Top Biotechs With Upside Ahead of Earnings (GILD, AMLN, ARIA, INCY, JAZZ, DNDN, HGSI, ILMN, AMGN, CELG, BIIB, BMRN, LIFE, REGN, AMLN, CBST, ONXX, THRX, VPHM)

October 19, 2011 · Filed Under analyst calls, Cancer, dendreon, Financial, M&A, R&D · 6 Comments 

Earnings season is afoot and we wanted to see how the analysts are ranking the top biotech stocks before these companies begin their earnings reports.  We pulled the top biotech and biohealth related stocks which have market caps of $1 billion and higher and we broke these out into three separate groups by size.  The large-cap biotechs are ranked in descending order by size.  The stocks under $10 billion in market cap and then under $3 billion were broken out in alphabetical order. 

We have compiled some color on selected names, but we also listed the current trading prices, the implied price targets from Thomson Reuters, gave multiples of earnings estimates (from Thomson Reuters) for the forward year (2012 in most cases), showed the trading history and listed a price-to-book ratio.  We did not take any merger news into consideration so that we could just show an as-is model here.

Of the large cap stocks in biotech, Gilead Sciences, Inc. (NASDAQ: GILD)  was the leader.  Several other standouts in the biotechs under $10 billion with a high degree of expected upside were as follows: Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA), Incyte Corporation (NASDAQ: INCY), and Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ).  Other biotechs such as Dendreon Corporation (NASDAQ: DNDN), Human Genome Sciences, Inc. (NASDAQ: HGSI) , and Illumina, Inc. (NASDAQ: ILMN) also screen out as those with the most upside, but that is because of huge share price drops of late.

THE $10 BILLION AND OVER IN MARKET CAP

Amgen Inc. (NASDAQ: AMGN) is the largest of the independent biotechs and it remains stuck like Chuck.  At $56.71, the consensus target is $64.85 and the stock trades at a mere 10-times 2012 earnings estimates.  Its 52-week range is $47.66 to $61.53 and its market cap is north of $52 billion.  It is also worth about 2-times book value.  Implied Upside: 14.3%.

Gilead Sciences, Inc. (NASDAQ: GILD) trades around $40.37 and estimates have a consensus price target of $47.96.  This forward earnings multiple is only about 9.0 now.  The 52-week range is $35.28 to $43.49, the market cap is $31.1 billion and the company trades at more than 5-times book value.  Implied Upside: 18.5%.

Celgene Corporation (NASDAQ: CELG) trades at $64.97 and the consensus price target is about $71.86.  This one is more expensive than many of the established biotech players at more than 15-times forward earnings.  Celgene’s 52-week range is $48.92 to $67.01, its market cap is $29.8 billion, and it trades at nearly 5-times book value.  Implied Upside: 9.8%.

Biogen Idec Inc. (NASDAQ: BIIB) remains the big-cap recovery stock of biotech.  At $102.00, its consensus price target is $110.36, and it trades at close to 16-times forward earnings.  The market cap is about $24.7 billion, the 52-week range is $57.58 to $109.63, and the company is worth about 4-times book value. Implied Upside: 8.5%.

UNDER $10 BILLION IN MARKET CAP

BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) trades at $33.05 and analysts have a consensus price target of $36.25. Unfortunately, this one is expected to lose money this year at -$0.31 EPS and next year’s earnings are expected to be -$0.04.  The 52-week range is $21.70 to $34.50, its market cap is $3.7 billion, and it is listed as trading at close to 5.0-times book value. Implied Upside: 9.6%.

Illumina, Inc. (NASDAQ: ILMN) trades around $26.56 and the consensus price target is about $42.90.  The company trades at more than 18-times next year’s earnings estimates, its 52-week range is $25.57 to $79.40, its market cap is about $3.3 billion, and it trades at almost 2.9-times its book value.  Implied Upside: 62%.

Life Technologies Corporation (NASDAQ: LIFE) may be difficult to compare after a huge run higher followed by a recent tank in the share price. It is also on the equipment side. Shares are back down around $37.24 and the consensus analyst price target is now down to $52.66.  The company now trades at barely 9-times forward earnings, if you trust the “E” in that P/E ratio.  LIfe’s 52-week trading range is $35.30 to $57.25, its market cap is about $6.7 billion, and the stock is worth about 1.5-times the stated book value. Implied Upside: 41%.

Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) trades around $60.00 after a large drop due to a $400 million convertible note offering.  The consensus price target is about $66.14.  The company is also expected to lose as much as $2.00 per share in 2012.  It has a 52-week trading range of $24.29 to $79.90, its market cap is $5.5 billion, and it trades at more than 12-times its previously stated book value.  Implied Upside: 10.1%.

UNDER $3 BILLION IN MARKET CAP

Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) trades around $10.14 and the consensus price target from analysts is $13.44.  The 52-week trading range is $8.03 to $21.23, its market cap is about $1.5 billion, and it is worth about 4.6-times book value. Implied Upside: 32.5%.

ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) trades around $10.25 and the consensus price target is $15.44.  The company is expected to have losses this year and next.  Its 52-week trading range is $3.51 to $13.50, its market cap is $1.35 billion, and the book value at the last report was barely positive.  Implied Upside: 50%.

Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) was another big winner earlier in the year and its shares are now at $36.71 versus a consensus price target of $40.82.  This used to be a value stock but now trades at closer to 22-times next year’s earnings estimates.  The 52-week range is $20.81 to $39.29, the market cap is $2.24 billion, and it trades at just over 3-times book value.  We once considered this a biotech buyout target, but that is in the past. Implied Upside: 11%.

Dendreon Corporation (NASDAQ: DNDN) shares are now around $9.40 and the consensus analyst target has come down all the way to $13.72.  The company has no forward P/E ratio now as it is expected to lose money.  The 52-week range is $7.81 to $43.96, its market cap is down to $1.4 billion, and it is listed as being worth more than 3-times its own stated book value.  Implied Upside: 45%.  Shares have fallen far from grace, so analyst targets and the ratios may all look a bit off.  We also cannot count on estimates since the analysts and the company got this one so wrong on the end demand for Provenge.  Now we have to hope that Provenge can have many more expanded uses outside of prostate cancer or this is a hard one to follow.  What is odd is that Provenge is being tested for other uses and those could reignite interest if more promising data ever comes out.  If not, let’s just say this was a painful lesson in biotech.

Human Genome Sciences, Inc. (NASDAQ: HGSI) is now up around $12.81 after buyout rumors and the consensus target is still listed as being roughly $24.00.  The company trades at about 24-times next year’s earnings estimates, its 52-week range is $10.40 to $30.15, its market cap is now under $2.5 billion, and it is worth about 5.3-times its book value. Implied Upside: 87%.

Incyte Corporation (NASDAQ: INCY) trades around $14.04 and anlaysts have a consensus price target of $22.92 on the stock.  It is expected to lose money this year and next year and the 52-week range is $12.58 to $21.15. While there is a $1.77 billion market cap, Incyte’s is listed as having a negative book value as laibilities exceed assets.  Implied Upside: 63%.

Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) trades around $40.00 after a sharp drop due to an FDA warning.  That may make the figures a bit distorted.  The consensus price target is $54.00 but that does not include the FDA impact.  Jazz trades at only about 10.6-times next year’s earnings estimates. Its 52-week range is $10.51 to $47.88, its market cap is almost $1.7 billion, and the company trades at close to 16-times an implied book value. Implied Upside: 35%.

ONYX Pharmaceuticals, Inc. (NASDAQ: ONXX) trades at close to $34.50 and the consensus target is closer to $44.60.  It is one which is also expected to lose money this year and next year.  The 52-week trading range is $26.17 to $45.90, its market cap is $2.2 billion, and the stock trades at close to 3.5-times its book value. Implied Upside: 29.2%.

Seattle Genetics, Inc. (NASDAQ: SGEN) trades around $20.50, above the $19.15 consensus analyst price target.  The company is expected to lose money in 2011 and 2012. With a 52-week range of $12.29 to $22.37, its market cap is $2.35 billion, and it trades at close to 9-times book value.  Implied Upside: NEGATIVE by -6.5%.

Theravance, Inc. (NASDAQ: THRX) trades around $21.40 and analysts have a price target of $27.43 for the stock.  The company is another one expected to lose money this year and next.  The 52-week range is $16.44 to $28.95, the market cap is $1.8 billion, and it is another one that trades with a negative tangible asset level.  Implied Upside: 28%.

