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 · 8 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

2011′s Overvalued Big BioHealth Names (AMLN, BIIB, EXEL, ILMN, JAZZ, MDVN, OSIR, SQNM)

January 4, 2011 · Filed Under analyst calls, Cancer, Financial, Sleep Disorder, stem cells · 11 Comments 

It is already 2011 and we have begun the coverage of our annual outlook series.  We covered the best of 2010 and an outlook for big-biotech stocks with the most implied upside already. Sometimes it is important to know also which of the big biotech and biohealth names may be overvalued when it comes to analyzing the current price and valuation data.  We have compiled data on the active biotech stocks which have at least five analysts making price target calculations for a year ahead. What we found was that a whole slew of companies were trading above the Thomson Reuters mean consensus price target objectives.  That does not assure that the analysts are right, but it means that either the analysts will have to play catch-up with price hikes or that they will be considering downgrading their expectations.

Our screen generated the following names: Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), Biogen Idec Inc. (NASDAQ: BIIB), Exelixis, Inc. (NASDAQ: EXEL), Illumina, Inc. (NASDAQ: ILMN), Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Medivation, Inc. (NASDAQ: MDVN), Osiris Therapeutics, Inc. (NASDAQ: OSIR), and Sequenom, Inc. (NASDAQ: SQNM).

Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) is way off its highs but may still be overvalued.  The company is seeking expanded approval for its BYETTA along with Basal insulin for diabetes but it may not be enough unless the analysts are missing the boat here.  At $14.80 and with a market cap of $2.1 billion, its 52-week trading range is $9.51 to $24.21.  The unfortunate issue is that Amylin’s consensus price target is $13.21 and the great huge hope here has yet to pay off for the company.  For whatever it is worth, Amylin’s CEO Dan Bradbury was given the honor of “The worst biotech CEO in 2010″ just last month.

Biogen Idec Inc. (NASDAQ: BIIB) has handily recovered from its past woes, perhaps recovered too much if analysts are anywhere close.  Shares are now trading at $67.20, with a market cap of $16.01 billion and a 52-week range of $45.96 to $68.60.  The consensus analyst target is listed as $62.83.  In early December Credit Suisse only gave a neutral rating but did assign a $68 target.  Biogen Idec was also reiterated Neutral but its target was raised to $70 at BofA/Merrill Lynch.

Exelixis, Inc. (NASDAQ: EXEL) may be overvalued to formal targets and maybe not… It came back in focus in November-2010 on news that Phase II clinical trial data on XL184 in ovarian and prostate cancer showed that the drug appears to be a help in both tumor types after it was effectively given back rights to the drug by Bristol-Myers Squibb earlier.  Share shave jumped and jumped and now trade at $8.49 with a market cap of $925 million and a 52-week trading range of $2.86 to $9.20.  Unfortunately, its consensus price target is $7.75 and there have been shares registered for sale by insiders over the last month.

Illumina, Inc. (NASDAQ: ILMN) was one of the best of the best in 2010, but that was then and this is about valuations.  The most recent price of $64.34 generates an $8.05 billion market cap and its 52-week trading range is $29.76 to $66.59.  We’ll be looking for analysts to catch up or for the stock to back off because the consensus target is listed as $60.34 still.  This is on the instrument side of the biohealth sector in integrated systems for the analysis of genetic variation and biological function.

Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) appears on the list of ‘overvalued’ biohealth names apparently just over extreme end of year performance in November and December.  Jazz shares rocked higher from under $11.00 per share to right at $20.00 for its most recent $19.96 close.  The market cap is about $776 million and the 52-week range is $6.38 to $20.28.  The consensus target is $16.80. Its sleep-disorder treatment Xyrem recently won a new patent for narcolepsy and it has seven other Xyrem patents that expire between 2019 and 2024. It also raised guidance in November after swinging to a better profit.  Jazz is still greatly under-followed by analysts with only 5 real targets out there.  This may be a situation of catching-up that is needed by analysts rather than a major concern that something is wrong at Jazz.

Medivation, Inc. (NASDAQ: MDVN) imploded early in 2010 on an Alzheimer’s disappointment.  Shares are now around $16.09 with a $556 million market cap and a very wide trading range of $8.43 to $40.49.  Unfortunately, its consensus price target is $14.50 per share.

