Icagen Inc. (NASDAQ: ICGN) is one of the smaller biohealth companies out there and it is often overlooked by investors. When headlines hit that Pfizer Inc. (NYSE: PFE) may be interested in acquiring the company, you know what happened… Shares skyrocketed.
What we want to know is if the deal could be worth it now that the biotech outfit has seen shares more than double in a single session.
Pfizer has said it was considering a strategic transaction with the company, and it needs to be known that Pfizer already is a stakeholder in the company. Icagen is also reportedly engaged in discussions.
What is amazing is that Icagen had a market capitalization of only about $18 million before the news, and now that is listed as $38.9 million after a 116% gain to $5.19. MILLION… not billion.
Icagen is based in the notorious Research Triangle Park, North Carolina. The two companies have collaborated in a development partnership with Pfizer’s capital for exclusive rights for drugs that come from the partnership.
The company’s description is as follows: “orally-administered small molecule drugs that modulate ion channel targets. Its drug candidates include ICA-105665, a small molecule compound that targets specific KCNQ ion channels for the treatment of epilepsy and pain, which is in Phase II clinical trial stage; and a compound that targets the sodium channel Nav1.7 for the treatment of pain, which is in Phase I clinical trial stage.” It was also noted that Icagen is conducting R&D in epilepsy, pain, and inflammation.
After the new 52-week high today, the new 52-week trading range is $0.96 to $5.75. Icagen’s most recent balance sheet lists about $11.01 million in cash and almost no significant long-term debt. While it has revenues, those appear to be R&D based sales.
Icagen used to have a significantly higher value than this, but that was long before the recession. This could be a huge deal for Icagen’s newer investors but this is so small that it would not even be a line-item expense for Pfizer with its near-$160 billion market cap.
JON C. OGG
Clovis Oncology, Inc. has filed for an initial public offering. The company plans to list on the NASDAQ Global Market under the stock symbol “CLVS.” Financial terms were not disclosed, but Clovis listed that the proposed maximum to be sold in shares is up to $149,500,000.00.
Book-runners are listed as J.P. Morgan and Credit Suisse; and the co-manager is Leerink Swann.
Clovis is a biopharmaceutical outfit focused on acquiring, developing and commercializing innovative anti-cancer agents in the United States, Europe and additional international markets. The target arena are development programs in subsets of cancer populations.
The company currently is developing three product candidates where it holds global marketing rights:
- CO-101, a lipid-conjugated form of the anti-cancer drug gemcitabine, which is in a pivotal study in a specific patient population for the treatment of metastatic pancreatic cancer;
- CO-1686, an orally available, small molecule epidermal growth factor receptor, or EGFR, covalent inhibitor that is currently in preclinical development for the treatment of non-small cell lung cancer, or NSCLC, in patients with activating EGFR mutations, including the initial activating mutations, as well as the primary resistance mutation, T790M;
- and CO-338, an orally available, small molecule poly (ADP-ribose) polymerase, or PARP, inhibitor being developed for various solid tumors that is currently in a Phase I clinical trial.
The company was founded in April 2009 by former executives of Pharmion Corporation, which developed and commercialized oncology products and which was ultimately acquired by Celgene Corporation (NASDAQ: CELG) in 2008.
Pfizer, Inc. (NYSE: PFE) was listed as a beneficial owner by name, but no actual shares were mentioned.
The company’s full IPO prospectus filing is available here.
JON C. OGG
Against a backdrop of falling stock prices, Pfizer Inc. (NYSE: PFE) and Bristol-Myers Squidd company (NYSE: BMY) have bucked the trend of the day and both are seeing a rise in their share prices after reporting that “apixiban” has tested as being superior to and safer than the generic drug “warfarin.” Both drugs are intended to aid in preventing strokes in patients with dangerously irregular heart rhythms. “Apixiban” is the experimental blood thinner being developed by both Pfizer and Bristol Myers. “Warfarin” is the generic version of Coumadin, whose patent expired more than 10 years ago.
The hope is that this will lead to another blockbuster drug with more than $1 billion in sales. The timing couldn’t be better for the two companies as Big Pharma companies are generally facing an industry-wide patten cliff, where a number of significant pattens will soon expire. As a result, less expensive and far-less-profitable generics will soon displace proprietary pharmaceuticals along with much off the revenues these products generate. This has so far not managed to keep these companies from being able to offer extremely high dividends.
