Pharma-Biotech Major Research Alerts (TEVA, AMGN, ACOR, CELG, HGSI, BIIB, GILD, EXAS, ZGEN, DYAX, IDXX, VPHM)
Biotech and pharma research calls from Wall Street research firms have come out of the wood work this Thursday.
Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is one of our recent “Defensive Stocks for the Next Bear Market” picks based upon valuation. This morning Oppenheimer raised the rating to OUTPERFORM on hope and expectations that it will see a big boost in the second half from its Effexor sales.
STIFEL NICOLAUS started many key biotech stocks with coverage this morning:
- Amgen Inc. (NASDAQ: AMGN) and Acorda Therapeutics, Inc. (NASDAQ: ACOR) and Celgene Corporation (NASDAQ: CELG) and Human Genome Sciences Inc. (NASDAQ: HGSI) were all started with BUY ratings;
- Biogen Idec Inc. (NASDAQ: BIIB) at SELL;
- Gilead Sciences Inc. (NASDAQ: GILD) at HOLD.
EXACT Sciences Corp. (NASDAQ: EXAS), a molecular diagnostics company focused on the early detection and prevention of colorectal cancer, is soaring by 13% after being started with new coverage as a Buy rating by Jefferies ahead of next week’s presentations at the Rodman & Renshaw 12th Annual Healthcare Conference and at the Baird’s 2010 Health Care Conference.
ZymoGenetics Inc. (NASDAQ: ZGEN) was hit with a cut to Neutral at UBS, but that is because of the Bristol-Myers Squibb buyout.
Dyax Corp. (NASDAQ: DYAX) and IDEXX Laboratories, Inc. (NASDAQ: IDXX) were both started as MARKET PERFORM and ViroPharma Inc. (NASDAQ: VPHM) as OUTPERFORM at Leerink Swann.
JON C. OGG
Adventrx Pharmaceuticals, Inc. (AMEX: ANX) no longer has to answer to Carl Icahn. The 13-F filings from Icahn Enterprise hit today and the roughly 4.3 million shares held as of March 31 is not listed in the June 30, 2010 portfolio holdings.
Icahn’s holdings of 3.2+ million shares of Biogen idec Inc. (NASDAQ: BIIB), 704,214 shares of Enzon Pharmaceuticals Inc. (NASDAQ: ENZN) and 2.62 million shares of Genzyme Corp. (NASDAQ: GENZ) appear to be the same as before.
Adventrx Pharmaceuticals’ stock is trading up 1.6% at $1.87 versus a 52-week trading range of $1.50 to $13.00. This trading range is of course on a post-split adjustment basis after its 1-for-25 reverse stock split went into effect in April. It seems that Mr. Icahn is no fan of reverse splits either.
JON C. OGG
Deutsche Bank is looking positive on a couple of the larger biotech names this morning after the firm initiated analyst research coverage. Unfortunately, the bulk of the big biotech shops have HOLD ratings and very unenthusiastic price targets. Whatever the new normal is, it is not looking stellar for the largest biotech names out there.
Amgen Inc. (NASDAQ: AMGN) Started as HOLD with a $57 price target.
Biogen Idec Inc. (NASDAQ: BIIB) Started as HOLD with a $57 price target.
Celgene Corporation (NASDAQ: CELG) Started as HOLD with a $56 price target.
Dendreon Corporation (NASDAQ: DNDN) Started as BUY with a $44 price target.
Genzyme Corporation (NASDAQ: GENZ) Started as HOLD with a $72 price target.
Gilead Sciences Inc. (NASDAQ: GILD) Started as BUY with a $42 price target.
JON C. OGG
We have now seen the changes in short selling in biotech stocks via the Mid-March short interest report from NASDAQ. This marks the changes seen at the March 15, 2010 settlement date versus a prior February 26 settlement date. We took a look at Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Gilead Sciences Inc. (NASDAQ: GILD), Celgene Corporation (NASDAQ: CELG), Genzyme Corp. (NASDAQ: GENZ), Geron Corporation (NASDAQ: GERN), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), and Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN). We even included the wild Cell Therapeutics, Inc. (NASDAQ: CTIC) to see what the shorts were betting on there.
There were some rather large changes both up and down. Again, the change reflects the March 15 settlement date versus a prior date of February 26:
Facet Biotech Corporation (NASDAQ: FACT) is a buyout saga that seemed as though it would never end in 2009. The company is now finally being acquired, but not by Biogen Idec (NASDAQ: BIIB). Abbott Laboratories (NYSE: ABT) announced last night that it entered into a definitive agreement for $27.00 per share in a cash buyout. The deal is valued at $722 million, but that includes about $272 million in cash and equivalents.
The net cost will be about $450 million. In late-2009, Facet turned down a second unsolicited offer from Biogen Idec of $17.50 a share after having rejected a lower offer before that.
Facet has discovery and development partnerships with Biogen Idec for MS, and it also has partnerships with PDL BioPharma (NASDAQ: PDLI) and Roche.