Osiris Therapeutics, Inc. (NASDAQ: OSIR) is tricky considering that it aims for the stem cell therapeutic segment.  At $7.77, its market cap is $255 million and its 52-week trading range is $5.39 to $9.24.  Unfortunately, its consensus target is $5.88.  Shares have been in a trading range for more than a year after a big sell-off and there is just an information gap that implies that Osiris could end up like “Ra” or “Rat” if you forgive the Egyptian mythology pun.

Sequenom, Inc. (NASDAQ: SQNM) is currently back up off its post-implosion lows.  The investing public has no idea how lucky they are that it is even still a public and traded company because it could have disintegrated entirely.  Shares are trading around $7.85 and have a market cap of almost $600 million and a 52-week trading range of $3.91 to $8.65.  The consensus price target is unfortunately $7.13

Sequenom was an interesting name in the screen even if it is more into diagnostics rather than cures.  It recently raised capital at $6.00 per share, so it has popped rather well.  The $7.85 price is trading above the $7.13 consensus price target.  Piper Jaffray initiated coverage with an Overweight rating in mid-December and gave it a $8.00 price target.

As you can see, being screened as ‘overvalued’ may be no fault of the company and may not even matter in the long-term development plans of a company.  Sometimes stocks outperform the market and they can outperform enough that the analysts have either not updated their coverage or maybe it was ‘too much too fast’ in that performance.

JON C. OGG

Outlook 2011, Part II: 2010 BioHealth Winners (AMRN, ILMN, INHX, JAZZ, NBIX, NPSP, THRX, VPHM)

November 30, 2010 · Filed Under analyst calls, daily, fda, Financial · Comment 

2011 is getting closer and closer, and we wanted to review some of the standout BioHealth winners for 2010 to see what their  prospects are for 2011.  The rounds of exponential gains seen in 2009 were not repeated as frequently in 2010 for the severity  of gains. The FDA has been difficult to  predict in 2010 and many companies with high expectations managed to become flops which either saw denied FDA approval or were given severe delays.  We wanted to review the companies that are up more than 100% from their lows of the last 52-weeks to see which have prospects out into 2011 or beyond.

Amarin Corporation plc (NASDAQ: AMRN), Illumina Inc. (NASDAQ: ILMN), Inhibitex Inc. (NASDAQ: INHX), Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Neurocrine Biosciences Inc. (NASDAQ: NBIX), NPS Pharmaceuticals, Inc. (NASDAQ: NPSP), Theravance Inc. (NASDAQ: THRX), and ViroPharma Inc. (NASDAQ: VPHM).

Amarin Corporation plc (NASDAQ: AMRN) rose to $5.85 and its new 52-week trading range is $0.93 to $6.00.  Its market cap is now $578 million.  This one owes Monday to its exponential gain status.  the stock was up big on Monday and was only at $3.55 before news that its AMR101 met pivotal phase 3 study endpoints with lower triglycerides and no statistically significant increase in LDL-C and safety profiles.  Real revenues are expected to still be beyond 2011.

Illumina Inc. (NASDAQ: ILMN) is more on the instrument side of the biohealth sector in integrated systems for the analysis of genetic variation and biological function.  At $60.26, it is one of the only multi-billion market cap stocks on the 2010 list.  The 52-week range is $26.87 to $61.77, it has a $7.5 billion market cap, and trades about 1.2 million shares per day.  Thomson Reuters expects $887.73 million in 2010 revenues and sees $1.08 billion in 2011 revenues.

Inhibitex Inc. (NASDAQ: INHX) trades at $2.90 versus a 52-week range of $0.67 to $2.95; its market cap is $180 million and it trades only about 200,000 shares per day.  The company’s opportunity comes in Hapatitis C, although it is development stage and no real revenues are expected through nextr year.  About a month ago it was awarded $489,000 in grants under the Therapeutic Discovery Tax Credit Program.

Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) trades at $16.72 and its 52-week trading range is $6.38 to $17.06.  Shares are up right at 100% for 2010.  The market cap is $650 million and it trades  close to 730,000 shares per day.  Jazz describes its self as a company which identifies, develops and commercializes innovative treatments for important, underserved markets in neurology and psychiatry. Its two products are Xyrem for narcolepsy and Luvox as an anti-depressant.  The company is already generating revenues, with $128.4 million in 2009 and Thomson Reuters looking for $168.45 million for 2010 and $237.95 million in 2011.

