Daily Archives: March 21, 2008

Sign Of More Market Trouble: S&P Downgrades Goldman Sachs (GS) And Lehman (LEH)

After a week in which the market finally seemed to vote that big financial companies will be OK, S&P took the holiday to slam Goldman Sachs (NYSE:GS) and Lehman Brothers (NYSE:LEH). No one was even on the floor of the NYSE to react.

According to Reuters S&P revised its outlook to "negative" from "stable" on Goldman’s "AA-minus" and Lehman’s "A-plus" long-term credit ratings, suggesting a possible downgrade in one to two years.

If the call is proactive, the agency obviously believes that a great deal more bad news lies ahead in falling revenue and further write-offs.

The market open next week just gained a bit of drama.

Douglas A. McIntyre

Posted on: March 21, 2008 – 12:15 pm in Financial Stocks, ,

IPO Filing: Zogenix, Inc. (ZGNX)

Zogenix, Inc. filed last night to come public via an initial public offering of up to $86.25 million in securities sales.  The company has applied to take the ticker "ZGNX" on NASDAQ.  Banc of America has been listed as the lead manager in the deal, with co-managers listed as Leerink Swann, Thomas Weisel Partners, and Susquehanna Financial Group.

It has two proprietary product candidates in late-stage development for the treatment of central nervous system disorders and pain. Its lead product candidate, sumatriptan DosePro™, enables needle-free subcutaneous delivery of  sumatriptan for the treatment of acute migraine. Zogenics has submitted a New Drug Application FDA, for sumatriptan DosePro in December 2007, which was accepted for filing in March 2008. The company intends to build a focused sales force in the United States and launch the product in the first quarter of 2009. Its second product candidate is ZX002, a controlled release formulation of hydrocodone for the treatment of chronic pain. This ZX002 product candidate has completed Phase II clinical trials, and it anticipates initiating the Phase III clinical program in the second half of 2008.

As the company is still in development stage, it essentially has no real revenues.  The San Diego-based company was formed in May, 2006 as SJ2 Therapeutics, Inc. but changed its name to Zogenix, Inc. when it commenced operations on August 25, 2006.  Its trademarks include DosePro™, Intraject® and Zogenix™.

Jon C. Ogg
March 21, 2008

Posted on: March 21, 2008 – 9:15 am in Biotech, IPOs,

Sirius (SIRI) Deal With XM (XMSR) Heads For The Barn

The FCC says it is getting closer to announcing its opinion of the Sirius (NASDAQ: SIRI) merger with XM Satellite (NASDAQ: XMSR). That may not be good news. The commission may turn the deal down.

According to The Wall Street Journal FCC boss Kevin Martin said "he had asked his staff to draft a document incorporating a variety of possible outcomes for the merger proposal."

In the case of the merger, no news is bad news. Aside from the likelihood that a long review may be a result of the FCC and Justice Department building a case again the deal, over the last year the finances of both companies have gotten worse.

In the last quarter, the subscriber growth at XM and Sirius slowed. Both lost money and face tremendous debt service. Each company has more than $1 billion in long-term debt on its balance sheet.

If the merger gets killed, one of the companies may not make it. The balance sheet and P&L problems are just that tight.

Douglas A. McIntyre

Posted on: March 21, 2008 – 6:54 am in Satellite, ,