ViroPharma Incorporated (NASDAQ: VPHM) trades around $19.00 and the consensus price target is $23.54. Due to an expected drop in royalties, its earnings are expected to be halved in 2012 versus 2011.  Its 52-week range is $14.39 to $22.16, its market cap is about $1.45 billion, and it trades at about 1.5-times its stated book value with a large portion of assets as intangible assets.  How this one looks on a standalone basis through time is a guess.  Implied Upside: 24%.
*******

On all of these implied upsides, please be sure to do your own research.  We encourage our readers to challenge Wall Street analysts rather than merely following them blindly.  Many cases have been there before were the analysts were just dead wrong.  We also cannot help but notice how the biotech sector often has two very same observations based upon the exact same set of data, yet one analyst will say “Buy” and the other will say “Sell.”

JON C. OGG

Beyond the Dendreon Implosion… What To Look For Next (DNDN)

August 4, 2011 · Filed Under analyst calls, Cancer, dendreon, fda, Financial, M&A · Comment 

This morning we gave a full preliminary analysis of the implosion happening at Dendreon Corporation (NASDAQ: DNDN) at 24/7 Wall St.  What is obvious as a heart attack, or as obvious as metastatic prostate cancer, is that the market is bracing for far worse news than what has been seen so far.  The price drop after withdrawal of guidance and the cost cutting only happens this far when another shoe is expected to fall.

We have seen many analysts come in on this today, mostly calls which are blow-ups.  To say that Dendreon caught most of the market off balance would be a severe understatement. We also believed that this was going to become the standard for final-stage prostate cancer care.

Here is what Wall Street analysts are making calls on today:

  • Raised to Neutral at Credit Suisse, but the target was cut to $22.00 from $29.00 as they were actually very negative ahead of the blow-up here.
  • Robert W. Baird downgraded Cut to Neutral from Buy and the new target is $20.00.
  • Collins Stewart cut the rating to Neutral from Buy and the new target is $19.00.
  • RBC Capital Markets cut the rating to Sector Perform from Outperform and took the target down to $15.00 from $50.00.
  • Needham cut the rating to Hold from Buy.
  • Cowen & Co. cut its rating to Neutral from Outperform.
  • Gleacher & Co. cut the rating to Neutral from Buy.
  • Canaccord Genuity lowered the price target 70% to $19.00 from $65.00 on “significantly diminished expectations for Provenge commercial penetration” but the company maintained a ‘Buy’ rating.
  • Bank of America Merrill Lynch cut the rating to Underperform from Buy and cut the target to $16.00 from $50.00 previously.
  • Brean Murray lowered the rating to Sell from Buy and issued a dismal $6.00 target.  Ouch!

After only 40 minutes of trading (plus pre-market trading), Dendreon shares are down a whopping 64% at $12.92 and shares hit a new low of $12.48 this morning.  We are now at ten-times volume on Dendreon as more than 24 million shares have already traded hands.

Again, withdrawing guidance and cutting the costs with employees and more is one thing, even if it is a really bad thing.  What the market is telling you is that more negative news is going to put a lid on this one in the near future.  Otherwise, Dendreon would be down ‘only’ 25% or so.

Many considered this to be a buyout candidate.  That will not be met by much enthusiasm today as investors worry about worse news yet to come.

As far as what to expect next, lawsuits are the first thing to expect.  Shareholders can accuse the company of over-inflating expectations.  Medicare and Medicaid pricing might be an issue, or maybe more doctor reports of considering alternative treatments will come.  Picking the next shoe to drop is difficult, but a drop of this magnitude is rarely a one-time event.  Most people got this one very wrong.

JON C. OGG

Medicare Coverage Capitulation, A Win For Dendreon & Provenge (DNDN)

July 1, 2011 · Filed Under Cancer, dendreon, fda, Medicare · 2 Comments 

Dendreon Corporation (NASDAQ: DNDN) is indicated higher this morning on news that came out last night.  The company announced support for broad availability for on-label use of Provenge for asymptomatic or minimally symptomatic metastatic castrate resistant prostate cancer.  The FDA also this week approved Dendreon’s Los Angeles immunotherapy manufacturing facility with 36 workstations.  The big win is Medicare coverage.

Dendreon reported that the Centers for Medicare and Medicaid Services issued a final coverage decision for PROVENGE that will require Medicare contractors to cover the use of PROVENGE for treatment of asymptomatic or minimally symptomatic metastatic castrate resistant prostate cancer. The coverage decision will standardize coverage processes across the country for all Medicare patients in need of the drug.

