"If you want to save a few hours in the library,
just spend a few weeks in the lab."


Laboratory maxim

The reports below were written to propose an investment thesis for an individual portfolio manager. Most are brief, interim versions of final reports and may contain undefined abbreviations or jargon. In addition, while a report typically addressed a particular clinical development program, it was insufficient, alone, to make an investment decision. Additional work, including my conversations with clinical researchers, company management and others provided supplementary information to support or refute the initial thesis. The PM also evaluated each company's financial status, certain market projections and relevant assumptions, as necessary. Other information sources included scientific abstracts and peer-reviewed publications. Much of the additional information noted above may not be fully reflected in a report.   Please recognize the limitations of each report.

Adolor - ADLR
June 2005
with Progenics; 4 pages

"We have been very skeptical of Adolor's ("Entereg" or "alvimopan") results from three clinical trials for the POI indication.... Adolor is likely to receive an "approvable" letter from FDA on or before Monday, July 25."  pdf

 

ADLR - Subsequent Events

At the time of FourSquare's report, Adolor had a market capitalization of about $360 million (stock at $9.18) with $147 million in cash and equivalents. On July 22, 2005, the FDA issued Adolor an "approvable" letter for alvimopan in post-operative ileus (POI). On November 6, 2006, the FDA issued Adolor a second "approvable" letter for alvimopan in POI. On January 23, 2008, an FDA advisory panel voted 9 to 6 acknowledging the clinical utility of alvimopan in POI. On May 20, 2008, the FDA cleared Entereg (alvimopan) to treat POI. In the first quarter of 2009, Adolor reported net sales for alvimopan of $1.4 million. In late June 2009, Adolor had a market capitalization of roughly $80 million with $125 million in cash and equivalents (no debt) at March quarter end.

In December 2011, Cubist Pharmaceuticals acquired Adolor for about $190 million cash plus up to $225 million in the form of a non-traded contingent value right, dependent on US and European regulatory approvals for ADL5945. By June 2015, Cubist had terminated all three phase 3 clinical trials of ADL5945 due to poor enrollment. Adolor’s final 10-Q filing with the SEC for September 2011 reported $23 million of cash and equivalents, nine-month year-to-date Entereg sales of $23.5 million and an accumulated deficit since its inception in 1993 of $530 million.



AtheroGenics - AGIX
March 2004; 5 pages

The third event (and most likely to disappoint) will be the announced results from the Company's Phase 3 trial (ARISE) of '1067, which began June 30, 2003...The leap of faith from a surrogate endpoint (retrospective analysis in the first Phase 2, prospective analysis in the second trial) to clinical endpoints (Phase 3) puts this pivotal trial at a very high risk of failure.” pdf

AGIX - Subsequent Events

At the time of FourSquare's report, AtheroGenix had a market capitalization of about $770 million (stock at $20.82) with $116 million in cash and equivalents. On March 19, 2007, the Company announced disappointing results from the phase 3 ARISE trial of '1067 (succinobucol). AGIX stock closed down $4.74 (60%) to $3.09 ($120 million market capitalization) on 21.8 million shares traded. A subsequent clinical trial of the same drug in diabetes also disappointed. On September 2, 2008, AtheroGenix defaulted on repaying $100 million due on a convertible security issued in 2003. On June 9, 2009, the Bankruptcy Court approved AtheroGenix's plan of liquidation under Chapter 11. The Company was delisted on June 22, 2009.

BioMarin - BMRN
March 2002; 4 pages

The data on BioMarin are mixed. ...I estimate a better than 90 percent chance of FDA approval within the year...I recommend a HOLD on BMRN (on price, only).”pdf

BMRN - Subsequent Events

At the time of FourSquare's report, BioMarin had a market capitalization of about $600 million (stock at $11.30) with $131 million in cash and equivalents. On January 15, 2003, an FDA advisory panel voted 12 to 0 in support of the safety and efficacy of aldurazyme. Two weeks later the FDA issued an approvable letter and, on April 30, 2003, cleared Aldurazyme. On June 1, 2005, the FDA cleared Naglazyme. On June 1, 2006, the FDA cleared Orapred ODT, an in-licensed formulation of prednisolone. On December 13, 2007, the FDA cleared Kuvan. In late June 2009, BioMarin had a market capitalization of roughly $1.6 billion. At the March quarter end, BioMarin reported $552 million in cash and equivalents, $497 million in debt and posted last-four-quarters' net income of $16.0 million on revenues of $310 million.

