In biotech news today, struggling gene sequencing company Complete Genomics Inc. (GNOM) got a lift on news that it has signed a definitive agreement to be acquired by leading genomics firm China’s BGI-Shenzhen for $117.6 million, or $3.15 per share. Per the deal, Complete will also get $30 million in bridge financing for operations. The offer is at an 18 percent premium to the $2.67 closing price of GNOM on Friday, Sept 15. In June, Complete Genomics reported that it was exploring strategic options with consultation from Jefferies & Company and slashing about 20 percent of its staff.
The premium price may seem grandiose as it is 54 percent higher than the value of GNOM when it announced possibly offering itself for sale in June, but it’s still a long way from the $17 per share Complete was worth late in 2010. The Mountain View, California-based company’s board of directors has unanimously recommended that stockholders accept the offer and tender their shares. Company officers and key shareholders controlling 17.5 percent cumulatively of GNOM outstanding shares have agreed to tender their shares. Pending all requirements being met, the acquisition is expected to close early in 2013.
BGI’s chief executive Dr. Wang Jun commented, “Complete has developed a proprietary whole human genome sequencing technology that, together with other sequencing platforms used by BGI, will fit well with our research and business requirements and position Complete to become an even more successful global innovator.”
Trading at $3.06, shares of GNOM are holding shy of the buy-out offer one hour into the trading day.
On the other side of the coin, shares of Threshold Pharmaceuticals Inc. (THLD) plummeted at the opening bell this morning upon news that its flagship pancreatic cancer drug didn’t significantly improve survival rates, although data did show that Threshold’s TH-302 drug candidate did meet its primary endpoint in the phase 2b clinical trial.
Shares of Threshold have galloped ahead more than 500 percent this year, largely on the back of optimism and strong trial data on TH-302, but dropped as low as $5.87 this morning before rebounding near $7.00 per share to pare losses to around 20 percent so far today. It was the largest intraday drop since October 2008 for the San Francisco, California-based biotech.
Threshold is partnered with Merck (MRK) on development of TH-302, with Merck to date dolling-out $60 million in cash as part of a larger $525 million licensing deal.
Today’s results and the stark price drop may have simply been a knee-jerk reaction to the news before it was completely digested. For starters, the drug is not dead; far from it. The clinical data collected will be used in the design of pivotal phase 3 trials of the drug. Secondly, TH-302 did hit its primary goal of progression-free survival (PFS). The TH-302 combined with chemotherapy (gemcitabine) arm showed PFS of 5.6 months as compared to 3.6 months for the gemcitabine-only control arm. The 2.3 increase is certainly statistically significant. The secondary endpoint that was not met related to overall survival rate. The company said that the trial wasn’t designed to identify a statistical improvement from that perspective and that the data was skewed because chemo-only patients were eventually treated with TH-302 when it was determined that the disease had worsened.
Threshold will be presenting its latest top-line data from the trials at the European Society of Medical Oncology meeting on September 29.
As investors seem to better comprehend the news, the share price is steadily recovering moving into afternoon trading.
By Andrew Klips