Facet shares are up 66% at $26.96 this morning after last night’s deal. Its prior 52-week trading range was $5.86 to $18.35.
JON C. OGG
Facet Biotech Corporation (NASDAQ: FACT) is outright rejecting the buyout offer from Biogen Idec Inc. (NASDAQ: BIIB). The company issued a press release stating that the stockholders rejected Biogen Idec’s unsolicited tender offer for $17.50 per share. Furthermore, it noted that Biogen Idec has terminated its tender offer after the company recently raised its offer as a “last and final offer.”
Facet management also called the Biogen Idec $17.50 offer as being “inadequate and did not fairly value our company and its prospects.” The company further noted that it will continue pursuing opportunities. Furthermore, it also noted that the company has requested that its financial advisor, Centerview Partners, solicit additional third parties that may have an interest in a transaction that our board would find in our stockholders’ best interests.
The company did note that it offers Biogen Idec the opportunity to conduct due diligence discussions to see if a materially increased offer could be made. Facet has a pipeline of five clinical-stage products and is seeking to identify and develop new oncology drugs and applying its proprietary protein engineering technologies to potentially improve the clinical performance of protein therapeutics. Its main targets are in oncology for cancers, which could have opened a new pipeline up for Biogen Idec. Facet’s market cap is $417 million, and Biogen noted that it was offering to pay $493 million for it when it raised its tender offer to $17.50 from $14.50.
Facet shares are finding the price down 2% at $16.00 in pre-market trading, and the 52-week trading range is $5.86 to $18.35. One problem Facet had was that it came public in late 2008 when the markets were in serious question. That is when it hit as high as $18.00, but shares were down under $10.00 in early September when Biogen Idec made its first offer.
Facet may want to hold out for money. It may get it, and it may not. As for Biogen Idec and its desire to buy a new drug pipeline that diversifies its dependence on MS drugs, it has already signaled that it is willing to pay almost $500 million for a company with very low revenues (Thomson Reuters estimate is $82+ million in revenues for all of 2010 for Facet).
JON C. OGG
Key Biotech Short Selling Changes in November (AMGN, BIIB, CELG, GILD, GENZ, GERN, LIFE, DNDN, HGSI, AMLN, OSIP)
We have now seen the changes in short selling in biotech stocks via the late-November short interest report from NASDAQ. This marks the changes seen at the November 30, 2009 settlement date versus a November 13 settlement date. We have given short interest data on Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Gilead Sciences Inc. (NASDAQ: GILD), Celgene Corporation (NASDAQ: CELG), Genzyme Corp. (NASDAQ: GENZ), Geron Corporation (NASDAQ: GERN), Life Technologies Corporation (NASDAQ: LIFE), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), and OSI Pharmaceuticals Inc. (NASDAQ: OSIP).
Again, the change reflects the November 30 date versus a prior date of November 13:
Amgen Inc. (AMGN) 18,247,560 shares versus 15,888,876, a gain of 14.8%.
Biogen Idec Inc. (NASDAQ: BIIB) 8,914,221 shares versus 8,201,010, a gain of 8.7%.
Gilead Sciences Inc. (NASDAQ: GILD) 19,334,491 shares versus 20,330,539, a drop of -4.9%.
Celgene Corporation (NASDAQ: CELG) 7,800,195 shares versus 8,122,937, a drop of -4.0%.
Genzyme Corp. (NASDAQ: GENZ) 3,835,576 shares versus 4,531,522, a drop of -15.4%
Geron Corporation (NASDAQ: GERN) 13,846,894 shares versus 13,653,745, a gain of 1.4%.
Life Technologies Corporation (NASDAQ: LIFE) 8,686,786 shares versus 8,950,719, a drop of -3.0%.
Dendreon Corp. (NASDAQ: DNDN) 9,881,341 shares versus 9,105,303, a gain of 8.5%.
Human Genome Sciences Inc. (NASDAQ: HGSI) 17,100,782 shares versus 17,571,094, a drop of -2.7%.
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) 8,353,185 shares versus 8,538,392, a drop of -2.2%.
OSI Pharmaceuticals Inc. (NASDAQ: OSIP) 5,471,010 versus 5,517,134, a drop of -0.8%.
JON C. OGG
December 10, 2009
This weekend we ran screens of several drug and biotech companies in our quest for ‘cheap stocks’ in the BioHealth sector. The intent is not solely for buyout targets because we prefer to look at value stocks rather than just picking buyout hopefuls. The obvious issue that makes most of these cheap is because there have been problems or have been issues that made these look cheap on the surface. To look for sub-market valuations, we used Thomson Reuters estimates for 2009 and 2010 earnings. We then set a maximum target of 15-times earnings and screened out the companies that gave the ‘false positives’ as there were many.
Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Cephalon Inc. (NASDAQ: CEPH), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), and PDL BioPharma, Inc. (NASDAQ: PDLI) all made the cut. We initially wanted to look for market caps over $1 billion, but we set the bar at $500 million and tried to focus on companies with growth. We included valuation data, performance, and some color on each name. Some, but not all of these, are also in our upcoming biotech buyout targets for 2010.