Still independent at June 2015, BioMarin remains a Wall Street “darling” with last twelve months revenues as of March 2015 of $803 million. The Company reported around $1.0 billion of cash and equivalents, $655 million of debt, almost 1,700 employees and, at $147.25 in mid-July 2015, had a market capitalization of $23.6 billion.


Cerus - CERS
October 2001; 2 pages

"Cerus should become an excellent short opportunity as it progresses towards regulatory approval and market launch.” pdf

CERS - Subsequent Events

At the time of FourSquare's report, Cerus had a market capitalization of about $820 million (stock at $52.27) with $125 million in cash and equivalents. Multiple delays in clinical development contributed to Wall Street's sell-side to throw in the towel soon after a Company conference call reporting on fiscal year end 2002. On January 31, 2003, Cerus stock closed down $5.96 (42%) to $8.36 ($133 million market capitalization) on 2.3 million shares traded. In late June 2009, Cerus had a market capitalization of roughly $33 million. At the March quarter end, Cerus reported $15 million in cash and equivalents, no debt and, not yet profitable, last-four-quarters' revenues of $15 million.

In December 2014, more than 23 years since its founding, Cerus received its first two FDA approvals, for the Intercept system to treat plasma and, separately platelets. The Company raised $70 million in a secondary offering in January 2015. At the quarter ended March 2015, Cerus reported $112 million of cash and equivalents, just under $10 million of debt, last twelve months revenues of $36.2 million and an accumulated deficit of $551 million since its inception in 1991. With a mid-July stock price of $5.43, Cerus had a market capitalization of $518 million.


Corgentech - CGTK
June 2004; 5 pages

"We began reviewing Corgentech, as a long thesis..[however] A long position carries unacceptable risk. ...completed enrolling patients in two Phase 3 trials under a single IND...'003's chemical design was given minimal consideration...same lack of refinement continues in Corgentech's clinical development program. ...both trials are fundamentally highly experimental." pdf

CGTK - Subsequent Events

At the time of FourSquare's report, Corgentech had a market capitalization of about $402 million (stock at $14.51) with $152 million in cash and equivalents. On December 6, 2004, the Company's first Phase 3, testing '003 (aka edifoligide) in PBG failed, missing all primary and secondary clinical endpoints. The stock closed down $11.29 (59%) to $7.71 ($214 million market capitalization) on 16.0 million shares traded. On March 30, 2005, Corgentech's second Phase 3 trial, testing '003 in CABG, also failed, again missing on its primary and secondary clinical endpoints. Two weeks later, the Company fired almost half of its employees. Ending Q2/05 with over $95 million in cash and equivalents but sporting a market capitalization in early August of » $75 million, the Company entered into a reverse merger with privately held AlgoRx, a company developing pain medications. Post merger, Corgentech's investors owned roughly 40% of the new entity, called Anesiva (ANSV). By April 2009, Anesiva had a market capitalization of about $12 million and, in early August, announced that it was merging with privately held Arcion Therapeutics. Arcion's shareholders will own 64 percent of the merged company. 

Cubist - CBST
November 2003; 11 pages

Cubist is a third-tier biotechnology company likely to reach second-tier status in 2004…Cubist will thrive and may well be acquired within the next ten years.” pdf

CBST - Subsequent Events

At the time of FourSquare's report, Cubist had a market capitalization of about $420 million ($10.50) with $183 million in cash and equivalents. By February 2004, Cubist's CAB-175 (an intravenous cephalosporin) had been abandoned. Likewise, by April 2004, oral ceftriaxone (Hoffmann La-Roche's Rocephin antibiotic) had also been abandoned. I had assigned both products zero value. In fiscal year 2004, Cubicin had sales of $58.6 million, a record for the first full year of sales by any intravenous antibiotic. In March 2006, an FDA advisory panel voted 9-0 in favor of expanding Cubicin's use to bacteremia (9-0), but only 5-4 for its use in endocarditis (a more valuable indication). That May, the FDA expanded the label to include bacteremia and right-side endocarditis (a partial victory for Cubist). For fiscal years 2006, 2007 and 2008, Cubicin sales were $190-, $290- and $415 million respectively. In late June 2009, Cubist had a market capitalization of about $1.06 billion. At the March quarter end, Cubist posted last-four-quarters' net income of $168 million on revenues of $466 million.

