It is Labor Day and the US so markets are closed for the break. This does mean, however, that we haven’t got anything to discuss moving into the start of a fresh week elsewhere around the world. The biotechnology space was as active as ever towards the end of last week and we got a whole host of fresh inputs – each of which injected some considerable volatility into the company to which it relates. Here is a look at two of the biggest movers, with analysis of what’s moving each and where we expect things to go next.
The two companies in our crosshairs for the session today are Pfizer Inc. (NYSE:PFE) and Cytori Therapeutics (NASDAQ:CYTX).
First up, then, Pfizer.
Late on Friday, Pfizer announced that the US Food and Drug Administration (FDA) has approved one of its lead development assets – a drug called MYLOTARG (gemtuzumab ozogamicin). Some reading might be familiar with this drug. It was initially approved back in 2000 for use as a stand-alone treatment for older patients with CD33-positive AML who had experienced a relapse. Subsequent to its approval, however, it was withdrawn (see voluntarily) based on concerns about safety and the number of early deaths among patients undergoing treatment. Pfizer since set about trying to collect some solid data to prove that it was safe and effective and, combined with support from the medical community rooted in reports that the drug can help patients in this group (a group that has very little in terms of treatment options available to them), resubmitted to the agency this year.
As per the latest news, then, this resubmission has been successful and MYLOTARG has picked up approval in a target indication of the treatment of adults with newly diagnosed CD33-positive acute myeloid leukemia (AML), and adults and children 2 years and older with relapsed or refractory CD33-positive AML.
As mentioned, this is a group of patients that don’t have much choice when it comes to choosing treatment, so the opportunity is pretty big here for Pfizer and MYLOTARG going forward.
With that said, however, it’s not a given that MYLOTARG will be a success. before it was pulled from markets, the drug only generated around $8 million quarterly for Pfizer. For a small company, this wouldn’t be too bad a whole. For a company the size of Pfizer, however, it’s negligible.
Anyway, it’s a drug approval and its positive development regardless of market size. As such, markets are trading up on in the wake of the news, with the company closing out the session on Friday for a couple of percentage points premium to the price at which it opened.
Next up, then, Cytori.
This one isn’t quite as positive as the Pfizer news. On Friday, the company announced that it was reducing its workforce by up to 50%. The reduction comes as part of a corporate restructuring plan and is reportedly intended to significantly reduce expenses while maintaining its ability to execute on its BARDA-sponsored cell therapy program, Japanese business and oncology program.
This sort of development is never good news, but at the smaller end of the biotechnology space, it’s not unusual either. Capital necessity is the main risk factor when it comes to microcap biotechnology stocks and the dilution associated with an equity raise can really hit the proportionate value of an investors exposure to the company in question. As such, while the company is downsizing, it’s doing so to avoid having to tap shareholders for cash and this could be seen as the lesser of two evils in the situation.
There is also a chance that we might see some type of sale or reverse merger near term, as hinted at by management in the press release linked to the restructuring. Nothing is confirmed that yet, but this is one to keep an eye on closely going forward as things play out.
Cytori currently trades for $0.36 a share, a little off highs of $0.38 recorded at the end of August. Year-to-date, the company is down more than 77%.
