from CEOcast newsletter
Sunday, September 15 2002
VOLUME XXXXVIII
Genstar Therapeutics (AMEX: GNT), an early-stage biopharmaceutical company that has been developing innovative gene therapy products for the treatment of serious medical disorders, took a giant step forward on Friday to little fanfare. The company announced that it would merge with Vascular Genetics, a privately-held concern, that has a later stage Gene-Based Cardiovascular Drug called VEGF-2. The merger dramatically transforms GNT. Although the company expects to change its name to Autus Genetics Corp., the real story is that it now moves from an early-stage company with just one drug in Phase I clinical trials, to a much later-stage entity, with a promising cardiovascular drug that has already completed a Phase I/II study.
The transformation of the company is dramatic. Formerly, the company had just one-early stage product, Factor VIII Therapy for the treatment of Hemophilia A, and $10.4 million in cash. We thought that it was likely that the company would be unable to raise additional funding, as its clinical program was not far enough alone to attract investors in the current biotech environment. Now, the company has a late-stage opportunity and is likely to raise additional capital, especially with Human Genome Sciences, Inc. (NASDAQ: HGSI) as a 15% shareholder through its previous ownership stake in Vascular Genetics. The company now has a valuation of approximately $28 million, well below comparably situated companies. We feel that as investors begin to understand the implications of this transaction that the stock will increase to approximately $1.25, valuing it at similar levels to others in the sector. Those investors who act quickly will be able to buy the stock well below this level. The stock was up 24% on Friday to close at $0.73. We initiated coverage of the company at $0.48. |
