Biotech to Bet on Healthy Prognosis, Plans to Buy Back Shares

0




Editor’s Note:

This article has been changed from the print edition to correct that Patrick Soon-Shiong still has beneficial ownership of 83 percent of Abraxis shares. California Capital LP., a new entity formed to help fund his family’s philanthropic work, now controls of some of the shares formerly owned by the family’s existing Themba Trusts.

Positive study results boosted the share price of Abraxis BioScience Inc. last week, but the biotech still considers itself underappreciated and plans to spend big bucks to buy back shares.

The company’s board voted last week to repurchase up to $100 million of common stock. The L.A. drug maker, which has seen sales of flagship cancer drug Abraxane accelerate, had $306 million in cash at the end of 2008.

“Our strong financial position makes the purchase of our own shares a sound investment at this time,” said Chief Executive Patrick Soon-Shiong.

At the time of the April 20 vote, Abraxis’ share price was off 25 percent compared with last year. But just a few days later, shares got a 3 percent boost after the company reported several positive studies at the annual meeting of the American Association for Cancer Research, widely attended by both Wall Street and the medical communities.

Abraxis shares closed at $52.17 on April 23, down 13 percent from a year earlier. The marginal rise in share price has not prompted the company to indicate any change of strategy.

Abraxis is cash flush despite continuing quarterly net losses as it builds its Abraxane franchise by investing in studies to prove the drug’s effectiveness in treating more than just breast cancer. Abraxane is being studied as a treatment for a common type of lung cancer, as well as malignant melanoma, and pancreatic, gastric, head and neck cancers.

The drug hit $335 million in sales for 2008, up 3.4 percent from a year ago, and the company is anticipating even stronger growth as recent overseas approvals begin to show results.

Abraxis is so pleased with Abraxane’s prospects that it spent more than $159 million recently to cancel a marketing deal with AstraZeneca, whose larger marketing and sales force had provided a key boost after the drug’s 2006 launch. The cancellations means Abraxis no longer has to share sales profits.

Soon-Shiong, through family trusts and direct holdings, controls roughly 58 percent of shares in the company he founded. That’s down from more than 80 percent control a year ago, as more institutional investors have taken an interest.

Abraxis also is deploying its cash via investments in other companies. This month it led a $6.5 million financing of Expression Pathology Inc. in Rockville, Md. The startup is developing techniques for discovering and analysis of protein “biomarkers” in tissues, which can help track how a tumor is responding to a drug.

No posts to display