Friday, January 24, 2014

Biotech IPO Indigestion and Other Small Cap Biotech News (AMAG, MSTX, CTIC, IMMY & TNIB)

The start of 2014 shows that biotech is still a hot area with the sector along with small cap biotech stocks like AMAG Pharmaceuticals, Inc (NASDAQ: AMAG), Mast Therapeutics Inc (NYSEMKT: MSTX), Cell Therapeutics Inc (NASDAQ: CTIC), Imprimis Pharmaceuticals Inc (NASDAQ: IMMY) and TNI BioTech (OTCMKTS: TNIB) producing news or returns plus Auspex Pharmaceuticals (NASDAQ: ASPX), Cara Therapeutics (NASDAQ: CARA), Egalet (NASDAQ: EGLT), Flexion Therapeutics (NASDAQ: FLXN) and Ultragenyx Pharmaceutical (NASDAQ: RARE) are among the (many…) planned biotech IPOs that have recently been announced publicly:

Key Takeaways From JP Morgan's 32nd Annual Healthcare Conference. Last week, JP Morgan's 32nd Annual Healthcare Conference was attended by approximately 300 companies who delivered presentations to more than 4,000 investors. Bruce Booth, a partner at Atlas Venture, wrote a piece for Forbes summarizing the key takeaways from the conference with the four common themes on the Pharma-Biotech-Venture ecosystem being: 1) Pharma embracing new innovative startups; 2) The Build-to-Buy structured deal concept is here to stay; 3) Lots of pending IPO indigestion of the buyside; and 4) Will there be enough money to go around as in the list of venture firms either raising new funds or about to raise new funds in 2014 is getting a lot longer. On the disease area side of things, the three themes that captured the most attention were: 1) Immuno-oncology is hot, hot, hot; 2) NASH, the new HCV? and 3) RNA therapeutics are back in vogue.

Biotech IPO indigestion? Venture capitalist Bruce Booth recently told a crowd at a MassBio event that he expects "IPO indigestion" over the next month with as many as 25 biotechs aim to go public at once. Bruce expects about 30 biotech IPOs this year verses the record of 45 to 50 biotech IPOs (depending on how the companies are classified) that happened last year and the average of 12 a year for the last several years before 2013. He also added that "the power is not so centered on one side of the equation" as small cap biotechs aren't so dependent on big pharma anymore.

More Announced Biotech IPOs. Just some of the small cap biotech IPOs announced in recent days would include the following:

Small cap Auspex Pharmaceuticals, which has just landed $35 million in venture and loan financing whose lead drug candidate is focused on movement disorders, is planning to sell 5.5 million shares at between $10 and $12 to raise another $75.9 million more in an IPO. The company is in the midst of a Phase III trial on abnormal involuntary movements associated with Huntington's disease which has 30,000 sufferers in the US with 90% having abnormal involuntary movements. Cara Therapeutics, a clinical-stage biotech developing novel opioid pain medication, plans to raise $60 million by offering 5.0 million shares at a price range of $11 to $13 for a market value of around $262 million. Cara Therapeutics initially filed confidentially on October 4, 2013. Egalet, which is developing abuse-deterrent oral products for the treatment of pain, plans to raise $42 million by offering 3.5 million shares at a price range of $11 to $13 for a market value of around $167 million. 
Egalet had initially filed confidentially on September 17, 2013. Flexion Therapeutics, which is working on drugs to help with pain due to osteoarthritis, has filed plans to raise up to $86 million. Flexion Therapeutics' most advanced drug is FX006, a sustained release steroid for patients with moderate to severe osteoarthritis pain, has completed a Phase 2b trial. Ultragenyx Pharmaceutical, a clinical-stage biotech developing treatments for metabolic genetic diseases, plans to raise $75 million by offering 4.8 million shares at a price range of $14 to $17 for a market value of around $436 million. Ultragenyx Pharmaceutical initially filed confidentially on October 4, 2013.

AMAG Pharmaceuticals Falls But Losses Are Trimmed. In the middle of the week, the FDA reminded investors who the boss of biotech is when an attempt by small cap AMAG Pharmaceuticals to expand the use of its anemia drug ferumoxytol was rejected. The drug is currently approved for patients with chronic kidney disease, but AMAG Pharmaceuticals wanted to sell the drug to all patients with iron deficiency anemia that have failed prior treatment with oral iron. The FDA said no and suggested the company run another trial. Shares are only down around 13% for the year though and still up more than 33% over the past year.

Small Cap Biotechs That Have Doubled for Investors This Year. Small cap biotech stocks Mast Therapeutics, Cell Therapeutics and Imprimis Pharmaceuticals have the distinction of more than doubling so far this year and not necessarily because of FDA approvals. Just take a look at their charts:

TNI BioTech Announces More Deals. Small cap TNI BioTech International, which acquires patents, develops treatments, markets and licenses immunotherapies for the treatment of cancer, HIV/AIDS and autoimmune diseases, recently announced that the Nicaraguan Ministry of Health had granted a certificate of free sale to the company's wholly-owned subsidiary, TNI BioTech International Ltd., for Lodonal, a Low Dose Naltrexone product (LDN) for the treatment of patients with autoimmune diseases HIV/AIDS, Crohn's Disease, Multiple Sclerosis and certain cancers. TNI BioTech International, Ltd., already has a distribution agreement with a Nigerian company called AHAR Pharma to market Lodonal in Nigeria for the treatment of autoimmune diseases and cancer. The company says that deal alone will generate just over $53,000,000 in gross revenue in 2014 with approximately $21,000,000 in available cash flow to meet its financial clinical trial commitments plus AHAR Pharma has also pre-paid for the API necessary for the soft launch and has committed to purchase a minimum of $1,000,000 worth of capsules between now and January 2014. TNI BioTech also has received a Certificate of Free Sale and export licenses for the Republic of Nigeria, Republic of Equatorial Guinea, Republic of Malawi and the Republic of Gabon plus the company is having discussions with a number of other emerging countries concerning the approval of Lodonal and hopes to receive approvals in these countries for this year. TNI BioTech is up more than 25% so far this year.

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