So we’re going to close out the week with a roundup of some of the companies that have moved the most over the last couple of sessions, and what’s driving the movement. We’ll also take a stab at detailing what we expect moving forward for each – specifically, will the trend continue, or might the companies in question be in for a reversal of fortunes?
Let’s take a look.
Immune Pharmaceuticals Inc (NASDAQ:IMNP) announced yesterday that it had received feedback from the FDA concerning its lead asset program, an investigation of its drug Ceplene in combination with low dose IL-2 for the maintenance of remission in patients with Acute Myeloid Leukemia (AML).
This one’s an interesting one. Basically, the announcement was negative, but markets have regarded it as extremely positive. Well, negative is probably a little strong. It’s a step forward in the sense that the company knows what it needs to do to put together a protocol for the FDA that will get accepted, and once accepted, it’s got a clear path to a pivotal initiation. However, that the agency has come back with some recommendations and requirements suggests that the initial proposed trial had some deficiencies, and at core, this is a delay. Delays cost money, and at this end of the biotech space anything that costs more money that initially expected can be crippling.
We don’t expect the company to falter too much, and the phase III will almost certainly go ahead base don a solid protocol application, but there’s probably a near term correction on the cards for Immune Pharmaceuticals Inc (NASDAQ:IMNP) as markets reevaluate what we see as a bit of an overzealous response to the news.
Moving on, let’s look at AEterna Zentaris Inc. (USA) (NASDAQ:AEZS).
Aeterna just announced that it intends to raise $7.56m in a secondary offering consisting of 2.1m units, with each unit consisting of one share and 0.45 warrants at a purchase price of $3.60 per unit. The warrants have an exercise prices of $4.70. Again, this isn’t a crippling announcement, and but it’s not great. Markets seem to have responded to this one somewhat appropriately. Why? Because any raise of this nature is going to dilute shareholders, in the sense that the shares issued are going to spread the company’s market capitalization a little thinner across the increased outstanding base.
What happens next is all about use of proceeds. Dilutive raises are pretty much always seen as negative, but they can quickly turn positive if the companies that undertake them (and more importantly, the management that is in charge of the raised funds) puts the capital to good use. Anything that serves to generate ROI will raise market cap, and can quickly offset any value lost through dilution.
AEterna Zentaris Inc. (USA) (NASDAQ:AEZS), has a pretty solid development program, and a number of key near term catalysts, so we think there’s the potential for a quick recovery here.
Finally, Biodel Inc (NASDAQ:BIOD).
This one isn’t as straightforward. To simplify the situation, Biodel is looking to merge with a private company called Albireo. The two are hoping to combine in what is essentially a reverse merger for Albireo using Biodel as a vehicle through which to gain a quick NASDAQ listing. If it is succesfull, the combined entity will focus on diseases of the liver, and attempt to push forward a pipeline that comprises primarily Albireo’s assets.
However, in order for the deal to go through, Biodel needs to persuade its shareholders that it is in their interests, and these shareholders need to vote by way of a proxy to approve the merger. The company set up an annual meeting at which it had hoped to gain enough votes to push the merger though, but by the proposed date, it was unable to secure said requirement.
As such, the meeting has now been delayed and pushed back to November 3. Between now and then, Biodel will be contacting investors essentially begging them for their vote. The company is down from a market cap perspective, based on this fact.
We think, however, that the vote will eventually go through, as while it’s not a great exit for investors, it’s better for them than Biodel Inc (NASDAQ:BIOD) pushing forward alone with a diminished pipeline.
Note: This article is written by Mark Collins and originally published at Market Exclusive.