Neurocrine Biosciences Inc. (NASDAQ: NBIX) trades at $7.05 against a 52-week range of $1.94 to $8.69, and shares have nearly tripled so far in 2010.  The market cap here is $387 million and average trading volume is about 550,000 shares per day.  Neurocrine develops drugs for the treatment of neurological and endocrine-related diseases and disorders.  Its pipeline partnerships are with Abbott Labs (NYSE: ABT) in men’s and women’s health, GlaxoSmithKline (NYSE: GSK) in anxiety and depression, and Boehringer for Type II diabetes.  The company is just in the first year of real revenue stages and Thomson Reuters expects $32.9 million in 2010 revenues and $68.8 million in 2011 revenues.  June was its first quarter of revenues at $4.64 million, followed by $14.448 million in the September quarterly revenues.

NPS Pharmaceuticals, Inc. (NASDAQ: NPSP) trades at $6.15 versus a 52-week range of $2.99 to $7.75;  its market cap is $411 million and it trades more than 400,000 shares per day.  The company is developing Gattex to treat short bowel syndrome that prevents patients from absorbing nutrients from food. NPS is also developing NPSP558 for hypoparathyroidism in adults. Revenue rose to $21.1 million on increased royalty fees, although R&D costs are up as well.  Both are in later-stage studies and Thomson Reuters has revenue estimates of $88.7 million in 2010 and $103.46 million in 2011.

Theravance Inc. (NASDAQ: THRX) trades at $25.00 and its 52-week range is $9.62 to $25.44; the market cap here now $1.85 billion and it trades more than 500,000 shares per day.  Shares were under $14 at the start of 2010 but fell to under $10 in February.  The company recently raised $129 million from GlaxoSmithKline PLC (NYSE: GSK), a vote that its joint-development of Relovair as a new lung disease and asthma drug is going well.  The companies noted back in September that Relovair met its goals in mid-stage studies, and many view this is a potential replacement drug for Advair.  The company is still pre-revenues with $22 to $24 million in revenues in each of the last three years; Thomson Reuters sees only $23.6 million in 2010 revenues and $29.3 million in 2011 revenues.

ViroPharma Inc. (NASDAQ: VPHM) trades around $15.70 versus a 52-week range of $7.40 to $15.79.  Its big gains came  in 2005 and the stock is still well under its 1999 and 2000 peak above $60.00.  Its market cap is $1.22 billion and it trades about 900,000 shares per day.  Products include Cinryze for routine prophylaxis against angioedema attacks and Vancocin for treatment of antibiotic-associated pseudomembranous colitis caused by Clostridium difficile and enterocolitis caused by Staphylococcus aureus and MRSA strains.  2009 revenues were $310.449 million and Thomson Reuters has estimates of $ 422.1 million in 2010 and $332.4 million  in 2011.

Yesterday’s first edition  of the stand-out BioHealth names for 2010 included Ariad Pharmaceuticals Inc. (NASDAQ: ARIA), Chelsea Therapeutics International Ltd. (NASDAQ: CHTP), Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC), EntreMed Inc. (NASDAQ: ENMD), Exact Sciences Corporation (NASDAQ: EXAS), Exelixis, Inc. (NASDAQ: EXEL), Amicus Therapeutics, Inc. (NASDAQ: FOLD), and Idenix Pharmaceuticals Inc. (NASDAQ: IDIX).  FULL DETAILS

JON C. OGG

FDA Shoots Down Jazz Pharmaceuticals’ Fibromyalgia Treatment

August 24, 2010 · Filed Under fibromyalgia · Comment 

Jazz Pharmaceuticals (NASDAQ: JAZZ) lost one of its development-stage drugs today when an FDA panel vetoed JZP-6, which was designed to treat Fibromyalgia, a painful nervous disorder. According to Reuters, one of the main reasons for the denial was the presence of hydroxybutyrate (GHB) which is known colloquially as “the date rape drug.”

The panel voted overwhelmingly against the drug (20-2) with panelists explaining their main reasons were concerns for abuse, as well as a lack of proof that the drug will perform any better than current treatments. The panel was not entirely pessimistic, and suggested Jazz go back to the drawing board on the treatment.

-Michael B. sauter

The Case Grows Against All That Jazz (JAZZ)

August 23, 2010 · Filed Under fda · Comment 

Jazz Pharmaceuticals Inc. (NASDAQ: JAZZ) is having an awful day, and frankly this is a situation that could have been even worse for holders considering the speculative phase that the company is in versus its existing portfolio.

The FDA advisory committee voted against Jazz’s fibromyalgia candidate in a voted tallied at 20-2 against approval.  The committee noted that risks outweigh the benefits.  The FDA also asked it to review the risk evaluation mitigation strategy.