In December 2014, Merck announced that it was acquiring Cubist for $8.4 billion in cash plus $1.1 billion in assumed debt. Eleven days after the announcement, the FDA cleared Cubist’s Zerbaxa, a two-drug combination antibiotic. Based on Cubist’s final 10-Q, the Company held $687 million in cash and equivalents with last twelve months revenues of $1.16 billion, over a billion of which came from Cubicin sales. Cubist was founded in May 1992.



Guilford - GLFD
September 2003; 9 pages

Guilford is a solid, second-tier biotechnology company...current product, Gliadel, provides modest revenues…two additional products in middle stage clinical development. Management's outstanding reputation and close ties to Johns Hopkins University are two added strengths.” pdf

GLFD - Subsequent Events

At the time of FourSquare's report, Guilford had a market capitalization of about $198 million with $130 million in cash and equivalents and $80 million in long-term debt. On March 24, 2005, the Company discontinued a Phase 3 trial of its general anesthetic Aquavan on mixed results, including increased adverse events compared with the active control, midazolam. The stock lost 34% leaving Guilford trading below cash on hand. By April 2005, Guilford announced that it planned to divest its Aggrastat assets. Aggrastat revenues for the six months ended June 2005 were $7.0 million. On July 21, 2005, MGI Pharma agreed to acquire 12 year-old Guilford for $178 million, 70 percent as stock, the rest in cash. In its last quarterly filing with the SEC, Guilford reported a $472 million accumulated deficit and posted last-four-quarters' revenues of $51.3 million.


Genta - GNTA
January 2002; 2 pages

There is compelling data to support a short position in Genta. The company's aggressive...is built upon a "spray-and-pray" clinical development program for Genasense...there is insufficient data to justify any of its late-stage trials in three different cancers…high likelihood of failure in all three studies.” pdf

GNTA - Subsequent Events


At the time of FourSquare's report, Genta had a market capitalization of about $870 million (stock at $13.26) with $54.1 million in cash and equivalents. On September 10, 2003, the Company reported that Genasense missed its primary clinical endpoint in the phase 3 melanoma trial. That December 9, Genta (surprisingly) submitted an NDA for Genasense in melanoma. On May 3, 2004, FDA's advisory Panel (ODAC) voted 13-3 against the NDA. Soon thereafter, the Company withdrew the NDA. On November 26, 2004, the Company reported that Genasense missed its primary clinical endpoint in the phase 3 trial for second line multiple myeloma. GNTA stock closed that day at $1.27, giving the Company a market capitalization of just over $100 million. In December 2004, Genta announced "encouraging" results from the phase 3 trial of Genasense in CLL and, in late December, 2005, submitted an NDA for this indication. However, in September 2006, an FDA advisory Panel again voted 7-3 against the NDA and the FDA rejected the NDA in mid-December. In late June 2009, Genta had a market capitalization of about $7 million. On August 2, 2012, after almost 25 years and an accumulated deficit of $1.26 billion dollars, Genta filed for bankruptcy protection under Chapter 7, liquidating the Company.

