3 Biotechs Burning Through Cash: Keryx Biopharmaceuticals (KERX), Peregrine Pharmaceuticals (PPHM) and More

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With a new stash of cash and some expected milestone payments coming up, Keryx should have plenty in the bank to get them through to a FDA decision.

Busy pipeline
For a small-cap biotech company that has yet to bring a drug to market, Ziopharm sure is busy. Not only is the company running two simultaneous phase 3 trials for palifosfamide on both metastatic oft-tissue sarcoma and small-cell lung cancer, it is also in phase 2 trials for its experimental IL-12 drug program.  Palifosfamide, its leading drug candidate, is targeted at a couple of cancers that do not yet have a strong drug candidate. GlaxoSmithKline plc (ADR) (NYSE:GSK)‘s Votrient has been approved as a second-line treatment for soft tissue sarcoma, but competition will more likely come from other pipeline drugs such as Threshold Pharmaceuticals, Inc. (NASDAQ:THLD) TH-302.

At about $95 million in cash and spending almost $18 million a quarter over the past year, the company believes that it has enough in the bank to keep all trials running through the second half of 2013. Since both of the phase 3 trials are in the process of recruiting patients, don’t expect this cash pile to keep the company running throughout the entire clinical trial. Unless Ziopharm can find a partner to help pay some of the bills, expect the company to ask Mr. Market for a few extra dollars later this year.

What a Fool believes
Don’t expect these companies to use their current holdings to bring these drugs all the way to market, nor do they need to. Peregrine and Ziopharm are in the precarious position that they may need to float more shares in the middle of a clinical trial, which will mean they probably will not get the bang for their buck had they floated shares close to a successful phase trial. Conversely, since Keryx’s just raised capital and its operational expenses are relatively low, the company should have more than enough to get them to a FDA decision.

While it is important for these companies to keep their budgets in order, it is far more important that these drugs pass clinical trials. The success of these drugs is the only mechanism for the companies to start generating profits.

The article 3 Biotechs Burning Through Cash originally appeared on Fool.com and is written by Tyler Crowe.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him on Fool.com under TMFDirtyBird, Google +, or Twitter @TylerCroweFool. The Motley Fool has no position in any of the stocks mentioned.

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