Let's take a look at today's top stories in biotech and health care. Keep an eye out for Inovio Pharmaceuticals (NASDAQ: INO ) , MannKind Corp. (NASDAQ: MNKD ) , NewLink Genetics (NASDAQ: NLNK ) and Retrophin (NASDAQ: RTRX ) .
Inovio announces date for reverse split
Clinical stage vaccinemaker Inovio Pharmaceuticals is down a little over 3% in premarket trading this morning after announcing that its planned 1 for 4 reverse stock split will take place on June 5. After the split, shares will commence trading the following day under the same ticker, "INO."
Is this cause for panic? I don't think so. Inovio is facing a major clinical milestone with the top line data readout of VGX-3100, which is expected within the next two months. Frankly, the reverse split is immaterial compared to this upcoming event. If VGX-3100 reports positive data, the reverse split and higher share price will likely help the company attract institutional investors, stabilizing its highly volatile common stock. After all, not many institutions are willing to report owning a sub-$5 stock. In short, management is taking the right steps to generate long-term growth if the readout goes well.
MannKind set to continue its rally
Shares of MannKind are up close to 2% in premarket trading this morning as the stock continues its momentum heading into the scheduled Prescription Drug User Fee Action (PDUFA) date of July 15, 2014 for its inhaled insulin product Afrezza. The stock has rallied over 30% in the past month and has seen some particularly large move upwards in recent trading sessions.
What appears to be driving this action is that investors are convinced Afrezza will be approved for both Type I and Type II diabetics. Based on the generally positive nature of the comments made by most panelists at the recent Advisory Committee, I think this optimism may be warranted (although it's important for investors to remember that the FDA is not required to follow its Advisory Committee's recommendation). If an approval is in the cards, investors should start thinking about how potential partnerships may be structured, market share projections for Afrezza, and perhaps most importantly, what the final label will entail. Until these questions are cleared up, I think it's difficult to place a fair value on MannKind shares.
NewLink heading higher on immunotherapy study results
Shares of NewLink Genetics are up over 10% in premarket this morning following a positive data release for its mid-stage study of dorgenmeltucel-L HyperAcute immunotherapy in combination with pegylated interferon-alpha 2b in patients with advanced metastatic, progressive, refractory or recurrent melanoma. Although the trial only enrolled 25 patients, NewLink reports that 12.5% of patients that completed the trial exhibited a complete response.
What's key to understand is that cancer immunotherapy drugs are highly prized within the pharma world right now. So NewLink shares could continue to head higher after releasing these encouraging data. That being said, you need to understand that this was a small trial, and a fair number of patients don't appear to have responded to the treatment. As such, we'll need to see how this therapy pans out in a larger trial before jumping to any conclusions.
Retrophin shares shoot higher on financing deal
Retrophin shares are up 32% in premarket following an announcement that the company has reached two non-dilutive financing deals worth up to $80 million in total . Per the press release, Retrophin agreed to a $40 million senior secured term loan facility with Athyrium Capital Management in one deal. Under the terms of the agreement, Athyrium will receive warrants that translate into 300,000 shares of Retrophin common stock at an exercise price of $13.93 per share.
In a second financing deal, Retrophin reached an agreement with institutional investors to purchase $40 million of 4.5% Senior Convertible Notes that are due in 2019. These notes are also convertible into common stock at a conversion rate of 57.43 shares per $1,000 principal amount of Notes. In plain English, these shares will have an initial conversion price of about $17.41 per share.
Why are investors excited? My take is that the market cheered this news because both deals place a premium on Retrophin's shares compared to yesterday's closing price of $12.88. Put simply, these institutional investors apparently see some upside in Retrophin over the long term.
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