Imclone - IMCL
November 2001; 3 pages

There is insufficient concrete data to support, unequivocally, a decision about FDA Panel acceptance or rejection of C225; however, several high risk attributes surrounding IMCL's clinical study coupled with one minor and two major, potentially adverse catalytic events support building a short position in this stock.” pdf

IMCL - Subsequent Events

At the time of FourSquare's report, Imclone had a market capitalization of about $4.5 billion (stock at » $62) with $349 million in cash and equivalents. On Friday evening, December 28, 2001, Imclone announced that the FDA issued a (rare) "refuse-to-file" letter for the Erbitux BLA. On December 31, IMCL traded down 16 percent. Within a month the stock was off 75 percent from its mid-70s high of the prior two months. By January 2002, both the SEC and the DoJ were investigating the Company and by March, Bristol-Myers Squibb had revised the terms of its September 2001 partnership. Before the end of the second quarter, IMCL stock was trading in single digits. In October, CEO Sam Waksal, Ph.D., plead guilty to six of 13 counts, including insider trading. Around June 2003 Dr. Waksal began a maximum seven-year prison term. In February 2004, the FDA cleared Erbitux for colorectal cancer. In 2007, Erbitux posted world-wide revenues of $1.28 billion. In October 2008, Eli Lilly offered to (and did) acquire the 24 year-old Company for $6.5 billion in cash ($70.00 per share). Ironically, Lilly originally owned the rights to the Erbitux antibody when it acquired Hybritech for about $350 million in 1986.

Immunomedics - IMMU
September 2009; 4 pages

"Volatility is one hallmark of biotechnology stocks. Therefore, it behooves investors to recognize the limits of a stock's sudden pop by understanding the historical context under which a company releases news. The recent activity in Immunomedics provides an excellent example of how, at investors’ peril, a stock’s dramatic rise effectively ignores a company’s past.." pdf

IMMU - Subsequent Events

FourSquare's September 11, 2009 report highlighted Immunomedics' dramatic stock rise on August 27, due to a Press Release reporting promising, if limited, Ph 2b data for epratuzumab in moderate-to-severe systemic lupus erythematosus. The stock closed up $2.58, 61 percent, to a five-year high of $6.84 on significant volume. With 75.2 million shares outstanding at the time, Immunomedics had a market capitalization of about $515 million with $27.4 million of cash and equivalents. By October 20, the stock was back at $4.23. Thus, in less than eight weeks, a one-day 60 percent gain had decayed to a 38 percent loss. In early February 2010, IMMU hit a low of $2.94. The purpose of FourSquare's report was to provide an example of how, at investors' peril, a stock's dramatic rise can effectively ignore a company's past performance. In late March 2010, IMMU had a market capitalization of ~ $260 million, and, at December end, about $18.6 million in cash and equivalents and $5.3 million of auction rate securities.

Founded in July 1982, the Company has no FDA-approved therapeutic products. In its 10-Q filing for fiscal Q3 (March 2015), Immunomedics reported last nine months diagnostic product sales of $2.18 million compared with $2.43 million for the same period last year. The Company ended the quarter with $106 million of cash and equivalents, $96 million of debt and an accumulated deficit of $297 million. With a mid-July stock price of $4.08, the Company had a market capitalization of $381 million.


Laser Vision - LVCI
June 1997; 6 pages

”…experienced and knowledgeable management team… demonstrated a prescient ability to adapt…Ophthalmologists believe that in the face of continued and significant price pressure from HCFA…need to identify an alternative, large market, independent of mandated payment schedules. Laser Vision is a leading player in the laser refractive surgery market…CEO Jack Klobnak and COO Jim Wachtman have positioned the Company to grow...supporting a long thesis.”pdf

LVCI - Subsequent Events

At the time of FourSquare's report, with a stock price of $7.63, Laser Vision had a market capitalization of about $67 million with $3.8 million in cash and equivalents and no debt. In April 1999, the stock hit a high of $52.50. Revenues increased dramatically over the subsequent four years from $8.2 million in fiscal year end April 1997 to $96.1 million in FYE 2001. In August 2001, the Company was acquired by TLC Vision, Inc., a Canadian company, for about $106 million in stock. At the closing, LVCI had about $17.4 million in cash and equivalents.