Amgen Inc. (NASDAQ: AMGN) is one we have long noted during its waves of problems and as it was under future reimbursement pressure that may be more like an old fashioned drug company now as it has matured. The company’s market cap is $56 billion, which is actually now the largest market cap since Genentech is now Roche. Its stock trades at $55.48 and its 52-week trading range is $44.96 to $64.76. Because of the pressure and past issues, it trades at only about 11-times earnings for 2009 ($5.03 est.) and 2010 ($5.14 est.) both. It also trades at under 4-times 2009 and 2010 revenue expectations and it sits with an arsenal of almost $14 billion in cash and equivalents, yet has over $10.5 billion in long-term debt.
Biogen Idec Inc. (NASDAQ: BIIB) is no stranger to issues… another activist was just out this week calling for more action and the company has not been able to get out from under the TYSABRI PML despite the notion that this is a very low risk. At $46.38, its market cap is $13.4 billion and its 52-week trading range is $37.21 to $55.34. Biogen has over $3.1 billion in cash if you include its short-term and long-term investments and it carries just under $1.1 billion in long-term debt. Biogen also trades at 11.6-times the $3.99 EPS target for 2009 and only 10.5-times the $4.42 target for 2010; and Biogen trades at 3-times 2009 expected sales. The risk is here is of course the TYSABRI risks. You never know if they will have to pull it again. This is an opinion rather than a formal target, but TYSABRI is good enough in treatments of MS that it could quite literally have two or three times the number of patients using it if the PML risk can either be quantified better or could be mitigated. Another issue is that it is trying to acquire Facet Biotech Corporation (NASDAQ: FACT) as a diversification and added pipeline move.
Biogen Idec Inc. (NASDAQ: BIIB) is not exactly new to the world of activist investors as there have been problems inside the company for years. An SEC filing this morning was filed by a fund called HealthCor Management, L.P. located in New York. It turns out that the fund is not a new entrant here, but the revelations are rather specific rather than broad and non-specific compared to other activist complaints. More importantly, the fund has CC’d in the following entities:
- PRIMECAP Management
- ClearBridge Advisors LLC
- Barclay’s Global Investors UK
- Fidelity Management & Research
- Icahn Capital LP
- Goldman Sachs Group
- State Street Corporation
- Vanguard Group Inc.
- Capital Research Group Investors
- Invesco Ltd.
Yep, you knew Carl Icahn was going to be in there. After all, the most recent Icahn holdings still showed Icahn holding a significant number of shares.
What is interesting is the data that HealthCor provided. It is calling for a specific buyback plan of $500 million to $1 billion worth of stock PER YEAR. It noted that Biogen Idec outspends and is expected to outspend all of its major large-cap biotech peers.
The activist group here compared the statistics (most of which include items) to Celgene Corporation (NASDAQ: CELG), Gilead Sciences Inc. (NASDAQ: GILD), Genzyme Corp. (NASDAQ: GENZ), Amgen Inc. (NASDAQ: AMGN), and Genentech-Roche.
R&D MARGINS (HISTORICAL AND CONSENSUS)
2007A 2008A 2009E 2010E 2011E
CELG 24% 24% 26% 24% 24%
GILD 12% 12% 12% 13% 13%
GENZ 18% 17% 18% 16% 16%
AMGN 21% 19% 18% 18% 18%
DNA 20% 20% 20% 20% 19%
AVERAGE 19% 18% 19% 18% 18%
BIIB 29% 26% 27% 27% 26%
HealthCor also noted that Biogen has failed to maximize its earnings and cash generation potential. There is a complain that CEO James Mullen has sold approximately $85 million worth of stock.
Now that the market has stabilized, there are likely to be more activist filings made in realm of underperforming biotech stocks.
JON C. OGG
NOVEMBER 20, 2009
Carl Icahn, via his Icahn Capital LP and other entities owned the following drug and biotech or biohealth names. There may be some overlaps because of more than 1 filing, but here goes:
Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) 12,971,328 shares;
Biogen Idec Corp. (NASDAQ: BIIB) 3,215,051 shares, second filing showed 12,860,205 shares;
Enzon Pharmaceuticals Inc. (NASDAQ: ENZN) 704,214 shares;
Cyberonics Inc. (NASDAQ: CYBX) 2,107,972 shares;
Exelixis Inc. (NASDAQ: EXEL) 2,357,110 shares;
Forest Labs (NYSE: FRX) 1,000,000 shares
Genzyme Corp. (NASDAQ: GENZ) 1,450,800 shares;
Regeneron Pharmaceuticals (NASDAQ: REGN) 2,508,001 shares.
Two smaller positions were omitted.
This is not the smallest amount he has held in biotechs and biohealth plays, but the focus looks narrower than in the past when there were more positions.
JON C. OGG