We wanted to see what else Jazz has.  Its Xyrem is on the market to treat excessive daytime sleepiness and cataplexy and Luvox CR to treat OCDs and social anxiety disorder. Xyrem is currently the major source of the firm’s revenues (about 80% on last count).  The company’s pipeline has targets aimed at bipolarity, restless leg syndrome, epilepsy and seizures.  Unfortunately, none of those are expected to add to the company for years.

The $128.44 million in revenues now compares to a market cap of $309 million.  That compares to a cash balance at June 30 of just under $10.5 million.

While the final vote from the FDA does not have to follow panel recommendation, a 20-2 vote is a clear sign that there was some bad salmon in the refrigerator.  For the FDA to not follow the panel’s advice with such a strong vote seems almost impossible.  It seems that as a minimum the FDA will delay approval by the October 11 date.  A 20-2 vote is something we usually call a bet against any approval.  Jazz said it intends to work closely with the FDA.

Trading volume of more than 7.5 million shares is also ten-times normal volume. After a 23% drop to $7.89, the 52-week range is $6.01 to $13.95.  There just isn’t all that much jazz at Jazz after this news.

JON C. OGG

Jazz Up Despite Q2 Loss

August 11, 2010 · Filed Under Uncategorized · Comment 

Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) was up $0.88 (9.31%) today to $10.33 following a Q2 loss of $6.4 million due to a debt extinguishment.  The company also raised its expected 2010 EPS to between 32 cents and 41 cents per share from the previous expected earnings of between 26 and 41 cents.

Jazz Pharmaceuticals, Inc. is a biopharma company that develops and sells products for neurology and psychiatry.  The company’s products include Xyrem, used to treat excessive daytime sleepiness, and Luvox CR, used to treat obsessive compulsive disorder and social anxiety disorder.

-Michael B. Sauter

Quest For 10-Baggers in BioHealth in 2010 (JAZZ, TRGT, VNDA, DNDN, HGSI, CGEN, BNVI, QCOR, ACHN, PSDV, ATHX, SNSS, AVNR, BIOD, ALXA, CTIC)

If one thing was noticed in biotech stocks, or BioHealth stocks as we often say, it was that investors, traders, and speculators all piled into the chase for the next ten-bagger late in the year.  When you have as many biotech and BioHealth stocks that ran over 1,000% in 2009 that is only to be expected…. hence the 10-bagger comments.  We had many biotech and biohealth shares rally from their lows significantly this year, with companies such as Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Targacept, Inc. (NASDAQ: TRGT), Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA), Dendreon Corp. (NASDAQ: DNDN), and Human Genome Sciences, Inc. (NASDAQ: HGSI) all being in or having been in the 10-bagger club this year.

But late in 2009 we started seeing an onslaught of low-priced stocks with small cap or micro-cap values running rapidly higher on news.  In some cases these faded, and in some not.  We saw the traders run up shares of Compugen Ltd. (NASDAQ: CGEN), Bionovo, Inc. (NASDAQ: BNVI), Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR), Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN), pSivida Corp. (NASDAQ: PSDV), Athersys, Inc. (NASDAQ: ATHX), Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS), and AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) on news late in 2009.  Also covered as potentials for this are Biodel Inc. (NASDAQ: BIOD), Alexza Pharmaceuticals, Inc. (NASDAQ: ALXA), and Cell Therapeutics, Inc. (NASDAQ: CTIC).

We have reviewed each of these and given a synopsis for each to see if these could be the 10-baggers for 2010.
Read more

Is Sunesis The Next 10-Bagger? (SNSS, DNDN, JAZZ, TRGT, VNDA, HGSI)

December 10, 2009 · Filed Under Cancer, fda, Financial · Comments Off 

Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) has become the next small cap and low-prices biotech craze this week.  We have seen this occur this year in other stocks, and now it seems that investors and traders are ready to jump into many of these small-cap biotech stocks with the hope of catching the next 10-bagger (1,000% return on investment).  When you look at the amazing performance of many stocks in the sector, you probably won’t be too shocked to see why traders and speculating investors pile in:

  • Dendreon Corp. (NASDAQ: DNDN) is up 900% from its lows over the last year.
  • Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) has jumped about 1,400% from lows.
  • Targacept, Inc. (NASDAQ: TRGT) has jumped over 1,000% from lows.
  • Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA) has popped over 2,000% from its lows.
  • And the biggie…. Human Genome Sciences, Inc. (NASDAQ: HGSI) was under $0.50 in March, making those fortunate few who bought after the March price tank have a gain of 50-fold if had they still held on today.

