Pharmacyclics: A Biotech Meltdown

By Douglas A. McIntyre Published Feb 21, 8:25AM EST

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Pharmacyclics, Inc. (PCYC-NASDAQ) is trading down over 40% pre-market after receiving a ‘refuse to file’ letter from the FDA for its new drug application for Xcytrin® Injection for the treatment of non-small cell lung cancer patients with brain metastases. FDA stated that the company’s application is not sufficiently complete to permit a substantive review based on clinical studies that failed to demonstrate statistically significant differences between treatment arms in the primary endpoints.

Richard Miller, CEO: "We will be evaluating our options with Xcytrin for the brain metastases indication and determine the best path forward. Beyond this indication, the clinical development program with Xcytrin continues on multiple fronts. Several ongoing trials are evaluating Xcytrin in non-small cell lung cancer and other cancers. We are also moving forward with several other novel compounds, which are in clinical and preclinical development."

PCYC is one of these biotech zombies that has no products on the market and no revenues. As of last quarter it had $50.3 million in cash and short-term securities and had only $2.77 million in total liabilities. The market cap was $130 million before this pre-market beheading, but unfortunately this was the company’s lead candidate that had completed Phase III trials. So they are going to be trading much closer to their net cash levels based on this.

Shares are down 41% at $2.97 pre-market on more than the average daily volume. The 52-week trading range was $3.48 to $6.29. Back before 2002 this was a $20.00 and higher stock. The good rule of thumb is to not blow phase 3 trials on your lead candidate.

Jon C. Ogg
February 21, 2007

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.