1. Medical Stock Spotlight
1) Losers far outpaced winners last week with Edge Therapeutics Inc. (Nasdaq:EDGE) nosediving 93% over the week to $1.18. Up until last week, shares of Edge Thera had posted gains of 66% year to date as investors eagerly anticipated the results from a late-stage trial for its lead drug candidate, EG-1962. The med had previously turned in promising data from an earlier Phase 1/2 trial for the delivery of the drug used to treat adults with aneurysmal subarachnoid hemorrhage (aSAH). The collapse came after the Berkeley Heights, NJ-based company announced it would be discontinuing the trial and laying off employees to preserve cash.
Steve’s Take: Ouch! The company’s market cap dropped from $480 million to just $40 million on the news, which is tantamount to a big thumbs-down confidence rating from investors. Considering that its next most advanced clinical trial is only in Phase 1, and it’s also testing EG-1962 again, that may spell doomsday for Edge’s future. Shares are cheap, alright, but what is there even to roll the dice on?
2) Elsewhere, more pain as Protagonist Therapeutics Inc. (Nasdaq:PTGX) plunged 58% to $8.59 after announcing that it has discontinued a Phase 2b study, called PROPEL, on its ulcerative colitis (UC) candidate, PTG-100. Milpitas, CA-based Protagonist is a small biotech company focused on developing treatment for inflammatory bowel diseases, Crohn’s disease and thalassemia. PTG-100 was the most advanced candidate in the company’s pipeline.
Steve’s Take: The stop decision was based on a planned interim analysis of the PROPEL study by an independent Data Monitoring Committee. Those are gold when they’re positive but death when not. The committee deemed that the study will not be able to achieve its primary endpoint of clinical remission. The interim analysis was conducted on data from the first 65 patients who had completed the 12-week treatment with PTG-100. The total patient population of the study was 240. This smacks of a long-term hold, not a buy at present.
3) And small-cap cancer company Geron Corp. (Nasdaq:GERN) fell 25% to $4.25 following the publication of an article from STAT’s Adam Feuerstein that calls Geron’s spectacular rise over the past two weeks into question. Thanks to a seemingly positive update on the company’s experimental blood-cancer drug imetelstat earlier last month, Geron’s shares shot up by more than 200%. Feuerstein, however, apparently doesn’t share the company’s optimism, calling imetelstat’s latest clinical checkup “flimsy.”
Steve’s Take: No one’s positive if this double-digit hammer job is warranted until Geron releases actual data on imetelstat’s ongoing midstage trials for advanced myelofibrosis and myelodyspastic syndromes later this year. Until now, the Menlo Park, CA-based company and development partner Johnson & Johnson have remained mum as to the all-important rough details (the number of complete and partial responses, for example) for both trials. Time to buy, hold or fold. I say at $4.25/share it’s a gamble but a small buy for the high-risk portfolio sounds like a smart move.
But among the tiny group of advancing issues, London-based Verona Pharma PLC (Nasdaq:VRNA) shot up 25% to $4.00. The clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapies for respiratory diseases announced positive top-line data from its Phase 2b study evaluating RPL554, a “first-in-class, inhaled, dual inhibitor of the enzymes phosphodiesterase 3 and 4 with bronchodilator and anti-inflammatory properties.” It’s designed as a maintenance treatment for chronic obstructive pulmonary disease (COPD).
Steve’s Take: Verona’s Phase 2b study met its primary endpoint, with RPL554 producing a clinically and statistically significant improvement in peak forced expiratory volume in one second (FEV1) at four weeks in patients with moderate-to-severe COPD compared to placebo. Furthermore, the peak FEV1 was significantly improved at all time points over the four weeks of dosing. Boiled down, the COPD arena has been fraught with failure after failure. But at $4/share, I like Verona’s outlook. A rational buy.
2. IPO Sector
Oh, to be back in the healthcare investment banking group of Merrill Lynch. Dating myself backwards rather obviously, back then it was all about new hospital chains and nursing homes. Now it’s the steady stream of biotech initial public offerings, almost all of which involve white-hot immunotherapy candidates. Just think Merck’s Keytruda, Bristol-Myers’ Opdivo and Novartis’s Kymriah.
With billions of dollars down the IO yellow brick road, here are last week’s latest entrants into the scramble for gold-plated returns.
1) Genprex Inc., which is developing gene-based nanoparticle therapies to treat cancer, raised $6.4 million by offering 1.28 million shares at $5 per share. At that price, it commands a fully diluted IPO market cap of $75 million. Genprex lists on the Nasdaq under the symbol “GNPX.” Network 1 Financial Securities acted as a lead manager on the deal.
Austin, TX-based Genprex is a clinical stage gene therapy company developing a new approach to treating cancer, based upon its novel proprietary technology platform, including its initial product candidate, Oncoprex immunogene therapy, or Oncoprex. Its platform technologies are designed to administer cancer-fighting genes by encapsulating them into nanoscale hollow spheres called nanovesicles, which are then administered intravenously and taken up by tumor cells which are then destroyed. Shares closed the week down 6% at $4.70.
2) Elsewhere, Unum Therapeutics Inc., which is developing antibody-coupled T-cell receptor (ACTR) immunotherapies for cancers, raised $69 million by offering 5.77 million shares at $12, the low end of the range of $12 to $14. At pricing, it commands a fully diluted market value of $380 million. Backed by Atlas Venture, F-Prime Capital and Sanofi SA, Unum’s insiders had indicated on up to $37.5 million of the deal (54%), with collaboration partner Seattle Genetics buying $5 million in a concurrent private placement.
Cambridge, MA-based Unum Therapeutics lists on the Nasdaq under the symbol “UMRX.” Morgan Stanley and Cowen & Company acted as lead managers on the deal. The company’s product candidates are composed of ACTR T cells co-administered with approved and commercially available antibodies or antibodies in clinical development. Shares closed the week off 7% at $11.11.
3) And Homology Medicines Inc., a preclinical biotech developing a gene-therapy delivery platform for rare diseases, raised $144 million by offering 9 million shares at $16, the high end of the range of $14 to $16. It previously filed to offer 6.7 million shares at the same range. Homology Medicines lists on the Nasdaq under the symbol “FIXX.” BofA Merrill Lynch, Cowen & Company and Evercore ISI acted as lead managers on the deal.
Bedford, MA-based Homology says it is a genetic medicines company whose proprietary platform is designed to utilize human hematopoietic stem cell derived adeno-associated virus vectors, or AAVHSCs, to precisely and efficiently deliver genetic medicines across a broad range of genetic disorders. Shares closed the week up 17% at $18.70.
3. Potential IPO Launches
This week include Framingham, MA-based Alzheon Inc. (ALZH), looking to raise $81 million via lead manager Citi. Alxheon is a late-stage biotech developing small molecule therapies for Alzheimer’s disease. And MorphoSys AG (MOR) hopes to raise $150 million via Goldman Sachs. The Planegg, Germany-based company licenses antibodies to pharmas and is developing its own therapy for lymphoma.