Healthcare Sector Review: Giant Step for MannKind, Threshold and Merck Agreement

Threshold Pharmaceuticals (NASDAQ:THLD) announced that a global agreement was signed with Merck (NYSE:MRK) KGaA, Darmstadt, Germany, to co-develop and commercialize TH-302, Threshold’s small molecule hypoxia-targeted drug. TH-302 is currently being investigated in a global Phase 3 clinical trial in patients with soft tissue sarcoma, a randomized Phase 2 trial in patients with advanced pancreatic cancer from which top-line results are expected in February, as well as additional clinical studies in other solid tumors and hematological malignancies. Merck will receive co-development rights, exclusive global commercialization rights and will provide Threshold an option to co-commercialize the therapeutic in the U.S. In exchange, Threshold will receive an upfront payment of $25M and could receive up to $35M in additional development milestones during 2012. Threshold is also eligible to receive a $20M milestone payment based on positive results from its randomized Phase 2 trial in pancreatic cancer. Total potential milestone payments are $525M, comprised of $280M in regulatory and development milestones and $245M in sales-based milestones. In the U.S., Threshold will have primary responsibility for development of TH-302 in the soft tissue sarcoma indication. Threshold and Merck KGaA will jointly develop TH-302 in all other cancer indications being pursued. Merck KGaA will pay 70% of worldwide development costs for TH-302.

The shares closed at $2.99, up $1.7, or 131.78%, on the day. Its market capitalization is $146.89 million.

MannKind Corporation (NASDAQ:MNKD) announced that it has entered into a purchase agreement with The Mann Group LLC, an entity controlled by MannKind’s CEO and principal stockholder, Alfred E. Mann, for the sale of shares of its common stock to The Mann Group. The Mann Group has committed to purchase 31.25M restricted shares of MannKind’s common stock, the same number of shares as the number of units that are expected to be purchased in the concurrent public offering of MannKind’s common stock and warrants, which was initially announced on Jan. 31. The shares to be purchased by The Mann Group will be priced at $2.47 per share, the consolidated closing bid price for MannKind’s common stock as reported by The NASDAQ Global Market on Feb. 2, resulting in an aggregate purchase price of approximately $77.2M.

The shares closed at $2.17, down $0.3, or 12.15%, on the day. Its market capitalization is $285.01 million.

Idenix Pharmaceuticals (NASDAQ:IDIX) announced that it has received notification from the U.S. FDA that the partial clinical hold on IDX184 has been removed and that the company’s 12-week phase IIb study evaluating IDX184 in combination with pegylated interferon and ribavirin, or PegIFN/RBV, may continue. IDX184, the company’s lead product candidate for the treatment of hepatitis C virus, or HCV, infection is a pan-genotypic oral nucleotide polymerase inhibitor, and has demonstrated a high barrier to resistance in vitro and potent antiviral activity in both preclinical and clinical studies. Recently announced interim phase IIb data demonstrated favorable antiviral activity and no serious adverse events.

The shares closed at $11.68, down $1.51, or 11.45%, on the day. Its market capitalization is $1.12 billion.

Edwards Lifesciences Corp (NYSE:EW) reported Q4 adjusted EPS of 62c, compared with analysts’ consensus estimate of 59c. The adjusted EPS excludes several items, including a pre-tax $17.6M special charge related to southern European receivables risk, a global realignment charge and a legal settlement. The company’s revenue came in lower than expected. Moreover, Edwards provided Q1 adjusted EPS guidance of 47c-49c, versus the consensus estimate of 55c, and the company expects its Q1 revenue to also come in lower than expected. Edwards’ Q1 EPS guidance excludes several special items, the company said. Edwards reiterated its 2012 EPS guidance of $2.70-$2.80, excluding special items, as well as its 2012 transcatheter heart valve sales guidance of $560M-$630M. Edwards’ guidance assumes a mid-year 2012 approval of Cohort A of the Partner Trial of its Sapien heart valve, the company said. “We have just begun offering our life saving Sapien technology to many inoperable U.S. patients suffering from severe aortic stenosis and also anticipate making it available for patients whose conditions place them at high risk for surgery,” said Edwards CEO Michael Mussallem. In a note to investors, Jefferies recommended buying the stock on weakness today, as the firm believes that the company’s outlook is largely unchanged following the results. Jefferies maintains a positive bias and Buy rating on the stock. In late morning trading, Edward dropped $9.36, or 11.60%, to $71.31.

The shares closed at $71.54, down $9.13, or 11.32%, on the day. Its market capitalization is $8.16 billion.

Johnson & Johnson (NYSE:JNJ) has been accused of price fixing and violating Chinese law by one of its Chinese distributors, and the issue went before a Shanghai court yesterday, according to Shanghai Daily. The distributor, which claims that J&J illegally set a minimum resale price for its suturing products,is seeking compensation of about $2.37M the publication added.

The shares closed at $65.64, up $0.05, or 0.08%, on the day. Its market capitalization is $179.25 billion.

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