MannKind - MNKD
February 2006; 4 pages

”…reviewed fifteen year-old MannKind Corporation (MNKD) as a possible short thesis...two Phase 3 trials for a dry powder, pulmonary insulin formulation called TechnoSphere/Insulin ("TI") based on very limited Phase 2 data...market capitalization of » $870 million...brief public tenure, preceded by over 13 years as a private firm...less than transparent posture to new investors. …relative opacity of MannKind's disclosure history…insufficient data to support either a buy or a sell recommendation at this time. ...any investment in MannKind can probably wait until actual market data are in for Pfizer/Inhale’s Exubera.”pdf

MNKD - Subsequent Events

All three of MannKind's pivotal trials began when projected, except '009, which began in March 2006, several months ahead of schedule. Although the FDA had cleared Pfizer/Nektar's Exubera in late January 2006, the product was not launched until July 2006 due to manufacturing problems. Fifteen months later (October 2007), Pfizer announced that it would take a $2.8 billion charge against Exubera and that it had stopped marketing the product "...because it did not meet customers' needs or the company's financial expectations." In mid-April 2008, Pfizer added a warning to Exubera's Package Insert noting that continued monitoring of clinical trial patients had revealed six reported cases of non small-cell lung cancer from 4,740 patients on Exubera compared to one case from 4,292 control patients. All seven patients were smokers. The difference was not statistically significant (p=0.08). Still, MannKind halted its search for a marketing partner as the stock traded to a low near $2.00. On March 16, 2009, MannKind submitted its NDA for Afresa (FKA TI, inhaled insulin), resulting in a nominal PDUFA date in mid-January 2010. On January 8, the Company announced that the FDA would not issue a decision by the PDUFA date but only needed to complete the inspection of an insulin manufacturer. Also, the drug's trade name was changed to Afrezza. As of February 2, with FDA's decision still pending, MannKind stock traded at $9.60 with 113 million shares outstanding, yielding a market capitalization of $1.08 billion.

Founded in February 1991 by the widely respected entrepreneur, Alfred Mann, the Company’s lead product, Afrezza (inhalational insulin), was FDA approved in June 2014. Less than two months later, MannKind partnered Afrezza with Sanofi for worldwide rights. The Company 10-Q for March 2015 did not report any product revenues; however, there were $7.1 million in Afrezza product sales to Sanofi, which were recorded as deferred product sales from collaboration. There was $121 million of cash and equivalents, $222 million of debt and an accumulated deficit of $2.53 billion. With a mid-July stock price of $5.49, MannKind had a market capitalization of $2.25 billion.


Medivation - MDVN
February 2009; 9 pages

”…Headquartered in downtown San Francisco, Medivation was founded in September 2003... acquired the rights to Dimebon for neurodegenerative disease or anti-aging purposes... launched in Russia in 1983 as an over-the-counter oral antihistamine...I believe there is little or no chance that Dimebon will demonstrate efficacy in Alzheimer's or Huntington's... there are really only two explanations for the remarkably positive Phase 2 data reported for Dimebon in the Lancet paper."  pdf

MDVN - Subsequent Events

At the time of FourSquare's report, Medivation's stock was quoted at $22.72, giving the Company a market capitalization of about $682 million with » $230 million in cash and equivalents. On March 3, 2010, the Company announced disappointing results from the pivotal phase 3 CONNECTION trial of dimebon (latrepirdine). MDVN stock closed down $27.15 (67%) to $13.10 (» $440 million market capitalization based on 33.5 million shares outstanding) with 44.9 million shares traded and ended the third quarter with $214 million in cash and equivalents. Compared with placebo, the drug missed both its co-primary (ADAS-cog, p=0.86 and CIBIC-plus, p=0.81) and secondary (ADCS-ADL, p=0.61; NPI, p=0.17) clinical efficacy endpoints. In a separate phase 3 study designed to expand the safety database for dimebon, the drug was well tolerated both alone and in combination with several other Alzheimer's medicines. There were no unexpected adverse events reported for dimebon from either trial.

