Strong test results on an experimental blood-pressure medicine blasted Myogen’s share price through the roof Thursday, a mere two weeks after billionaire investor George Soros sold more than half of his 7 percent stake in the company.
The Westminster biotech firm announced that one of its drugs in late- phase testing, Darusentan, caused significant drops in blood pressure in patients for whom other hypertension drugs do not work. The stock soared 60 percent to close at $21.67.
It promises to be the first effective drug for a market of 3 million to 4 million Americans, according to First Albany Capital analyst Lucy Lu. “It is a large market underappreciated by investors,” Lu wrote in a research note Thursday that set Myogen’s new target price at $40.
Other analysts back in late June had said the stock was worth only $7.
“We are certainly pleased,” said Derek Cole, Myogen’s head of investor relations. He cautioned that Darusentan still has to undergo Phase III testing and get approval from the Food and Drug Administration before it can be released on the market, a process that could take a year or more.
Also pleased was a Boulder venture-capital firm that incubated Myogen in the mid-1990s after its spinoff from the University of Colorado.
Sequel Venture Partners owns 5.7 percent of the company. It was worth $10.8 million in late June, but on Thursday afternoon, it was worth $44.6 million.
As of June 30, Myogen posted a net loss of $40 million for the year and an accumulated deficit of $216 million.
The biotechnology company is burning through, on average, $18 million in cash each quarter and had $84 million in cash and short-term investments left as of June 30.
But Myogen’s boosted share price puts it in a good position to raise more money on the stock market.
Myogen and another local biotech company, Pharmion, successfully launched initial public offerings in late 2003, during the dog days of the tech slump.
“They put Colorado on the map in 2003 as a real player in biotechnology,” said Denise Brown, executive director of the Colorado Bioscience Association.
Now analysts say Myogen may help fuel Wall Street interest in biotechnology, which uses microorganisms, such as bacteria, or biological materials, such as enzymes, to produce certain reactions in the human body.
“This really opened up a lot of eyes that this is an exciting company,” said CIBC World Markets analyst Matt Geller.
“Concerns that the economy might slow down have caused investors to move from technology-related stocks. Investors who want aggressive growth are looking at biotechnology,” he said.
Myogen’s fortunes have not always been so rosy.
Its shares spent most of the year between $6 and $9 but then slumped in late June after the biotech firm canceled tests on one of its most promising drugs. But investor interest in another drug, Ambrisentan, pushed Myogen’s share price to $15 by Aug. 2.
Then Soros announced his selloff of 1.1 million shares, and the stock dipped again. The stock started climbing shortly thereafter, and then spiked dramatically Thursday.
Staff writer Ross Wehner can be reached at 303-820-1503 or rwehner@denverpost.com.