The move provides local Medicare Administrative Contractors the specific criteria, which is said to be “consistent with the label,” on how PROVENGE should be covered. PROVENGE was also issued a product specific Q-code effective July 1, 2011.

Dendreon will also support programs to provide comprehensive assistance for eligible patients seeking access to treatment with PROVENGE.  This will include grants to independent foundations and establishment of a patient assistance program for uninsured patients.

PROVENGE was approved by the FDA in April 2010, but what had been under attack was the $93.000 price tag for the treatment.  Many felt that was too high.  We do not have a formal “sale price” per treatment yet under Medicare coverage that will be paid to Dendreon but this is being treated as a win for PROVENGE and a win for Dendreon.

Dendreon shares closed at $39.44 on Thursday and the 52-week trading range is $25.78 to $43.96.  Volume is thin so far with more than two hours until the market opens but shares are indicated up around $41.00 in pre-market trading.

In early May came a report that Dendreon was given an “Underperform” rating by Credit Suisse; late in May came a “Buy” rating from ISI Group.  Goldman Sachs also initiated coverage with a “Buy” rating in early June.

JON C. OGG

The Other Side of the Coin: Big Caution in Dendreon (DNDN, JNJ)

May 27, 2011 · Filed Under analyst calls, Cancer, dendreon · Comment 

Dendreon Corporation (NASDAQ: DNDN) is one we have been very positive about before the FDA approval of Provenge for metastatic prostate cancer.  We often like to feature both sides of the coin, and the other side of the coin is one of caution from Credit Suisse this week.  If this research call is right, shareholders could face some competitive pressure in shares of Dendreon.

Credit Suisse has been very cautious when it comes to Dendreon Corporation (NASDAQ: DNDN).  The firm noted that an editorial in this week’s New England Journal of Medicine was published based upon Johnson & Johnson (NYSE: JNJ) and its abiraterone post-chemotherapy trial results.  What made the concern is the focus on results which validate abiraterone’s action. 

Some may consider one article not a strong enough basis for this week’s caution.  Credit Suisse believes that the results can imply off-label pre-chemotherapy use as a competing agent against Provenge from Dendreon.  Another bit was the combination data of abiraterone and other agents as lacking, but the firm believes that its concerns about abiraterone as a competitor are currently under-appreciated.

The belief is that these trial results show that abiraterone might possibly be used in all patients with metastatic castration-resistant prostate cancer.  This is a longer-term concern rather than near-term, but and the firm is not assuming either “a pre-chemo approval in 2011 or significant off-label use ahead of an approval.”  Still, it does seem to enhance compeitive risks to Provenge.

The article from the NEJM suggests that this could impact both how new drugs are developed and used.  There is also a concern that a lack of combination data could eventually impact how Provenge is used in combination with other therapies.

Credit Suisse’s official rating Underperform with a discounted cash flow model price target obkective of $29.00 per share.  The firm is much more cautious on the risks here than most Wall Street analysts based upon competitive threats and based upon lower E.U. pricing and penetration.

Credit Suisse has modelled $0.59 EPS for 2012 on about $877.2 million in revenues and it sees 2013 estimates of $1.68 EPS and $1.162 billion in sales.

Sadly, this call is one that is very expensive to hedge against.  The call is long-term rather than short-term, so we looked at longer-dated LEAPS in options.  Going all the way out to the JAN-2013 $35 PUTS is almost at $6.50 per contract, implying that a sub-$29 share price is the breakeven point on your contract. 

Reuters noted that of the analysts following Dendreon, the ratings were as follows:

  • BUY- 11
  • OUTPERFORM- 6
  • HOLD- 5
  • UNDERPERFORM- 1
  • SELL- 1

Thomson Reuters has a consensus price target objective of $49.72 and Dendreon shares are currently trading around $42.25 with a 52-week range of $25.78 to $44.85.

AFTERTHOUGHT…… I have already been receiving some emails that need to be considered regarding abiraterone’s side-effects.  These were not really covered in the report summary and they are very important to consider.  I also kept the comments mostly to what this report was simply because it was one of the only standout research calls from the rest of the pack. 

