AtheroGenics Inc. (AGIX-NASDAQ) is the latest biotech implosion this morning. It went from bad to worse as its late-stage clinical study for heart disease treatment failed to meet endpoints, although the company is proceeding with studies to continue its developments.
Russell M. Medford, M.D., Ph.D., President and Chief Executive Officer of AtheroGenics (consolidated quotes): "Based on our review of the ARISE clinical trial results, we are optimistic about the therapeutic potential of AGI-1067 and currently intend to continue its development with the goal of improving patient care. We will continue to analyze the extensive body of data generated by this trial and meet with regulatory agencies in order to select the optimal development path for the compound. We believe that the strength of our financial position and the capabilities of our dedicated team of professionals at AtheroGenics place us in a strong position to continue development of AGI-1067."
Wall Street doesn’t share the same optimism and it is likely that the company will lose AstraZeneca (AZN) as its trial partner. Shares are down a massive 60% or more at $2.90 from its $7.83 close on Friday; the 52-week range was $7.23 to $20.03. Need less to say, this is a meteoric implosion. The market cap was $309 million but will now be indicated around $125 to $140 million depending on where this really settles in today.
The problem with this company is that while it says it has cash of $150+ million, it actually has $286 million in long-term debt before its regular liabilities. This will put it in a different league of many other biotech zombies because its balance sheet is inverted. It still has more than enough capital to continue operating for some time, so it isn’t as though it is disappearing tomorrow. Just beware of anyone pointing to only the cash values on this one.
Jon C. Ogg
March 19, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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