Today’s action dwarfs what was seen on Tuesday after Sunesis announced positive data from its two Phase II clinical trials of its lead drug candidate called voreloxin.   The company said that the results showed strong efficacy and safety profile when used as a single agent or in combination with chemotherapy in patients with difficult to treat acute myeloid leukemia.

This data was presented at the 51st American Society Hematology Annual Meeting in New Orleans, LA.   Sunesis showed that the high rates of remission in both trials have translated into durable effects with meaningful preliminary overall survival results.

With an anticipated median survival of three and a half to six months on currently available therapies, primary refractory and first relapse AML patients are particularly in desperate need of more effective treatment options. The company said that it plans to discuss the data with the FDA in  End-of-Phase 2 meeting scheduled for the first quarter of 2010.

This stock closed at $0.44 on Monday before the data was released.  But then on December 8 it had trading volume of 10,042,800 and closed up at $0.53.  Yesterday it closed up at $0.60 on 4.1 million shares.  The 52-week trading range was $0.05 to $0.90, which shows how this was a dormant stock.  But then this morning traders began piling into the stock.  And piled and piled.  At 2:00 PM EST the stock is up a whopping 120% at $1.32 on 23 million shares having traded, but the stock traded as high as $1.84 on the day.

If you smooth out the most recent trading action and if you smooth out the exact lows you have an average share price of probably $0.30 or $0.35.  If we see one more day of this action, a 10-bagger is more than just theory.

Even after the run this week, this is a mere $45.4 million market cap stock.  At the end of September, it held $3.87 million in cash.  Always keep in mind that there is a nasty side to major price gains in small speculative biotech stocks that release positive study data.  That is the “news selling” where companies raise cash in private placements.  Don’t be too shocked if you see the company use the gains to raise cash.

JON C. OGG

Jazz (JAZZ) Post Big Earnings

August 12, 2009 · Filed Under General · Comments Off 

Jazz Pharmaceuticals(JAZZ) reported revenues for the second quarter were $37.3 million, compared to $15.5 million for the quarter ended June 30, 2008. Revenues for the second quarter included a $10.0 million milestone payment from UCB Pharma Limited that was received in July 2008 and recognized as revenue when the last patient completed the second JZP-6 Phase III clinical study in April 2009.

Research and development expenses for the second quarter were $11.2 million, compared to $21.9 million for the second quarter 2008 and $11.4 million for the first quarter 2009.

Jazz Pharmaceuticals’ net income for the second quarter 2009 was $2.2 million, compared to a net loss of $51.9 million for the second quarter of 2008. Jazz Pharmaceuticals’ unrestricted cash and cash equivalents balance as of June 30, 2009 was $15.8 million. In July 2009 Jazz Pharmaceuticals raised $7.0 million in a private placement and paid $14.6 million in accrued interest to the holders of its senior secured notes. Jazz Pharmaceuticals believes that it has cured all material defaults under the agreement governing the notes, and that it has sufficient cash to fund its operations and pay its obligations on an ongoing basis.

The stock is trading up 14% to $7.42, a long way from its 52-week low of $.52

Douglas A. McIntyre

Jazz Pharmaceuticals may have more to plow into its drug candidate (JAZZ)

July 7, 2009 · Filed Under General · Comments Off 

Jazz Pharmaceuticals Inc. (Nasdaq: JAZZ) shares are up more than 26 percent to $4.62 on volume of more than 500,000 shares in the first hour of trading after the company said it has paid its senior secured noteholders interest payments that had been due them, following a private placement that eases its cash crunch.

The company announced it has closed a private placement of about 1.9 million common shares, and warrants to buy about 950,000 additional shares, generating proceeds of about $7 million. The per-unit purchase price for the stock and a warrant with an exercise price of $4 was about $3.69. 

The company also said it has cured all material debt defaults.

Last month, Jazz Pharmaceuticals (Nasdaq: JAZZ) said it planned to halt development of three drug candidates in an effort to preserve much-needed cash. As of its most recent filing, the company had about $17 million in cash on hand, but at that time it had yet to make its fourth-quarter interest payments on about $19.5 million of its senior secured notes.

The company does plan to continue developing its Phase 2 experimental drug to treat fibromyalgia. The easing of its cash crunch may mean the company has more funding to plow into its drug candidate. — Mike Tarsala

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