JON C. OGG

Ahead of Earnings: Analysts Fight Over Dendreon (DNDN)

May 2, 2011 · Filed Under analyst calls, Cancer, dendreon · 2 Comments 

Dendreon Corporation (NASDAQ: DNDN) was just highlighted on Saturday morning as being on of the top analyst calls of the week because ThinkEquity had initiated coverage of Dendreon with a “Buy” rating at the firm with a price target objective of $50.00 per share.

This Monday came a new analyst call from Credit Suisse that is almost the exact opposite.  Credit Suisse started coverage with an “Underperform” rating and only a $29.00 price target objective. 

What makes both of these calls so important is that this is ahead of this week’s expected earnings report.  Credit Suisse was cautious on peak-Provenge sales, while ThinkEquity was positive on peak-Provenge sales.
Dendreon earnings are due shortly and remains a story around guidance for late-2011 and into 2012 rather than it is an earnings story for the last quarter. Provenge sales are just getting going and Thomson Reuters has estimates of -$0.70 EPS and $28.86 million in revenues; next quarter estimates are -$0.69 EPS and $58.3 million in revenues.

The Thomson Reuters estimates for 2011 are -$2.24 EPS and $369.7 million in revenues, but the 2012 estimates are $0.30 EPS and about $860.5 million in revenues.

This is one of those instances where research teams basically have access to the same data yet have differing conclusions.  That is what makes a ball game.

Shares closed at $43.43 on Friday and the stock is down 1.2% at $42.90 in pre-market trading this Monday.

JON C. OGG

Analyst Bulls Up on Dendreon (DNDN, AMGN)

February 23, 2011 · Filed Under analyst calls, Cancer, dendreon · Comment 

A bullish research call on Dendreon Corporation (NASDAQ: DNDN) by Gleacher & Co. has so far been unable to prevent some pullbacks along with a broader market that is spooked by international geopolitical events.  Still, the research does lend credence to further upside for Dendreon based on its Provenge.  While not a target in the research call, we would throw out that there is some new indication from Amgen Inc. (NASDAQ: AMGN) in the war against prostate cancer as well.

Gleacher & Co. this morning initiated coverage of Dendreon with a “Buy” rating and assigned a $42.00 price target.  The report from analyst Ying Huang notes, “we are encouraged by the survey results indicating that 40%-50% of castration-resistant prostate cancer (CRPC) patients in the US will be treated with Provenge.”  Furthermore, the call indicates that Provenge will become a blockbuster drug with sales north of the $ 1 billion mark, with a projected peak of roughly $2.2 billion in worldwide sales for Provenge.  This based on no off-label usage as well.

The firm surveyed 47 physicians, 35 urologists and 12 medical oncologists, who collectively treat more than 17,000 patients with metastatic castration-resistant prostate cancer.  The indication is that medical oncologists give higher ratings to the safety and efficacy of Provenge than urologists.  The oncologists projected that the use of Provenge will be in 50% of eligible CRPC patients versus a 39% projection by urologists.

All in all, Huang sees a 30% U.S. market penetration and a 15% E.U. market penetration.  Huang sees FDA approval of a new manufacturing plant and believes that the CMS will ultimately approve the $93,000 cost for the approved label usage but not for off-label usage.

Dendreon shares are currently down 1.2% at $32.17 but the stock was in positive territory this morning above $33.00 per share.  The implied upside from today’s level would be more than 30% to the Gleacher & Co. target price of $42.00 per share.

As a reminder, Dendreon has been called a takeover candidate by some.

JON C. OGG

M&A Bonanza For Drug & Biotech in 2011 (MRK, PFE, ALXN, DNDN, HGSI, CEPH, UTHR, CADX, AMAG, SNY, GENZ, AMGN, BEC, TEVA, SGMO, LLY, ALTH, CBST, VVUS, AUXL, VRTX)

January 29, 2011 · Filed Under Acquisitions, Anemia, Cancer, Cardiac, dendreon, Diabetes, Heart, Infections, M&A, obesity, R&D, Rumor · Comment 

The game of predicting mergers and acquisitions in the biotech and in pharma sectors is not a new one.  The talk heats up, then it dies down.  A deal comes, followed by another deal, and the activity goes quiet.  This next week is likely to have at least more chatter in the biohealth sector for possible mergers and acquisitions after Barron’s gave a cover story called “The New Doctor in the House: Consolidation.”

