Pfizer news sparks buyout buzz; Immtech falls; Alkermes up; Icos off; Alexion higher; Oscient down

By Ronda Fears

Memphis, Feb. 8 - Pfizer, Inc. shares climbed nearly 6% Wednesday on news that it may spin off or sell its consumer products division - the unit that markets items like Listerine, Rogaine and Lubriderm.

The news also rekindled chatter about the biggest of the Big Pharmas padding its pockets to extend its spending spree - that is, to continue to spend money on acquisitions of biotechs with products in late-stage development - to plug into its dwindling drug pipeline.

"There was a lot of chatter about what Pfizer is doing; they also have a lot of repatriated dollars to spend yet," said a sellside biotech stock trader.

"But really that's all that happened, a lot of talk, noise. Pfizer has hundreds of collaborations going so to trying to narrow it down that way is overwhelming. The Vicuron purchase last year makes Incyte a prime target, some people say, because it is or was partners with both of them, but there wasn't a big rush to buy any of the so-called targets."

Incyte Corp. shares (Nasdaq: INCY) lost 7 cents on the day, or 1.34%, to $5.17. Late last year, Incyte inked a deal with Pfizer on its anti-inflammation drugs worth in the neighborhood of $800 million to Incyte if the drugs come to fruition.

News of the possible sale came late Tuesday, ahead of Pfizer's annual meeting on Friday with analysts and portfolio managers, who cheered the move. Pfizer shares (NYSE: PFE) gained $1.43 on the day, or 5.73%, to $26.37. Last summer, Pfizer bought Vicuron Pharmaceuticals for $1.9 billion, or a 74% premium on the stock price. The two had been collaborators on developing new antibiotics.

Alexion Pharmaceuticals, Inc. again was the source of big buying, pushing the stock to another new 52-week high Wednesday, after doing the same the day before. It has no affiliation with Pfizer, and there was no news on the wires about Alexion again Wednesday, except for the company announcing it will report fourth-quarter and 2005 results before the market opens Feb. 14. Alexion shares (Nasdaq: ALXN) added $2.50, or 7.99, to $33.80, and a sellside trader noted heavy buying in March calls on the stock.

Oscient down 9% on drug buy

Oscient Pharmaceuticals Corp. reversed course Wednesday after big gains Tuesday on an expanded pact with Pfizer. Waltham, Mass.-based Oscient announced Wednesday that it bought out Pfizer for full control of manufacturing, development and commercialization of the antibiotic Ramoplanin.

"The Ramo [Ramoplanin] news makes me uneasy. Pfizer has had a chance to look at Ramo in house and is passing on it," said a buyside biotech analyst. "For Pfizer to do the phase 3 trials would not be huge financial burden. How's Oscient going to pay for it?"

Oscient shares (Nasdaq: OSCI) dropped 20 cents, or 8.89%, to $2.05. The day before, the stock gained sharply on expanding its arrangement with Pfizer to expand marketing of the antibiotic Factive to Mexico.

According to Oscient, Ramoplanin represents a new class of antibiotics that is highly effective against Staphylococci, and sellside analysts were enthusiastic about Oscient taking on the full rights to Ramoplanin as it could be a source of additional cash, but noted the drug is not expected to be launched until 2009.

Alkermes rises 3% on surprise

Alkermes, Inc. posted a profit for fiscal third quarter that caught analysts and the market by surprise Wednesday. Traders said arbitrageurs were particularly caught off guard, and short covering contributed largely to the stock's rise.

"The hedge guys lost control. They were trying to keep it down, pushing it down with relatively large blocks on the ask. Their first few blocks were eaten up, though, and quickly," said a sellside biotech stock trader in New York. "This is now a new investment, instead of speculation, so many new investors are moving in."

Alkermes shares (Nasdaq: ALKS) gained 77 cents on the day, or 3.41%, to close at $23.37.

