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

The Best of ‘Big’ BioHealth in 2010 (ILMN, ITMN, INCY, THRX, VPHM)

December 27, 2010 · Filed Under analyst calls, Financial · 3 Comments 

2010 has been an interesting year for biotech and biohealth investors.  While we have had far fewer of the ‘ten-bagger ambitions’ in 2010 with exponential gains, there have been many key winners.  In the “$5 billion and over” category of market caps, Illumina Inc. (NASDAQ: ILMN) is the surprise winner of the biohealth players.  In the $1 billion to to $5 billion category, we have several winners including shares of InterMune Inc. (NASDAQ: ITMN), Incyte Corporation (NASDAQ: INCY), Theravance Inc. (NASDAQ: THRX), and ViroPharma Inc. (NASDAQ: VPHM).  We have taken a look at what has driven the gains as well as what the prospects are for 2011 and beyond.

Illumina Inc. (NASDAQ: ILMN) is sort of surprising in the $5 billion and higher category considering that it develops, manufactures, and markets integrated systems for the analysis of genetic variation and biological function.  It is on the equipment and systems side of the biohealth equation.  Still, it appears to be the preliminary winner in biohealth for companies in the $5 billion and higher market cap.  At $63.50, shares have more than doubled from its 52-week low of $29.58 and shares are down only about 5% from the high of $66.59.  After the performance, the market cap is now approaching $8 billion.  Unfortunately, the consensus analyst target is currently around $60.00 per share.  Thomson Reuters has analyst revenue projections of $888.03 million for all of 2010 and $1.08 billion for 2011.

And the $1 billion to $5 billion category of market capitalization rates for biohealth stocks…

InterMune Inc. (NASDAQ: ITMN) makes the grade as we were looking for those performing from recoveries, but the caveat here is that many hard losses were felt.  At $38.35, its 52-week trading range is $8.34 to $49.46 and it closed out 2009 at $13.04 giving it roughly 200% gains year to date.  Analysts have a consensus price target of $39.17.  What is driving InterMune is the recent gains made from Esbriet (pirfenidone) with a recommended E.U. approval against Idiopathic Pulmonary Fibrosis.  FULL COVERAGE

Incyte Corporation (NASDAQ: INCY) is a close call here with shares up almost 100% from the 52-week lows… With shares trading around $16.95 with nearly a $2.1 billion market cap, its 52-week trading range is $8.50 to $17.48.  Incyte closed out 2009 at $9.11, so shares are up close to 75% for the year.  The consensus analyst price target is just above $21.00, giving it the most remaining implied upside if you trust analysts.  This was covered back at the start of the year as being one of several biohealth stocks having the most implied upside. Shares are up on positive late-stage human study results over its bone marrow cancer drug.  Analysts from Thomson Reuters see $169.6 million for 2010 revenues and $107.7 million for 2011 revenues.

Theravance Inc. (NASDAQ: THRX) is currently around $26.75 with a $1.97 billion market cap and against a 52-week trading range of $9.62 to $28.84.  The stock ended 2009 at $13.07, so shares are up right at 100% year to date.  The average analyst price target is $25.83, so analysts see the stock being close to fully valued.  This one is also a late-year runner and its gains have been tied to having 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.  At issue here is that the revenue story is a ways off with Thomson Reuters seeing only $23.6 million in 2010 revenues and $29 million for 2011 revenues.

ViroPharma Inc. (NASDAQ: VPHM) is at $17.80 with a $1.4 billion market cap and a 52-week trading range of $8.18 to $18.37.  Shares ended 2009 at $8.39, so shares are up over 100% for the year.  The average analyst price target is almost $19.50, so some implied upside is still expected.  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.  Thomson Reuters sees revenues for 2010 at $423.2 million and $344.4 million for 2011.

Stay tuned this week as we run all of the-bagger candidates whose shares have run up exponentially and which still have market capitalization rates of under $1 billion.

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

ViroPharma Hits FDA Snag (VPHM)

October 22, 2010 · Filed Under fda · Comment 

ViroPharma Incorporated (NASDAQ: VPHM) shares were halted this morning after the FDA issued a complete response letter to the company.  The complete response letter is regarding Cinryze™, the company’s C1 Esterase Inhibitor, industrial scale manufacturing expansion activities.

The problem with complete response letters is that it generally translates to delays.  That appears to be the case here at ViroPharma.  The company gave few details but noted that the FDA has requested additional information related to observations from the pre-approval inspection and review of the technical processes.

The company said that it and partner Sanquin will begin working immediately to respond to the FDA “as expeditiously as possible.”  The company also noted that it plans to commence manufacturing industrial scale lots at risk in the first quarter of 2011.

CEO Vincent Milano noted, “We remain committed to provide patients with an uninterrupted supply of Cinryze.  In addition to our efforts around our industrial scale, we expect our currently approved manufacturing process alone will yield up to 60,000 doses annually.”

Shares are now down 16% at $13.60 before the open, and shares have a 52-week range of $7.28 to $16.77.

JON C. OGG

Is Allos Really a Buyout Candidate? (ALTH, VPHM, GERN, PCYC)

September 10, 2010 · Filed Under Acquisitions, Cancer, M&A, Rumor · Comment 

What is the oldest trick in the book when you need a share price up after it challenges 52-week lows?  Float a a takeover rumor… Allos Therapeutics, Inc. (NASDAQ: ALTH) is up big on more than triple-normal the trading volume.   A fresh article from FORBES got the rumor going that Allos could be a takeover stock based upon a screen from biotechnology analyst Geoffrey Porges of Sanford C. Bernstein.  The claim is that 10,000 companies were screened to find a list of 25 that look like possible takeout candidates, and then Porges picked 4 of those which he thinks could get scooped up.