Barron’s noted that “as big drug firms buy up smaller, specialty outfits and their most innovative products, better pipelines and sales-force efficiency will boost profits.”  Here is the thing to consider: Barron’s did not really offer anything new or ground-breaking this weekend.  It will have rekindled some hope that M&A is coming in the space.  At issue: pipeline fatigue.  A note we’d throw in as well, dead-dead stocks.  We are going to at least address some of the Barron’s roster, but we want to show you many others which are just as or even more likely acquisition targets.  Some of ours have even been in-play before.

Barron’s threw in Merck & Co. (NYSE: MRK) and Pfizer, Inc. (NYSE: PFE) as the largest of the Big Pharma players and it threw out biohealth names with stock-market values below $10 billion:

  • Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) with a $7.5 billion value after a hueg run-up;
  • Dendreon Corporation (NASDAQ: DNDN) for Provenge for prostate cancer (and future cancers) with a $5 billion market value today;
  • Human Genome Sciences, Inc. (NASDAQ: HGSI) for its Benlysta in patients with severe active lupus nephritis and CNS lupus and a $4.5 billion market cap;
  • Cephalon, Inc. (NASDAQ: CEPH) is one we have rarely looked as since things quieted down there;
  • United Therapeutics Corporation (NASDAQ: UTHR) for its treat pulmonary arterial hypertension and an almost-$4 billion value;
  • Cadence Pharmaceuticals Inc. (NASDAQ: CADX) was noted for its pain medication without the addiction aspects of morphine and its value is only $369 million;
  • AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) was called a value stock despite its recent weak sales and despite its cash burn with a $368 million market cap.

Much of the biotech M&A game hinges on Sanofi-Aventis (NYSE: SNY) in its chase to acquire Genzyme Corporation (NASDAQ: GENZ).  The latest talk is that a work-out could come to $80 all-in if certain milestones were achieved but the deal is still south of there officially.  As noted above, we have our own opinions on which biotech companies and drug companies could find their way into the hands of a larger acquirer.

Amgen Inc. (NASDAQ: AMGN) is likely to continue being an acquirer.  The company recently announced a deal worth potentially $1 billion to acquire privately-held BioVex.  Last year the company said it was aggressively looking for new targets and its $52 billion market cap is the largest of all the independent biotechs in America. The company has more tricks up its sleeve.

Beckman Coulter Inc. (NYSE: BEC) went into play in early December with private equity firms being the likely acquirers of the portfolio of biomedical testing equipment and supplies.  We argued at the time of the premium that it seemed shares fully reflected that value, and shares are actually lower now.

And don’t forget Sangamo Biosciences Inc. (NASDAQ: SGMO), where shares rallied in November on rumors of a potential bid interest from Eli Lilly & Co. (NYSE: LLY).  It had good news on ZFP Therapeutic program to develop SB-509, a zinc finger protein transcriptional activator (ZFP-TF) of the vascular endothelial growth factor (VEGF)-A gene as a treatment for ALS and the news flow has continued to propel shares higher.  It went above $4.50 on the rumors but now shares trade at $7.39.  The market cap is still low here at $334 million.

Allos Therapeutics, Inc. (NASDAQ: ALTH) has been another name floated out there for M&A possibilities, but things are looking less and less bright for the company.  Shares hit a 52-week low just on Friday.

Cubist Pharmaceuticals Inc. (NASDAQ: CBST) has not really gone anywhere as it is deemed a mature company, but it is one we thought for sure that would find its way into being part of a larger company.  Its Cubicin is on the market and it fights severe hospital-induced infections and the market cap is $1.3 billion here.

VIVUS Inc. (NASDAQ: VVUS) remains a wild card due to the FDA.  Diet and weight-loss pills have not been given any real love by the FDA.  The exception here is that Qnexa does have serious benefits.  There are side effects, particularly in cases of pregnancy.  We would ask this though: How many pregnant and soon-to-be-pregnant women really diet?  Most doctors don’t even want pregnant women taking supplements, let alone drugs.  IF the FDA approves Qnexa, that $680 million market cap may be worth far more.

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA)… We have also noted Teva’s mega-cap ambitions, and making more acquisitions would generally get there.

Last year, Morningstar put out a list of three favorites that it sees as acquisition targets in the biohealth space: Auxilium Pharmaceuticals Inc. (NASDAQ: AUXL), Human Genome Sciences Inc. (NASDAQ: HGSI), and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX).  FULL ARTICLE

This should at least give you a better and more concise list of possible deals and deal-makers for 2011.  Just remember this, regardless of what Barron’s or other media outlets try to tell you: not all biotechs have to be acquired, not at all.

