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  • Biotechs Blaze Trail for Small Caps, Though Longevity is Questionable 1 comment
    Jul 27, 2009 12:09 PM | about stocks: WINT, MSTX, AGEN

    Antigenics, Adventrx Pharmaceuticals, and Discovery Laboratories led biotechs - which led small caps - today.

    It's a great day to be a small cap biotech investor, particularly if you owned Antigenics Inc. (NASDAQ:AGEN), Adventrx Pharmaceuticals (ANX), or Discovery Laboratories Inc. (DSCO). Each of those stocks was up by double digits today. Better still, each of them are still priced less than $5.00. Here's the rest of the story for each, now that the biotech cat is out of the bag.

    Antigenics Inc. (AGEN 3.87 +10.6%) announced the company's Q2 results conference call would be held on July 30th. No hints - subtle or otherwise - were dropped by the company in terms of what to expect. The company's losing a lot of money, and that's not apt to change anytime soon. However, considering the company has more drugs in the pipeline than it currently has on the market, optimistic curiosity seems to be driving some buying today.

    Antigenics' and its investors' focal point is cancer vaccine Oncophage. It was approved by Russia in 2008, and a European approval decision is expected by the end of 2009. The company does intend to seek FDA approval (again), though not in the foreseeable future.

    As for today's big bump, the bulk of it is the result of speculation regarding earnings - Antigenics is expected to beat estimates. Other proposed possibilities are the onset of revenue-bearing activities in Russia, or an impending commercial licensing deal for its QS-21 vaccine adjuvant.

    None of those ideas have been addressed or prompted by the company, however.

    Adventrx Pharmaceuticals (ANX 0.15 +16.7%) didn't inspire a wave of buying with any news either - the rally was completely organic. The recent financing (only $1.36 million) was closed on July 6th, and had little effect on the stock's price either way.

    Possible explanations for Adventrx's big gain today are a decision being made at the swine flu epidemic conference, the possible naming of a partner for trial drugs ANX-514 and/or ANX-530, or an early NDA submission for those two drugs. Those are all shaky ideas though, at best.

    Investors should be aware that ANX shares have a bit of a history with moves that look like breakouts but then falter, leaving the stock range-bound. It's happened three times since February.

    The Discovery Laboratories Inc. (DSCO 0.55 +37.4%) rally is fairly easy to explain...Bristol-Myers Squibb (NYSE:BMY) acquired Medarex Inc. (MEDX). The implication is simply that biotech buyouts are back en vogue, and Discovery Labs is a prime acquisition target.

    What a suitor would be getting with Discovery is a biotechnology company developing surfactant therapies for respiratory diseases. Surfactants are produced naturally in the lungs and are essential for breathing.

    What those potential suitors (as well as investors) may want to know is that most buyout speculations don't pan out, and that even Discovery Laboratories management has said their drug candidate Surfaxin faces "a significant hurdle for approval."

    Given that almost all hopes of revenue are riding on troubled Surfaxin, the big pop today is probably ill-advised buying at this point.

    Sign-up for Free to Receive Future Commentary and Trading Alerts on AGEN, DSCO, and ANX.
    Stocks: WINT, MSTX, AGEN
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  • David Jensen
    , contributor
    Comments (49) | Send Message
    Is everyone giving up on Discovery Labs (DSCO)? I know they have let a lot of investors down in the past, but they still have a drug that passed Phase III. Would love to hear what you think.
    27 Oct 2010, 06:04 PM Reply Like
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