Cambridge, Mass.-based Alkermes posted net income for the quarter of $1.4 million, or 1 cent per share, up from a loss of $9 million, or 10 cents per share, a year prior, with revenue of $41.4 million, up from $23.6 million. First Call analysts on average were expecting a net loss of 8 cents per share. The company itself had lowered forecasts due to delays in shipments of Vivitrol to Cephalon Inc., its partner in the shot to treat alcoholism. The company said it expects to launch Vivitrol sometime between April and June.

Alkermes now expects revenue for the year to range between $145 million and $165 million, down from its previous forecast of $150 million to $170 million. Manufacturing and royalty revenue for the year is expected to come in around $75 million to $85 million, down from a prior outlook of $85 million to $95 million.

Immtech loses 7% on deal

Immtech International, Inc. took a dive Wednesday after a spot stock sale that also caught players by surprise, but many were pleased with it. The Vernon Hills, Ill.-based biotech raised $16 million in gross proceeds from a follow-on offering of 2 million shares at $8.00 each, discounted from Tuesday's close of $8.52.

"Wow, talk about a stealth secondary offering. This $16 million is just what the doctor ordered. Obviously, this cash will get them through their trials and, more importantly, the offering shows that interest is picking up, which is very good news," said a buyside market source.

"This is a vote of confidence, no doubt. Unlike the other cash infusions which offered lucrative warrants and stock priced significantly below market price, this deal is much cleaner, much less dilutive."

Immtech shares (Amex: IMM) dropped 58 cents on the day, or 6.891%, to $7.94.

Immtech concentrates on developing and commercializing oral drugs to treat infectious diseases and is expanding its markets by targeting other disorders. The company has advanced clinical trials testing new treatments for malaria, Pneumocystis pneumonia and African sleeping sickness (trypanosomiasis).

On Jan. 24, Immtech named a new chairman and chief executive officer, Eric Sorkin, replacing Stephen Thompson, who will continue as the company's president in charge of operations.

Icos in green but misses

Icos Corp. late Tuesday reported its first quarterly profit on strong sales of Cialis, the erectile dysfunction drug to rival Viagra, but the number still missed analysts' projections, and the stock dropped nearly 5%.

"Even with $860 to $900 million in sales forecast for Cialis in 2006, Icos will not be profitable in 2006. This is the main reason why the stock is down today," said a sellside biotech stock trader, who was a seller in the stock. "I got to say, I'm glad I am out at this point. Buying back in if the stock falls to the teens could be worth considering, but probably not until 2007 at the earliest."

Icos shares (Nasdaq: ICOS) lost $1.18, or 4.75%, to $23.56.

Bothell, Wash.-based Icos posted a fourth-quarter net profit of $5.6 million, or 9 cents per share, compared with a net loss of $33.4 million, or 53 cents per share, a year earlier. Analysts on average expected a profit of 14 cents per share. Revenue dropped to $18.8 million, down from $20.4 million last year.

Icos forecast a 2006 net loss of 8 cents to 39 cents per share. Icos is partners with Eli Lilly & Co. on Cialis, and for 2005, sales of Cialis were up 35% to $746.6 million.

Cell Therapeutics rises

Cell Therapeutics Inc. announced early Wednesday that the Food and Drug Administration has given its cancer drug Xyotax a fast track designation.

The stock rose 8.7% in pre-market activity. Cell Therapeutics shares (Nasdaq: CTIC) settled with a gain of 19 cents, or 10.33%, at $2.03 and was up further in after-hours activity, adding another 6 cents, or 2.96%, to $2.09.

Seattle-based Cell Therapeutics is testing Xyotax as a first-line treatment for women with advanced non-small cell lung cancer. It is a biologically enhanced version of paclitaxel, the active ingredient in Bristol-Myers Squibb Co.'s cancer drug Taxol, designed to cut down on the toxic effect to normal tissue.

"Once they get approval, this is a cash cow," said a trader.

But an analyst on the convertible desk of a sellside shop posed, "The question I ask myself is: 'Are these moves breaking through more than two standard deviations?' And, if they aren't, then maybe the moves aren't as significant as they sound."

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