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Tuesday, Apr 23, 2024

Firm Not Providing Full Disclosure of Cash on Hand

Torrey Pines Therapeutics, Inc. says it plans to merge with a small public biotechnology firm, but won’t disclose how much cash on hand the companies have.

To biotechnology industry watchers, especially investors, the number is one of the most important indications of an early stage biotech company’s success.

Since firms such as Torrey Pines Therapeutics and New York-based Axonyx typically don’t have an approved product to sell yet, there isn’t usually a stable source of revenue. Therefore, burn rate is a strong indicator of how long scientists at a company without a federally approved product can keep charging toward the goal of getting an efficacious, safe drug on the market.

While an $80 million number surfaced in Torrey Pines’ June 8 press release announcing the merger, that amount was actually the hypothetical cash on hand the companies would have possessed if they were a single entity at the close of the first quarter of this year. As of March 31, Torrey Pines had around $26 million on hand and Axonyx held about $54 million.

Torrey Pines Chief Financial Officer Craig Johnson wouldn’t disclose how much the firms have now, though he confirmed it was more than $40 million and less than $80 million.

“Since we’ve signed this thing, we’re kind of tied at the hip to these guys,” Johnson said. “It’s kind of like being a public company, but not being one.”

While Torrey Pines is private, Axonyx trades under the symbol AXYX on the Nasdaq stock exchange.

The merger is expected to become final in the fourth quarter, once shareholders approve it. Torrey Pines stockholders would own 58 percent of the combined company, and Axonyx stockholders would get 42 percent.

Johnson said Axonyx’s six employees would not transfer with the merger. The new firm will take Torrey Pines’ current name and trade under Axonyx’s spot on the Nasdaq stock exchange.

Together, the firms will continue to develop drugs to treat disorders of the central nervous system. Both companies have drug candidates to treat Alzheimer’s disease in early clinical trials.

Axonyx stock closed at 96 cents, up 9 cents, the day after the announcement, June 9.

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More Testing:

Hollis-Eden Pharmaceuticals, Inc. is trying its luck on a different market for Neumune, the much-publicized drug to treat acute radiation syndrome, ignored of late by the federal government.

The biotech will begin testing Neumune, an immune-boosting drug, as a remedy for health care-associated infections, or infections acquired in a health care setting, such as during hospitalization.

About 2 million infections are acquired each year in hospitals, amounting to 90,000 deaths and $4.5 billion in health care costs, according to the Centers for Disease Control and Prevention.

Hollis-Eden has said it has been left in the shadows by Project Bioshield , a federal program that allows the government to use $5.6 billion to stockpile drugs for emergency situations even if they have not been approved by the Food and Drug Administration.

Hollis-Eden has maintained that it has spent millions of dollars developing Neumune because the government said it would buy around 75 million doses of the drug. In October, however, the feds announced they wanted only 100,000 doses for now, and Hollis’ stock fell 40 percent.

Project Bioshield awards are to be announced “on or about June 2006,” so spokesman Scott Rieger said the company has not given up hope that Neumune still may make it into the national stockpile.

“Essentially, we’re still talking about immune compromise,” Rieger said about both the radiation and infection fighting applications of the drug. “This should by no means suggest we’re giving up on the radiation applications. It’s really more of an extension of what we’ve discovered.”

The company said Neumune boosts the immune system by stimulating creation of white blood cells, which help the body respond to bacteria, and platelets, or blood clotting elements.

– – –

Back On Nasdaq:

The previously highly troubled Ligand Pharmaceuticals, Inc. began trading again June 14 on the Nasdaq stock exchange.

The San Diego drug development company’s common stock was booted to the Pink Sheets in the fall after the firm failed to properly file reports.

Ligand has had several problems, including a lawsuit filed by shareholders in August 2004. In September, its hedge fund manager called for the chief executive officer’s ouster and sale of the company.

Ligand focuses on drugs to treat cancer, pain and skin, hormone-related and cardiovascular diseases, among others. The firm has five products on the market, including Avinza, a painkiller it launched in 2002, and five other drugs in the last phase of testing before federal review.

Ligand, which is not yet profitable, reported $51 million in revenues for the first quarter, a 38 percent increase versus the same period in 2005. Net loss for the quarter was $142.2 million, compared with $18.5 million for the same period in 2005.

The company’s stock traded at $9.95 the afternoon of June 14, down 5 cents.

Contact Katie Weeks with biotechnology news at


, or call her at (858) 277-6359.


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