WORRY ABOUT IT.
OLD MANAGEMENT, THEIR RESEARCH FIRMS, THEIR EXPERTS, THEIR HIGH TARGET PRICES,
KIND WORDS AND HIGH MEAN TARGET PRICES FROM THOMSON FINANCIALS THAT IS HEADED BY DEVIN WENIG, AND LAST BUT NOT LEAST, 5 STAR MINE EXPERTS AND JIMMY CRAMER ALL WERE A BIT SMOTHERING FOR MOST INVESTORS WITH THEIR TOUTING & EXCITEMENT. BUT WITH ALL THE SCAMS AND MISLEADING INFO GIVEN TO INVESTORS FROM WALL STREET THESE PAST 4 MONTHS, AFTER THE DAMAGE HAS BEEN DONE, YOUR HAPPY WITH NEW MANAGEMENT.
CLUELESS I AM NOT, AND MY ACCURACY HAS
BEEN DEAD ON, AND PROVEN ON MINYANVILLE, SEEKINGALPHA,THE STREET.COM, PREDICTWALLSTREET,THE MOTELY FOOL,
TOPIX AND EARNINGSWHISPERS.COM, SINCE DECEMBER 2006 UNTIL PRESENT.
MAY BE YOU'LL BE RIGHT, BUT I DO NOT WANT OTHER INVESTORS TO LOSE MONEY THE WAY I DID AND THOUSANDS OF OTHERS DID THESE PAST 25 YEARS.
Go take your meds
YOUR EXCITABLE, SNIPPY AND SEEM TO ENJOY CALLING OTHERS NAMES IF THEY DO NOT SEE IT YOUR WAY.
I'M SURE BEING SELF CENTERED, HAS PLACED YOU IN YOUR LIFE'S POSITION THAT YOU ARE IN TODAY!
IF EVERY INVESTOR WHO LOST 10'S OF THOUSANDS SENT YOU AN E-MAIL, IT PROBABLY WOULD TAKE YOU MONTHS TO REPLY TO ALL OF THEM. ANYWAY, YOU ENJOY YOURSELF MR.LEVIN, BOTH HERE ON MINYANVILLE AND THE MRNA MESSAGE BOARD. AT LEAST YOU CAN OCCUPY YOUR TIME, MARKETING THE NEW MANAGEMENT, AND SOON TO COLLECT YOUR TRIPLING OF MONIES.