The news of apixiban’s successful tests negatively impacted the prices of companies manufacturing competing blood thinners. Bayer AG (BAYRY.PK) and Johnson & Johnson (NYSE: JNJ ) are seeking FDA approval for “xarelto,” their own blood thinner, traded lower. In mid-day activity, Bayer traded at $77.15, down 7.26%, while Johnson and Johnson traded at $64.85, down 1.85%. Sanofi-Aventis (NYSE: SNY) who partners with Bristol-Myers in co-marketing, the hugely successful blood thinner, “Plavix” traded down over 2% at $37.08. “Plavix” will lose its patent protection in the near future.
The successful tests of “apixiban” effectively make Bristol-Myers a double winner by compensating for the impending expiration of its proprietary position with a promising new blood thinner. In mid-day activity, shares of Bristol-Myers traded up 5.4% at $29.25, while Pfizer traded up 2.1% at 20.72. Shares of both companies are near their highs for the day.
Before today’s announcement, the consensus price target for Pfizer was $23.37 per share, giving the shares an implied upside a tad less than 13%. With today’s gains, Bristol-Myers Squibb has essentially surpassed its posted consensus target price. Keep in mind that unforeseen and significant new product introductions like “apixiban” have the potential of powering upside adjustments in consensus price targets, earnings and revenue estimates, and even in the overall bias. The question is, how much of a game changer will “apixiban,” prove to be . . . not merely in “targets” but in realized revenues and profits.
Morgan Stanley has now boosted its rating on Bristol-Myers Squibb to Overweight and said they win from this much more than Pfizer due to relative size.
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)
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
Top BioHealth Research Calls of the Week (MNKD, PDLI, ILMN, CLDA, MRK, PFE, LLY, BMY, ALXN, SVNT, AMGN)
There were some key research calls in biotech and biohealth shares this week. Over in our “top five analyst calls of the week” at 24/7 Wall Street we noted how one firm came out in defense of MannKind Corporation (NASDAQ: MNKD) on its implosion this week and another call was highlighting the potential upside value that remains in PDL BioPharma, Inc. (NASDAQ: PDLI) despite its patent fight concerns. There were many other standout calls though in analyst coverage this last week in biohealth:
Illumina Inc. (NASDAQ: ILMN) has remained impressive after having been one of our “Best of Big BioHealth in 2010″ and was also at the start of the year listed as “an overvalued biohealth names with peers.” This week brought an analyst duel. Citigroup raised its rating to BUY from Hold and the new price target is $85.00 per share. Thomson Reuters has a consensus price target of $66.87 and the Citi target appears to be the street-high price target. Elsewhere, RBC Capital Markets lowered the rating to Sector Perform from Outperform due to valuation. Illumina’s 52-week range is $34.25 to $71.07, and at $68.75 it has a market cap now of $8.6 billion.
Clinical Data Inc. (NASDAQ: CLDA) will be one to watch this coming week after the FDA approved its antidepressant drug to be sold under the brand name Viibyrd. Shares closed at $15.03 on Friday but were much higher after the news and the 52-week trading range is $10.87 to $22.39. What is interesting is that analysts already see peak sales above $2 billion as this antidepressant is believed to not interfere with sexual desire as much as in some rival drugs. The consensus price target is already $29.67 per Thomson Reuters data.
This week came a standout call in Big Pharma from Wells Fargo as the firm raised the sector to “Overweight.” Wells Fargo raised Merck & Co. (NYSE: MRK) and Pfizer Inc. (NYSE: PFE) to Outperform ratings and also noted Eli Lilly & Co. (NYSE: LLY) and Bristol-Myers Squibb Company (NYSE: BMY) in the call.
Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) closed the week out at $84.43 and has a 52-week range of $44.86 to $87.14. There was an analyst duel this week. Gleacher & Co. raised its rating to Buy while UBS cut its rating to Hold.
Savient Pharmaceuticals, Inc. (NASDAQ: SVNT) hit new 52-week lows this last week and closed at $10.20 versus a 52-week range of $10.16 to $23.46. Its shares were downgraded to “Underperform” over at Bank of America Merrill Lynch after previous news in its business update of reports of batch failures with its new gout medication called Krystexxa.