In June 2005, the Company established Medivation Prostate Therapeutics as a wholly owned subsidiary and, in June, licensed the rights to enzalutamide. In August 2012, the FDA approved the drug, trade-named Xtandi, as second-line therapy for (metastatic, castration-resistant) prostate cancer. Roughly two years later, Xtandi’s label was expanded to include first-line use (i.e., prior to chemotherapy), putting it on par with J&J’s first-to-market Zytiga. Despite a low risk for seizures, Xtandi sales of more than $1.0 billion are expected for 2015. Based on Medivation’s 10-Q for March 2015, the Company had $569 million of cash and equivalents, $245 million of debt and last twelve months net income of $287 million on revenues of $752 million. At $147.25 in mid-July 2015 stock price of $112.92, Medivation had a market capitalization of $8.9 billion.

On September 28, 2016, Medivation was acquired by Pfizer for $14 billion ($81.50/share) in cash. At June's Q2 end, the Company reported $327 million of cash and equivalents, $17.4 million of debt, quarterly Xtandi revenues of $595 million and 166 million shares outstanding. At $81.50 per share, Pfizer paid an enterprise value (+debt) of 13.3 times last 12 month's revenues of $1.03 billion.


Micromet, Inc. - MITI
May 2010; 10 pages

”…...In 1993, the Institute for Immunology at Munich University spun off Micromet AG. After the reverse acquisition of CancerVax by Micromet... over 90 percent of its 130 employees are based in Munich and approximately a dozen..are located in Bethesda, Maryland..despite clinical development weaknesses...limited progress over seventeen years...I am optimistic about the outcome...and propose a long thesis in the Company."  pdf

MITI - Subsequent Events

At the time of FourSquare's long thesis, Micromet's stock was quoted at $6.73, giving the Company a market capitalization of about $544 million with » $183 million in cash and equivalents. The stock hit a low of $4.37 on August 8, 2011. On January 26, 2012, the Company announced its acquisition by Amgen for $11.00 per share in cash, valuing Micromet at about $1.2 billion. Micromet ended its third quarter in September with $183 million and no debt. At this time, Micromet has yet to enroll any patients in a US-based phase 3 clinical trial.

Progenics - PGNX
June 2004 with Adolor; 4 pages

"Progenics, with a tarnished history in drug development...will benefit from Adolor's delayed market entry....the Company's first Ph 3 trial in AMI was clearly positive...A long position in Progenics is warranted."pdf

PGNX - Subsequent Events

At the time of FourSquare's report, Progenics had a market capitalization of about $385 million (stock at $19.64) with $61 million in cash and equivalents. In December 2005, the Company received $60 million up-front to license world-wide rights to MNTX, now called Relistor, to Wyeth Pharmaceuticals. In March 2008, an important Phase 3 trial of the intravenous formulation of the drug failed. In April, both Canada and the US FDA cleared sub-cutaneous Relistor to treat the first, and smallest, indication of constipation in hospice patients. That May, the second Phase 3 trial of the intravenous formulation also failed. Currently, Relistor sales are running at » $10-15 million per year ($3.2 million in Q2/09). In early August 2009, Progenics had a market capitalization of about $180 million, ending the second quarter with $117 million in cash and equivalent.

Regeneron - REGN
November 2002; 4 pages

"Regeneron will be a strong "short" candidate. ...clinical trials with Axokine for obesity are at very high risk of clinical, regulatory...failure. ...the designs of all four Phase 3 trials differ significantly...from Regeneron's single Phase 2 study."pdf

REGN - Subsequent Events

At the time of FourSquare's report, Regeneron's stock was quoted at $15.13, giving the Company a market capitalization of about $665 million with $341 million in cash and equivalents. On March 31, 2003, Regeneron reported disappointing results for Axokine and the stock dropped almost 57% to $7.52 per share. Subsequent Axokine trials were not successful and the project was discontinued. In February 2008, the FDA cleared Regeneron's first product, Arcalyst, a so-called TRAP for interleukin-1. The drug is used to treat the extremely rare, chronic cryopyrin-associated periodic syndromes, e.g. Muckle-Well syndrome. There are perhaps 500 cases in the US. Estimated sales for 2009 are on the order of $20-$25 million. In early August 2009 with the stock at $21.75, Regeneron had a market capitalization of about $1.7 billion, ending the first quarter with $416 million in cash and equivalents.

