Seeking Alpha
Profile| Send Message|
( followers)  
Friday, Molecular Insight Pharmaceuticals (MIPI) placed 5 million shares with investors at $14 each in its IPO.

Although $14 was the low end of the range, the more important fact is that the range held, and a $14 price gives the company a stout $344 million market capitalization.

Clearly, investors see potential in Molecular Insight, because its clinical candidates are not particularly advanced. At the moment, it has three compounds in clinical trials, two in Phase II tests, the other in Phase I.

Products and Compounds
Molecular Insight specializes in radiotherapeutic drugs and molecular imaging compounds. Azedra, which was previously known as Ultratrace MIBG or I-131-metaiodobenzylguanidine, is aimed at metastatic neuroendocrine tumors. Molecular Insight uses its Ultratrace technology to bind a radioactive iodine isotope to a MIBG molecule, and the molecule delivers radioactive iodine to specific tumor cells.

An older form of I-131 MIBG was approved in Europe for diagnostic imaging, but it contained cold contaminants. Molecular Imaging contends its compound does not have the cold contaminants, which add side effects and lessen efficacy. Azedra has been given Orphan Drug status by the FDA. Currently in a small Phase I trial, Azedra should begin a Phase I/II test in the middle of the year that evaluates safety, dosage and efficacy.

Onalta is another radiotherapeutic drug, aimed at carcinoid and pancreatic neuroendocrine cancer. Molecular Insight in-licensed the drug last week from Novartis (NYSE:NVS). Onalta is an yttrium-90 radiolabeled somatostatin peptide analog that inhibits the secretion of growth hormones, insulin and gastrin. Also a drug with Orphan status, Onalta completed three Phase II trials at Novartis before it was acquired by Molecular Insight.

In its tests, the compound produced longer survival than historic norms. Molecular Insight hints it will seek a Phase III trial with the endpoints of reducing tumors, alleviating symptoms and improving quality of life for patients whose symptoms are not helped by conventional somatostatin analog therapy.

Zemiva, the third clinical compound, is a molecular imaging product that is designed to diagnose cardiac ischemia, or insufficient blood flow to the heart. Zemiva is a radiolabeled fat-like molecule that allows doctors to visualize the heart’s use of fats as an energy source. The product is intended to replace the stress test with a tool that takes less time to complete and is easier on the patient. With more accurate diagnosis, Molecular Imaging believes that money could be saved by preventing treatment of patients who are misdiagnosed as having suffered either cardiac ischemia or a heart attack. Zemiva is in Phase II trials.

Molecular Insight points out it does not own the patent to Zemiva. The patent on BMIPP, the active ingredient, ran out in 2003, and Molecular Insight maintains that Zemiva is a new chemical entity, because the FDA has never approved a drug containing the ingredient. As a new chemical entity, it will be eligible for market exclusivity.

Also about 10 days ago, Molecular Insight announced it bought a radiotherapeutic drug from Bayer (BAY) that targets malignant melanoma. AK-BA, which will be known as Solazed, is a small molecule, benzamide compound that targets melanin, an oxygenated form of the amino acid tyrosine. Melanin is over-expressed in approximately 40 percent of melanoma tumors. The compound can be labeled with Iodine-131 as a targeted radiotherapeutic and with Iodine-123 for imaging. Although the drug underwent some clinical testing in Europe, its status in the U.S. is not spelled out in Molecular Insight’s filings.

mipi logo
Financials
In 2005, Molecular Insight lost $18 million. In the past year, the company has been stepping up its clinical activity, moving to advance its drug candidates, and costs have risen as a result. During the first 9 months of 2006, the company incurred a loss of almost $19 million, or slightly better than $2 million per month.

On September 30, 2006, Molecular Insight had $16.3 million in cash, which would be diminished by approximately $8 million at the current burn rate. The IPO raised $70 million before fees and costs, so the company will have somewhere around $72 million after it receives the net proceeds, enough to last Molecular Insight for better than two years.

Existing investors paid an average of $3.54 for their shares, so the IPO returned almost 4 to 1 for the venture capitalists, a better return than most of the recent biotech IPOs. In early open market activity, Molecular Insight is trading slightly above its offering price. The company was trading during the mid-session at $14.03, up 3 cents.

Disclosure: none.

Source: Biotech IPO Watch: Molecular Insight Seeks Imaging and Radiotherapeutic Drugs