JON C. OGG

Amgen Scores Indication in Prostate Cancer (AMGN, DNDN)

December 14, 2010 · Filed Under Cancer, dendreon · Comment 

Amgen Inc. (NASDAQ: AMGN) is running higher after reporting on Monday evening that denosumab did delay the spread of prostate cancer to bones.  The study opens up the possibility for another blockbuster revenue stream for the drug and then some with annual sales possibilities of more than $1 billion.

Denosumab delayed the spread of prostate cancer by 4.2 months on average over the placebo group.  The study did not find a survival benefit.  The drug targets a RANK protein discovered by Amgen more than a decade ago, which works to break down old bone cells and replace them with new cells.

Amgen said it plans to review the study data and will then meet with regulators before deciding whether or not to seek approval for a prostate cancer indication.

The men in this last study were considered high risk for malignancies that could spread to bones with high PSA levels.

Amgen shares are up over 5% at $57.00 in early pre-market indications versus a 52-week trading range of $50.26 to $61.26.

Dendreon Corporation has PROVENGE for prostate cancer, although these are different agents.  It appeared that Dendreon was trading higher but that was a perhaps a bad print in the pre-market no-man’s land trading.

JON C. OGG

BofA Analyst Rallies Behind Dendreon (DNDN)

December 1, 2010 · Filed Under analyst calls, Cancer, dendreon · Comment 

Dendreon Corporation (NASDAQ: DNDN) is seeing shares gain this morning on news that Bank of America/Merrill Lynch initiated research coverage with a BUY rating and a $44 price target objective.   The buy rating was initiated with the belief that its PROVENGE will see significant market penetration after its manufacturing capacity expansion in 2011.  BofA called PROVENGE a first-in-class product and a product that will drive a biotechnology business model with unique manufacturing challenges.  Also noted was a high barrier to competitive entry.

BofA/ML research noted, “We believe DNDN shares trade at a discount to future cash flow potential as the overhang of execution into a big launch year looms. While 2011 is not risk-free, we are encouraged by strong demand metrics, and believe these signals foreshadow a strong 2012.”

The price objective is based on a probable adjusted discounted cash flow that includes the assumption of $300 million in convertible debt financing in early 2011.  More important than the $44 target stated: “…as the company transitions to cash flow positive in 2012, upside beyond our PO is likely based on peer comparable multiples.”

Other data points show growth as well.  European expansion plans represent a key catalyst according to the research report.  The firm further noted that the current risks and investor skepticism are creating a buying opportunity as investors gain increased confidence in these risks and skeptic items.

BofA/ML is expecting global peak sales of $2+ billion based on a successful manufacturing expansion, clarity on an EU filing strategy, and successful resolution of CMS reimbursement.  the firm expects free cash flow of $263 in 2012 on sales of $878 million generating adjusted net income of $282 million.

Dendreon shares are indicated up more than 2% at $36.30 and the 52-week trading range is $25.05 to $57.67.  The current market cap is about $5.2 billion.

JON C. OGG

Dendreon One Step Closer to Provenge Approval Expansion (DNDN)

November 18, 2010 · Filed Under Cancer, dendreon, Medicare · Comment 

Dendreon Corporation (NASDAQ: DNDN)  is seeing a surge this morning after its PROVENGE for prostate cancer received a positive vote from a Medicare coverage advisory panel late on Wednesday.  This had been a key hurdle, although the price has always been the issue even if the ‘efficacy’ issue was brought up.

The news suggests that Medicare will pay more than $90,000 per patient for the treatment, and it is no secret that prostate cancer usually hits those who are already under Medicare.

This is one more step rather than an ultimate and final conclusion.  This does seem to be an added win, as you would notice in teh share rally this morning.

We are expecting a final ruling from Medicare late in the first quarter of 2011.  We also expect that coverage will be granted in at least a “most of the way” form, although the delays have been so steady here that we are not hanging our hat on any final-final decision date.

Provenge was finally approved for late-stage prostate cancer earlier in 2010.  The company’s production guidance has been a drag on the company and it has more capacity via more manufacturing space being constructed that will be available late next year.

Dendreon shares are trading higher at the open this morning.  What else would you expect?  Shares are at $39.00 for an 8.7% gain right after the open.

JON C.OGG

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