In November 2011, after 23 years, Regeneron hit pay dirt with FDA's approval of the intraocular drug, Eylea, a competitor to Hoffmann-La Roche's (Genentech) Lucentis, to treat wet, age-related macular degeneration. For fiscal year 2012, Eylea had US sales of almost $840 million while the Company's other two products, Zaltrap and Arcalyst, posted sales of $32 million and $20 million, respectively. For 2014, Eylea's revenues were $1.7 billion. In July 2015, the FDA approved Regeneron's (partnered with Sanofi) Praluent, the first drug - a monoclonal antibody - to treat severe hypercholesterolemia, e.g., when statins don't work. As of mid-September, with Regeneron's stock trading around $550 per share and 102 million shares outstanding, the Company had a market capitalization of over $56 billion. Note that 27 years after its founding, Regeneron still has 1.95 million Class A shares (10 votes per share, most held by President and CEO Leonard Schleifer, MD/PhD) plus 102 million common shares with one vote per share.


Telik - TELK
October 2003; 5 pages

"Telik provides a strong short opportunity, but not for at least six months…has embarked on two very high-risk, fundamentally experimental Phase 3 trials of its most advanced drug candidate, Telcyta…the scientific rational for Telcyta's tumor specificity appears flawed.”pdf

TELK - Subsequent Events

At the time of FourSquare's report, Telik's stock was quoted at $22.80, giving the Company a market capitalization of about $820 million with $67 million in cash and equivalents. After multiple missed time-line projections from management, on December 26, 2006 Telik reported that all three Phase 3 trials for Telcyta (aka TLK'286) had disappointing results. Telik stock dropped $11.49 or 71 percent to $4.77 on 33.6 million shares of volume. The market capitalization was about $250 million due, in part, to a 46 percent increase in the share count from the time of FourSquare's report. In early August 2009 with the stock at $1.10, Telik had a market capitalization of about $59 million, ending the first quarter with $46 million in cash and equivalents and $8.0 million of debt.

In July 2014, Telik reverse-merged into privately held MabVax Therapeutic Holdings, leaving Telik shareholders owning no more than 15 percent of the combined company. Telik had about $2.0 million of cash in the bank, no debt and an accumulated deficit since its inception in October 1988 of over $550 million.


Thoratec - THOR
July 2003; 3 pages

"Thoratec is best-of-breed in a narrow sector of cardiovascular devices. ...solidified its market dominance by acquiring Thermo Cardiosystems ("TCA" part of the Thermo Electron family)...building a long position beginning closer to $13.00...is strongly recommended”pdf

THOR - Subsequent Events

At the time of FourSquare's report, Thoratec's stock traded around $15.85, giving the Company a market capitalization of about $880 million with $49 million in cash and equivalents. Over the past six years Thoratec has stumbled and, overall, under-performed investors' expectations. The stock has ranged from a low of roughly $8.50 to a high over $32.00. As of the second quarter of 2009, Thoratec has reported last-four-quarters' net income of $23.1 million (6.6 percent) on revenues of $348 million. Annual top-line growth has averaged over 15 percent per year, but net income has varied widely. In early August 2009 with the stock at » $24.00 and 56.6 million shares outstanding, the Company's market capitalization was about $1.4 billion. Thoratec had about $251 million of cash and equivalents and about $128 million of debt. Thus, Thoratec has an enterprise value-to-sales ratio (market capitalization + debt - cash, divided by the last-four-quarters' sales) of 3.6x compared with about 5.5 at the time of FourSquare's report.

Founded in March 1976, the Company appears to stumble along while competitor Abiomed has, over the years, garnered a higher valuation on Wall Street. Based on Thoratec’s 10-Q for March 2015, the Company had $240 million of cash and equivalents, no debt and last twelve months net income of $42.9 million on revenues of $473 million. At $46.61 in mid-July 2015, Thoratec had a market capitalization of $2.5 billion. The ratio of enterprise value to last twelve months revenues is 4.8, compared with Abiomed’s 11.6 ratio. On July 21, 2015, St. Jude Medical offered to acquire Thoratec for $3.4 billion in cash, paying $63.50 per share, a 30 percent premium over the $48.81 pre-news price.