On Allos, Porges noted that it sells the cancer drug Folotyn.  While the stock has not performed well ( big understatement), the ultra-orphan cancer niche would give a new team something that would appeal to buyers.  Frankly, there was very little meat to the argument.

Three other names floated out there were ViroPharma Incorporated (NASDAQ: VPHM), Geron Corporation (NASDAQ: GERN), and Pharmacyclics Inc. (NASDAQ: PCYC).

Allos was the stock that investors took most to heart in a very short description article today.  With about 90 minutes to the market close, shares are trading up 8.3% at $4.31 on more than 3.85 million shares.  The 52-week trading range is $3.58 to $8.79 and average volume in the last 90 days has been roughly 1.1 million shares. That $3.58 low in Allos was just seen as recently as August 31.

Unfortunately, Geron is now too embattled in this ban on embryonic stem cells that is not yet resolved; Geron was down 2.3% at $5.15.

ViroPharma was up less than 1% at $13.19 and Pharmacyclics was up 4% at $7.73 on the notation that a buyout could come their way too.

JON C. OGG

Pharma-Biotech Major Research Alerts (TEVA, AMGN, ACOR, CELG, HGSI, BIIB, GILD, EXAS, ZGEN, DYAX, IDXX, VPHM)

September 9, 2010 · Filed Under analyst calls, Financial · 2 Comments 

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

The Changing Landscape of Biotech Valuations (ACOR, CBST, MNKD, INCY, SGEN, ITMN, IPXL, MRX, SVNT, VPHM)

March 6, 2010 · Filed Under Cancer, Cardiac, Diabetes, Financial, General, generic drugs, M&A, R&D · 1 Comment 

The biotech and biohealth universe is changing in size.  In 2008 and 2009, partly due to mergers and partly due to market valuations, there had become a surprisingly small number of biotech stocks which had market capitalization rates of more than $1 billion.  At one point there were only about 10 or 11 in our universe of biotech stocks that actually had market caps which were very far north of $1 billion, or at least out of the biotech stocks which followed at BioHealth Investor.

We have recently seen Acorda Therapeutics, Inc. (NASDAQ: ACOR), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), MannKind Corporation (NASDAQ: MNKD), Incyte Corporation (NASDAQ: INCY), Seattle Genetics, Inc. (NASDAQ: SGEN), InterMune, Inc. (NASDAQ: ITMN), Impax Laboratories Inc. (NASDAQ: IPXL), and Medicis Pharmaceutical Corporation (NYSE: MRX) either get into or get back into the $1 billion market cap club.  And then we have Savient Pharmaceuticals Inc. (NASDAQ: SVNT) and ViroPharma Incorporated (NASDAQ: VPHM) that have been in the club and are currently just short of it.

Due to waves of big emerging drug news and due to strong performance we now have 16 of the biotech and related stocks (at least of those which we cover as pure biotechs) which have market caps north of $2 billion.  More importantly, the biotech news flow and he bull market has suddenly helped many stocks rise or at least get back above the $1 billion mark.  Many of these had been there before, but the market has helped many new names get back above the $1 billion market capitalization level.  And waves of mergers in the last two and three years sort of thinned out the group.

In these we did not take into consideration revenues, earnings, and not even cash.  This has largely been news-driven and momentum-driven.  Below is a review of each.

Read more

Great News For Hospital-Acquired infections (OPTR, VPHM)

November 11, 2008 · Filed Under General · Comments Off 

If you have ever personally contracted or know anyone who has contracted hospital or long-term care born internal infection, there is a bit of good news this morning.  Optimer Pharmaceuticals, Inc. (NASDAQ: OPTR) released some positive top-line results from its pivotal Phase III clinical study of Optimer’s lead anti-infective drug candidate, OPT-80, in patients with Clostridium difficile Infection (CDI).

ViroPharma (NASDAQ: VPHM) makes the competing drug called Vancocin, and its shares are down 5.7% at $11.85 in pre-market trading.
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ViroPharma Scores, Recession-Proof (VPHM)

October 29, 2008 · Filed Under General · Comments Off 

ViroPharma Inc. (NASDAQ: VPHM) is bucking the trend of bad earnings, which you might expect considering that the biotech company should be somewhat independent of growth or recession. The company has also just last week closed its merger with Lev Pharmaceuticals, and those numbers are not in the past quarter earnings.

The company reported Q3-2008 earnings of $0.33 EPS on a 29.4% year/year revenue gain to $65.9 million.  First Call had estimates at $0.23 EPS and $59.2 million in revenues.

More importantly than the past, the company is also giving upside guidance of $235 to 245 million for the year in Vancocin sales vs. estimates of $233.3 million.  Guidance on R&D and general and administrative expenses for 2008 is roughly $115 to $125 million.

Regarding additional payments due to Lilly in connection with the Vancocin acquisition, the company said that net sales as of September 30, 2008 exceeded the threshold of $45.0 million and it recorded additional purchase price of $7.0 million to intangible assets in 2008.

ViroPharma commercializes Vancocin, which is approved for oral treatment of antibiotic-associated pseudomembranous colitis caused by Clostridium difficile and enterocolitis caused by Staphylococcus aureus.  This includes methicillin-resistant strains. ViroPharma commercializes Cinryze(TM) for routine prophylaxis against angioedema attacks in adolescent and adult patients with hereditary angioedema, also known as C1 inhibitor deficiency.

The primary drivers were the increase in net sales and a lower effective tax rate.

Shares are up over 7% at $11.95 and the 52-week trading range is $7.11 to $15.16.

Jon C. Ogg
October 29, 2008

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