Stock Preacher

Metabasis Therepeutics Inc. (NASDAQ: MBRX)(D*)

* Financial status indicator is deficient: Issuer failed to meet NASDAQ continued listing requirements

Metabasis Therapeutics Inc. (MBRX) is a biopharmaceutical company focused on the discovery development of drugs. The Company’s product pipeline includes product candidates and advanced discovery programs for the treatment of metabolic diseases such as diabetes and hyperlipidemia, which it refer to as its core assets, as well as product candidates and advanced discovery programs for the treatment of liver diseases such as hepatitis and primary liver cancer, which it refer to as its non-core assets. All of the Company’s product candidates were developed internally using its HepDirect technology.

The Company’s product candidates under development comprise MB07811, which is in phase II clinical trials for the treatment of hyperlipidemia; and MB07803, which is in phase II clinical trials for the treatment of type 2 diabetes. Its metabolic disease advanced discovery programs consist of AMPK, a metabolic disease program focusing on the development of drug candidates for the treatment of type 2 diabetes and other metabolic diseases; Glucagon Antagonist, a program focusing on identifying orally bioavailable glucagon antagonists for the treatment of type 2 diabetes; and TRß agonist, a second-generation program to identify drug candidates for the treatment of hyperlipidemia. It has collaborative research and development agreements with Roche; Merck & Co.; Idenix Pharmaceuticals Inc.; Daiichi Sankyo Company Ltd.; Valeant Pharmaceuticals International; and Schering Corporation.

The Company was founded in 1997 and is based in La Jolla, California.

Source: http://www.reuters.com/finance/stocks/overview?symbol=MBRX.W , http://phx.corporate-ir.net/phoenix.zhtml?c=176272&p=irol-irHome , https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=MBRX

Financial Summary

Revenues were $9.7 million for the three months ended June 30, 2009, compared with $0.7 million for the three months ended June 30, 2008. The $9.0 million increase was mainly due to a $6.0 million one-time, non-refundable payment received from Merck in settlement of all potential future amounts payable by Merck in the form of milestone or royalty payments under the Company’s AMPK collaboration agreement. The remaining $3.0 million increase primarily relates to license and research revenues of $3.3 million from its HCV collaboration with Roche entered into in August 2008, offset by a decrease of $0.3 million in license and research revenues from MBRX’s AMPK collaboration with Merck as the research period naturally ended in the second quarter of 2009.

Research and development expenses were $3.4 million for the three months ended June 30, 2009, compared with $9.7 million for the three months ended June 30, 2008. The $6.3 million decrease was mainly due to a decrease of $3.8 million in payroll and related benefits as a result of lower headcount, a decrease of $1.5 million in clinical, pre-clinical and development expenses for the MB07811, MB07803 MB07133 and other research programs and a decrease of $0.5 million in non-cash stock-based compensation. In connection with the restructuring in May 2009, all research and development activities were discontinued. As a result, all facilities and other formerly allocated overhead costs subsequently became fully absorbed by the general and administrative function resulting in a decrease of $0.7 million in depreciation and occupancy costs. These decreases were partially offset by a $0.4 million in restructuring costs and costs associated with the disposal and/or discontinued use of various long-lived assets. MBRX does not expect to incur any additional research and development costs in the near-term.

General and administrative expenses were $2.9 million for the three months ended June 30, 2009, compared with $2.6 million for the three months ended June 30, 2008. In connection with the restructuring in May 2009, all research and development activities were discontinued. As a result, all facilities and other formerly allocated overhead costs subsequently became fully absorbed by the general and administrative function resulting in an approximate $0.7 million increase in costs reflected in general and administrative expenses. In addition, the The The Company incurred $0.2 million in severance related restructuring costs and impairment charges for the second quarter of 2009. These increases were offset by a decrease of $0.5 million in payroll and related benefits and professional services.

As of June 30, 2009, MBRX had $6.6 million in cash and cash equivalents as compared to cash, cash equivalents and securities available-for-sale of $21.6 million as of December 31, 2008, a decrease of $15.0 million. The decrease is primarily a result of net cash used in operations of $6.4 million and $8.6 million of aggregate payments made during the first half of 2009 and in final settlement of our debt facilities.

Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176272&p=irol-sec

Analyst Consensus

This is the consensus forecast amongst 1 polled investment analyst against the Metabasis Therapeutics Inc. company.

On August 6, 2009, MBRX reported second quarter 2009 earnings of 0.09 per share. This result exceeded the -0.12 consensus loss of the one analyst covering the company and under-performed last year’s second-quarter results by 0.43. The next earnings announcement is expected on November 09, 2009.

Source: Financial Times.com

Source: http://www.reuters.com/finance/stocks/estimates?symbol=MBRX.W

Investment Highlights

MBRX recently announced it has entered into a definitive merger agreement under which Ligand will acquire all of the outstanding shares of MBRX. Under the transaction, MBRX stockholders will receive a cash payment at the closing of the transaction of approximately $3.2 million, less MBRX’s estimated net liabilities at closing and an amount to be deposited in the stockholders’ representative’s fund (Metabasis currently estimates the closing payment to be approximately $1.8 million in cash). In addition, MBRX stockholders will receive for each MBRX share four tradable Contingent Value Rights (CVRs) that will be registered on a Form S-4 registration statement to be filed by Ligand with the Securities and Exchange Commission.

The CVRs will entitle MBRX stockholders to cash payments as frequently as every six months as cash is received by Ligand from proceeds from the sale or partnering of any of the MBRX drug development programs, among other triggering events. Ligand has committed to spend at least $8 million in new research and development funding on the MBRX programs within 42 months following the closing of the transaction. The Ligand and MBRX boards of directors have unanimously voted in favor of the transaction. Stockholders of MBRX representing approximately 29% of the outstanding shares of MBRX have signed voting agreements in support of the transaction. Merriman Curhan Ford acted as financial advisor to MBRX with respect to this transaction.

MBRX announced on September 18, 2009, that on September 15, 2009, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market, notifying the Company that based upon the closing bid price of its common stock for the last 30 consecutive business days, the Company did not maintain a minimum closing bid price of $1.00 per share or more that is required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has a grace period of 180 calendar days, or until March 15, 2010, in which to regain compliance. If at any time during this grace period the closing bid price of the Company’s common stock is $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide the Company with written confirmation of regained compliance.

Source: Scottrade.com, Reuters.com

Technical Analysis

Source: www.stockcharts.com

Moving Average Price Compare

Yesterday, MBRX closed below its 50-day moving average. This is generally considered to be an indication of a bearish trend.

Bollinger Bands

MBRX’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, MBRX is trading near its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.

MACD

MBRX’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9-day moving average or signal line. This suggests that positive momentum has begun to slow.

Comparative Analysis

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

Report Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

Popularity: unranked [?]