Amgen Inc. (NASDAQ: AMGN) is set to report earnings on Monday and Thomson Reuters has estimates of $1.10 EPS and $3.8 billion in revenues; for the next quarter estimates are $1.31 EPS and $3.67 billion in revenues. At $56.97 shares are actually down slightly from 90-days ago and the 52-week range is $50.26 to $61.26. This stock is getting toward its higher end of a 3 year trading band, so we expect that analyst will have to make some adjustments after earnings. Thomson Reuters has an average price target above $65.00 currently.
At the end of December, we gave a list of Big Biotechs With teh Most Upside in 2011.
Those are definitely not all of the research calls of the week in biotech and biohealth names, but this was a fairly busy week.
JON C. OGG
Top BioHealth Analyst Upgrades & Downgrades (AMGN, AZN, BAY, BIIB, CELG, EXAM, GILD, GSK, HGSI, LH, NVS, PFE, UTHR, WCRX)
We have seen many research calls from Wall Street analysts with upgrades, downgrades, and initiations this Tuesday in the world of biotech, pharmaceuticals, and biohealth. Some of the key calls we have seen are as follows:
Amgen Inc. (NASDAQ: AMGN) Started as Neutral w/ $58 target at Credit Suisse.
AstraZeneca (NYSE: AZN) Cut to Underperform at Credit Suisse.
Bayer AG (NYSE: BAY) Raised to Outperform at Credit Suisse.
Biogen Idec Inc. (NASDAQ: BIIB) Started as Neutral w/ $68 target at Credit Suisse.
Celgene Corporation (NASDAQ: CELG) Started as Neutral w/ $60 target at Credit Suisse.
Celgene Corporation (NASDAQ: CELG) Maintained Buy with $68 price target at BofA/ML.
Examworks Group Inc. (NASDAQ: EXAM) Started as Outperform w/ $22 target at Credit Suisse.
Gilead Sciences Inc. (NASDAQ: GILD) Started as Outperform w/ $52 target at Credit Suisse.
GlaxoSmithKline plc (NYSE: GSK) Raised to Neutral at Credit Suisse.
Human Genome Sciences Inc. (NASDAQ: HGSI) Started as Outperform w/ $31 target at Credit Suisse.
Lab Corporation of America (NYSE: LH) Started as Neutral w/ $89 target at Credit Suisse.
Novartis (NYSE: NVS) Raised to Outperform at Credit Suisse.
Pfizer Inc. (NYSE: PFE) Maintained Outperform at Credit Suisse.
United Therapeutics Corp. (NASDAQ: UTHR) Started as Neutral w/ $57 target at Credit Suisse.
Warner Chilcott plc (NASDAQ: WCRX) Reiterated Buy at BofA/ML.
You can join our free daily email distribution list from 24/7 Wall St. to hear more about broader analyst upgrades and downgrades, top day trader and active trader alerts, news on Warren Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.
JON C. OGG
When you hear the term ‘erectile dysfunction’ tied to the world of drugs and pharmaceuticals, chances are that the drugs that come to mind are VIAGRA and CIALIS. After all, Pfizer Inc. (NYSE: PFE) and Eli Lilly & Co. (NYSE: LLY) have spent billions combined and had untold efforts getting those ED drugs to be your first choice. VIAGRA broke records, then came ‘the weekender’ in Cialis.
But there is a second tier of ED treatments that never really caught on in the same manner. VIVUS, Inc. (NASDAQ: VVUS) has had its MUSE treatment on the market since 1997 and it has decided to sell off MUSE.
The company has entered into an asset purchase agreement with Meda for MUSE where Meda will acquire the MUSE assets (including the United States and foreign MUSE patents, existing inventory and the manufacturing facility located in Lakewood, New Jersey). Existing VIVUS employees that are MUSE dedicated are expected to join Meda and VIVUS will retain all of the liabilities associated with the pre-closing operations of the MUSE business.
VIVUS has already been business partners with Meda in Europe for MUSE since 2000, so it seems a natural fit here on the surface. VIVUS now plans to focus its efforts on the commercialization of QNEXA as a treatment against obesity and the development of avanafil for erectile dysfunction.
The terms of the deal call for an acquisition price of up to $23.5 million. the deal terms are for a cash payment of $22 million and VIVUS is eligible to receive a one-time milestone payment of $1.5 million based on future sales of MUSE.
