How the table has turned.They now have funding, and it also mentions $15-$20M for next trials (2007 figures).
Kopp divests as Prima looks for the exit
Thursday, 16 August 2007 Nick Evans
PRIMA BioMed's future participation in the Australian biotech industry seems likely to be short-lived, after executive director Eugene Kopp and one of the company's major shareholders divested their shares over the last two days, on the back of a day-trader driven spike in the company's share price.
Prima BioMed executive chairman Eugene Kopp
Update: This story has been updated since it was originally posted. Please refer to the last paragraph for details.
Despite effectively announcing that the company was up for sale in its annual report last week, Prima BioMed shares soared on Tuesday, after the company announced the granting of an Australian patent for the therapeutic application of anti-cancer antibodies targeting the tumour antigen, cripto-1.
Opening the day at 1.9c, the share price more than trebled over the course of the day, trading as high as 7.4c at one stage – its highest mark since January 10 – and eventually closing at 6.9c. As a comparative indication, shares only reached 6.4c on March 14, the day that the company announced the successful results of its Phase 2a trial of CVac, the company's novel ovarian cancer treatment.
Kopp put the blame for the volatility firmly at the feet of day traders, accusing them of "playing with the company".
"Reviewing the security transfer registers, it appears clear that the holdings were not held overnight, they were just churned over in the period of a day," he said.
"It was absolutely phenomenal – whoever was buying and selling and doing this trading had obviously decided to play with this stock and went for a ride and thought that within the three-day window before they pay they could do the same thing that they do with the mining, uranium or other stocks.
"I've been involved in investment banking in some way for over 15 years, and I've never in my life seen something that trades over two and a half times within two days with a 400 percent increase on the basis of a patent having been granted in Australia."
Earlier this month Prima quietly announced, via its 4Q report, that the company was having trouble raising money to complete the clinical trials of its products and that the company's assets, including the subsidiaries holding the bulk of the company's intellectual property, were effectively up for sale.
The release said: "Prima has now completed its review of potential funding sources and is progressing confidential discussions with several companies with the view of possible sale of its subsidiaries' assets. The company anticipates that over the course of the next two quarters an announcement will be made about any disposals of assets of one or more of its subsidiaries."
The revival was short-lived, however, with a crash later in the afternoon, after the company released the news to the Australian Securities Exchange that Kopp had taken the opportunity of the elevated price to divest himself of just over 16.5 million of the company's shares – almost the entirety of his holding.
At the same time major shareholder Bluscan also ditched its holdings, shedding almost 14.9 million shares since Tuesday – presumably on Kopp's advice, as the Prima executive chairman is also the managing director of the private equity company.
Kopp said that his Bluscan investors made the decision to exit Prima after day traders had already sent the price soaring.
"My investors have been in the stock for two and a half years," he said.
"We've been extremely patient, and quite frankly when you have a 400 percent increase in two days the investors decided it was an opportune time to exit – we didn't move the stock, we didn't participate in any of the activities, we were not aware of anything material.
"I represent a group of investors, and the markets are very, very nervous about everything – they are liquidating not just this position but many other small holdings and they decided it was opportune to exit within what was an incredibly rising and rapidly rising market. Even after we sold, the market kept going to, I think, 8.7c – my average is way, way below that."
Prima shares have been languishing since the announcement of the Phase 2a results in March, trading in a steady decline from late March, when the shares hit 6.4c. Until Tuesday Prima shares were trading at around 1.5c.
The company admitted to being in serious trouble in its 4Q report, saying that it had pared back research and development work to save money, but only had enough cash at hand to continue for a little over two more quarters.
"It is our intention to trade sale the assets," said Kopp.
"We were unable to raise the money required to do the next level of trials – it's a very large exercise, we're talking about $15–20 million required and I suppose the capitalisation and also the difficulty in the regulatory environment for cancer vaccines elsewhere, particularly with Dendrion's situation, was a major factor.
"Unfortunately, I think we were a victim of outside circumstances beyond our control at the time we were trying to raise money. That's very disappointing because we are very passionately committed to the technology, and all of the management and the board believe the technology has tremendous benefits for patients, but obviously needed further validation and trials.
"Significant further funding is required and we felt that the company has exhausted the funding route options so we need to consider trade sale options. The best way to deliver value to shareholders is probably to sell the assets independently – or jointly, if anyone wants to buy them jointly – and mostly likely distribute the assets back to shareholders either as shares or cash," he said.
Since this story was published, Prima Biomed has issued a clarification to the trading in its shares by Bluscan and Eugene Kopp. Please see BTN's follow up story for details
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