Biotech Day In Review: Merger Monday

by: Centient Biotech Investor
Cytyc (CYTC), a diagnostics/device company that focuses on women’s health and cancer, will pay $452 million ($24 per share) to buy Adeza Biomedical (ADZA).

The main product for Adeza is FullTerm, The Fetal Fibronectin Test which identifies women at risk for preterm birth. Currently, FullTerm produces revenue of about $50 million, but Cytyc estimates it has potential for $500 million annually, given Cytyc’s already existing OB/GYN sales force. Cytyc expects the purchase to be neutral to earnings in 2007 and to add 5 cents in 2008. Cytyc rose 73 cents to $30.28, a 2.5% gain, while Adeza shot 53% higher, climbing $8.25 to end at $23.78.

Diversa (DVSA), a maker of enzymes and biological compounds, will exchange $154.7 million worth of stock to acquire Celunol, a company developing cellulosic ethanol. The ethanol is produced from biomass using enzymes, instead of the traditional process that employs natural gas. A trial plant is making ethanol from the husks of sugarcane after the sugar has been removed. After the acquisition, Diversa will own 76% of the combined company. Diversa moved up 5 cents to $10.36.

Onyx (NASDAQ:ONXX) gained 97% after the company, together with partner Bayer (BAY), reported positive results for cancer drug Nexavar (sorafenib) in patients with liver cancer (see story). The data safety board stopped the trial early because of the increase in survival, and Nexavar was given to all participants. Nexavar has been on the market for just over a year for patients with kidney cancer, and it has produced respectable amounts of revenue, though the early expectations for a blockbuster drug have not been met so far. Onyx practically doubled on the news. It traded up 97%, rising $11.98 to $24.15.

Adolor (ADLR) began a multi-dose Phase I trial of ADL5859, an oral Delta opioid receptor agonist that will be aimed at alleviating inflammatory pain. In the Phase I trial, the drug will be given to healthy volunteers. Adolor was off by 9 cents at $6.76.

Targeted Genetics (TGEN) reported positive results from an investigatory arthritis treatment. In a Phase I/II trial, tgAAC94 appeared safe and was well-tolerated, and it also seemed to reduce signs and symptoms of arthritis in joints. The compound, which is injected directly into joints, is designed to inhibit tumor necrosis factor-alpha (TNF-alpha), a mediator of inflammation. Targeted Genetics slipped 2 cents to $3.95.

ARIAD Pharma (NASDAQ:ARIA) sold a non-exclusive license for its Argent cell-signaling regulation technology to CellNexus. CellNexus will use the technology to develop new cancer drugs. In return, ARIAD will receive an equity stake in CellNexus and royalties from any marketed products. Products in the partnership will use ARIAD's small-molecule dimerizer drug, AP1903, which has already completed a Phase 1 clinical trial. The first target will be cancer-caused anemia. ARIAD moved 29 cents higher to $5.25, a gain of 6%.

Cell Therapeutics
(NASDAQ:CTIC) will spin off a company that will focus on follow-on biologics. Aequus BioPharma will develop a Genetic Polymer [TM] technology designed to speed manufacture of biosimilars. Cell Therapeutics also believes the technology can be used to develop small inhibitors of RNA [siRNA]. Cell Therapeutics added on 2 cents to end at $1.60.

Biotech started off the new week with a small loss. The Centient Biotech 200™ fell 19 points to 4031, a drop of .48%. The S&P 500 was down .33% and Nasdaq was off by .38%.

Disclosure: none.

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