MUSE has been on the market since 1997 as the first minimally invasive therapy for erectile dysfunction approved by the FDA. The drug is delivered locally to the erectile tissues and was meant to minimize chances of systemic interactions with other drugs or diseases.
VIVUS still has Qnexa and avanafil for erectile dysfunction under development stages today. Shareholders seem to not care about the transaction. VIVUS shares are down 0.45% at $6.55 in light volume trading.
JON C. OGG
MannKind Corporation (NASDAQ: MNKD) is not without controversy. So what happens when you hear ‘buyout rumors’ driving the stock higher?
Barron’s reported a rumor first being published by TheFlyOnTheWall that MannKind could be a takeout buyout candidate. Eli Lilly & Co. (NYSE: LLY) was noted as the buyer, and $12.50 was the price hinted at.
The problem is that it is still an outstanding issue over whether or not MannKind will get its inhaled insulin approved by the FDA. The company has raised money and it has even gone as far as changing the name for AFREZZA.
To make matters even more complicated, MannKind is a highly-shorted stock. The most recent settlement date of September 15, 2010 showed that the short interest was down to 14.215 million shares. That was actually the lowest short interest since mid-April, but that represented 13 days to cover at the most recent time.
Recent financing has not been without criticism, and share lending arrangements are often hated by shareholders. The big catch here is that the inhalable insulin market will be huge if the safety risks can ever be overcome. Imagine no more needles for diabetics taking insulin. Pfizer Inc. (NYSE: PFE) has gone down this path before. It failed.
Novo Nordisk A/S (NYSE: NVO) has one monster insulin franchise, and it would likely do anything it could to protect its market share and its market cap is a whopping $57+ billion. Not bad for a Danish company, not bad at all. Its shares hit a new 52-week high of $99.75 today.
Options trading has been elevated today as well in MannKind trading, but the options expirations of JAN-2011 are the first month where the options start to price in any FDA event decisions.
In late-day trading, MannKind shares were up over 8% at $6.59, but the 52-week trading range is $4.76 to $11.12. The bet is an obvious one: inhalable insulin, if ever approved, is an easy blockbuster treatment.
Keep in mind that rumors have been out on MannKind before. Of course, most rumors turn out to be nothing more than unfounded rumors. The risks of acquiring a company without FDA approval are often too large for a large for a Big Pharma player. With a sub-$1 billion market cap, anything is possible.
JON C. OGG
September 29, 2010 (3:30 PM EST)
Pfizer, Inc. (NYSE: PFE) was up $0.13 (0.79%) today following the FDA’s approval of a Prefilled Dual-Chamber Syringe for administration of the company’s XYNTHA® Antihemophilic Factor (Recombinant) Plasma/Albumin-Free to patients for the treatment of hemophilia A. Pfizer stock is presently trading at $16.55.
Pfizer, Inc. is a biopharm company develops and manufactures a variety of prescription medications. The company’s products include Lipitor, Norvasc, Caduet, and Lyrica.
-Michael B. Sauter
Pfizer Inc. (NYSE: PFE) managed to handily beat earnings this morning showing growth in many drugs and contraction in others. A move of greater than 5% in Pfizer in a single day is nothing to take lightly. Much of the diversification that took place came from its Wyeth acquisition. As we are always looking for the next big trend, we wanted to know if Pfizer is still willing to make acquisitions of whether the drug giant wants to avoid M&A for the time being.
It turns out that Pfizer is still willing to acquire companies. That is the message from the company’s CFO and CEO. We would not be looking for any game-changing buyout here from the company. “Bolt-on” acquisitions appear to be the M&A of choice. In short, a new unit or drug can be added directly into the organization and operate as part of the whole.
After going through the conference call notes today, the focal areas are likely to be in emerging markets, established products, pain therapy, inflammation, neuro-science, and Alzheimer’s.
Again, don’t look for the next mega-cap merger to come from Pfizer. The CFO outlined a size as being a few billion to several billion. Any deal that size would be easy to fit into the company if the operation or the drug and its network and support could be instantly rolled into the Pfizer operations without significant restructuring.
We are not going to throw out a bunch of stocks and their tickers as the company is still integrating its Wyeth and Pfizer restructuring.
JON C. OGG