Thursday, January 30, 2014

Daily Dose - AVEO, KBIO, GERN

Welcome to today's daily dose!  The Nasdaq Bio index is up 3.29% at this moment which is a strong bounce back from yesterday's slide.  Here are the movers, shakers, and stories for the day.

Aveo Pharma AVEO is down 5.65% after announcing that it and partner Astellas discontinued a phase 2 trial of it's flagship drug, Tivozanib in Breast Cancer due to enrollment challenges.  This should be of no surprise as they already alerted investors to this challenge, the drug was rejected by the FDA last year for treating liver cancer, and warned that the drug was unlikely to succeed in its phase 2 trial in colon cancer.  In summary, it looks like their lead compound is a dud and worthless. The company has two other compounds, one in phase 1 and one in preclinical development, but they are many years away from proving themselves and providing any value to investors.  The company did project having $113 million in cash at the end of the year.  With a market cap of $83 million, the company does have some value.  The big question is "what do they do with the cash"?  What they SHOULD do is find a private biotech company with compounds in phase 2 development that requires cash and perform a reverse merger before they blow through the money.  What they will LIKELY do is blow through the money to develop their early stage compounds (ie management keeps getting paid).  I would recommend sitting on the sidelines until there are further developments.

KaloBios KBIO is down 27.31% today after reporting that KB003 didn't meet it's primary endpoint in a phase 2 trial in severe asthma.  This was it's lead drug so it's a big blow to the company.  It does have a few other compounds in early/mid stage development, one of which for cystic fibrosis, and partnerships with Sanofi and Novartis.  The company had $55 million in cash at the end of the third quarter and has a current market cap of $111 million so it may be worth an investment at these levels.  I'm going to do some more research and let you know if I get in.

Geron GERN is up 21.71% to $5.27 today which is baffling after issuing 22.5 million shares at $4.00 this morning.   Stocks usually fall after diluting existing shareholders but not in this case.  I wish I was in on the offering at $4 as that group just made a 30% return in less than a day!  Adam Feuerstein at The Street had a good article on Geron's compound earlier in the week which is worth reading before making an investment in Geron.  Adam Feuerstein Article

That's it for today's daily dose.  Please feel free to send me any questions or comments!


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