Theravance - THRX
August 2005; 3 pages

"Theravance is not expensive...much of its destiny for the next two years is in Glaxo's hands....at least one clinical trial is likely to hit the minimum requirement to support an NDA filing...A long position is warranted..."pdf

THRX - Subsequent Events

At the time of FourSquare's report, Theravance's stock traded around $20.64 with 53.4 million shares outstanding, including Glaxo's 9.4 million shares (» 18 percent). This gave the Company a market capitalization of about $1.1 billion with $202 million in cash and equivalents. Numerically, little has changed over the past four years. However, in August 2006, the Company reported modest results from two Phase 3 trials of its telavancin antibiotic in skin and soft tissue infections. In June 2007, long-time partner, GlaxoSmithKline (GSK), chose not to exercise its call option for 50 percent of the outstanding stock. That September both GSK and Astellas chose not to exercise their options for two of Theravance's drugs in development. Despite a favorable FDA panel review of telavancin in November 2008, kidney toxicity problems worried FDA officials, prompting an "approvable" letter this past February. Theravance responded to the FDA's questions in April and expects a decision in mid-September. A second decision from the FDA regarding telavancin's use in hospital-acquired pneumonia is expected in late November. In early August 2009 with the stock at » $15, Theravance had a market capitalization of about $940 million, ending the second quarter with $176 million in cash and equivalents plus $173 million held as convertible debt.

With over 200 full-time employees at the end of 2011, Theravance had shrunk to 12 employees as of December 2014 and currently describes itself as a “royalty management company.” Based on the Company’s 10-Q for March 2015, Theravance had $251 million in cash and equivalents, $732 million of debt and last twelve months revenues of $16.1 million. At $16.59 in mid-July 2015, the Company had a market capitalization of $1.9 billion. It is also worth noting that there were 26.6 million shares short (over 80 percent of the float) representing 46 days of trading volume.


Trimeris - TRMS
April 2002; 3 pages

There is sufficient data to support a short position in Trimeris…clinical development program is highly experimental…inadequately supported, if at all, by prior clinical trial results. Patient enrollment/treatment criteria…substantially different from those employed in a single, small Phase 2 efficacy trial, which failed. T-20's potential market could prove significantly smaller than analysts predict. Two mitigating factors to the short thesis are…” pdf

TRMS - Subsequent Events

At the time of FourSquare's report, Trimeris's stock was quoted at $45.14, giving the Company a market capitalization of about $845 million with $115 million in cash and equivalents. In April 2002, Trimeris reported impressive results from the first of two Phase 3 trials for Fuzeon in very advanced AIDS patients. Solid results were also reported a month later for the second trial. In February 2003, Trimeris's partner, Hoffmann-La Roche, announced that it planned to sell Fuzeon in Europe for about $20,000 a year, much higher than any other AIDS therapies. That March, the FDA cleared Fuzeon (an injectable drug) after a six-month review. World-wide sales in 2004 were $135 million, peaked at $267 million in 2007 and have been dropping each year due to newer oral AIDS medications. Half through 2009, sales were running at an annualized rate of » $115 million. In early August 2009 with the stock at $2.29, Trimeris had a market capitalization of about $51 million and ended the second quarter with $33 million in cash and equivalents. Trimeris currently has four full-time employees.

In November 2011, Trimeris reverse-merged into privately held Synageva, leaving Trimeris shareholders owning 25 percent of the combined company. In May 2015, Alexion Pharmaceuticals acquired Synageva for $8.4 billion (50/50 cash and stock). Many on Wall Street considered this a high price. Based on the Company’s 10-Q for March 2015, Synageva had $711 million in cash and equivalents, no debt and no product revenues. The FDA has set September 8, 2015 as the PDUFA date for Synageva’s Kanuma (sebelipase alpha), an enzyme replacement therapy to treat lysosomal acid lipase deficiency (LAL). LAL affects perhaps 3,000 individuals worldwide.

If you require independent, confidential deep due diligence for a potential biotechnology or medical technology
investment (financial or strategic) please contact us at (408) 865-1001 or eric@foursquarepartners.com