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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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November 21, 2008

The Back Door to the Stock Market

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Posted by Derek

Nitromed has been in trouble for several years now. They're a perfect example of a dog that caught a car: a company that was demolished by actually getting its drug on the market. No one wanted to pay for it, though, and after all that expense the company was left worse off than before.

Their remnants, though, are still listed on the NASDAQ, and that's more than a lot of more promising companies can say. One of those is Archemix, a company that I see every day on my way to work in Cambridge. They're working on aptamer-based therapies, and are at the stage in their life where (under normal conditions) they'd be thinking about an IPO. Well, they were thinking about that, but. . .these aren't exactly normal conditions, and the company recently announced that it was shelving that plan for now.

Enter Nitromed! The two companies have now announced a merger (a 70:30 stock split) which will keep the Archemix name and be listed on the stock exchange like Nitromed. Just add water, and you have an IPO, albeit with some dilution compared to the traditional way. Interestingly, the CEO of Nitromed will be the CEO of the new company, which I gather is coming as a bit of a surprise to the folks in the trenches at Archemix, as you might imagine.

But good luck to them all - in this environment, we all need it. Aptamers are an interesting and risky business, but not as risky as developing cardiovascular drugs that no one wants. . .

Comments (8) + TrackBacks (0) | Category: Business and Markets


1. daen on November 21, 2008 12:58 PM writes...

Interesting ... I can see there are close links to SomaLogic - Archemix are using SELEX, and Larry Gold is on the Archemix SAB (he was also on the SAB of a small biotech I used to work for).

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2. Chrispy on November 21, 2008 3:10 PM writes...

Researchers at little biotechs beware: the same fate awaits success or failure. If you succeed then research will be laid off to hire marketers or you will be bought. If you fail you will get bought for less. But unless you are at the top of the pile, with a lot of ownership, you will almost certainly fail to profit much from either of these endpoints. The only exceptions I know of are when a small company is acquired and all of a sudden the laughable "director" title someone had in the old company becomes a respectable position in the new one.

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3. cellbaby on November 21, 2008 4:28 PM writes...

Perhaps the more important thing for Archemix was Nitromed's $60M still in its coffers. How else could this company raise that kind of money? Nitromed is a sorry case of too long to get too little and a lot of hype in between. There is also a moral here, make sure your first product is worth it! The other moral to all those "clinical stage" biotechs is that no matter how hard it seems, they are in their technology honey moon period. Once you're on the market, it is a different game, some good and some bad. All the more reason to always shoot for the best. Low hanging fruit usually falls to the ground and rots.

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4. KwadGuy on November 21, 2008 4:56 PM writes...

All I can say is that I'm glad that I exercised a bunch of options in my company (Vertex) back during the dot-bomb bubble. I only wish I'd sold them all when I could. I remember the day I came into work and realized that our market cap that day was greater than that of Xerox!

Those were the days...ha ha ha...

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5. C on November 21, 2008 5:30 PM writes...

Funny - EPIX Medical and Predix Pharmaceuticals ran something similar in 2006. Predix was a promising therapeutics company with multiple compounds in trials and was fresh off not-going-public-due-to-market-conditions in 2005. EPIX was a public company fresh off a layoff in '05 and still dealing with an imaging agent approved ex-US. They were working on issues to be resolved with the FDA to gain US approval. Long story short, Predix was acquired by EPIX and the combined company was far more a continuation of Predix than EPIX. Since the combined company hasn't done that well and is now facing delisting. Hope Archemix fares better...

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6. Jose on November 21, 2008 5:36 PM writes...

How many biotech now have a market cap bigger than GM? OK, not funny, but funny all the same.

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7. Cloud on November 21, 2008 6:41 PM writes...

@Chrispy- any biotech researcher who has been around for even a little while knows that corporate success does not equal individual success. I don't stay in biotech because I expect my company to make me fabulously rich. If that happens, it would be a nice surprise, sort of like winning the lottery. I stay in biotech because the work is fun and I like the team atmosphere. Also, they pay me a nice salary, some of which I set aside to cover me when the inevitable layoffs come.

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8. Porkpiehat on November 24, 2008 7:29 AM writes...

Yes, there is some degree of precedent for this type of entry into the public markets in the biotech sector. Recent examples: Epix/Predix is one, and DPI/Infi is another. And there are a few more out there. The Nitromed deal looks like it was the best option out there for Archemix ($60M is pretty good considering the times).

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