Acorda IPO on deck with cheaper talk; Serono up on Glaxo chatter; Amylin soars; Charles River rises

By Ronda Fears

Memphis, Feb. 9 - Serono SA shares got a lift Thursday on buzz that GlaxoSmithKline plc is rumored as being a lead bidder.

Glaxo gained Wednesday after reporting a 45% spike in fourth-quarter net earnings to $1.96 billion with a 13% gain in revenue to $10.33 billion. And, for 2006, Glaxo, second only to Pfizer, Inc. among Big Pharmas, expects profits to rise around 10%. Glaxo shares (NYSE: GSK) rose 90 cents, or 1.77%, to $51.85.

Serono has been on the auction block, by choice, since November without much progress, but the market seemed to think some or all of the company would lure bids in the wake of Glaxo's results. Serono shares (NYSE: SRA) added 52 cents on the day, or 2.86%, to $18.73.

"It will take deep pockets to consider Serono, and Glaxo has deep pockets," said a sellside biotech stock trader.

During Glaxo's quarterly conference call, chief executive Jean-Pierre Garnier reportedly declined to comment on Serono but did say that Glaxo might consider acquiring Pfizer, Inc.'s consumer products division. Pfizer 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.

Pfizer's 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.

Pfizer shares (NYSE: PFE) were little changed - off 3 cents, or 0.11%, at $26.34 - ahead of its annual meeting with analysts is scheduled for Friday.

Acorda aims to get IPO off

Acorda Therapeutics Inc. cut the price talk for its planned initial public offering to $6 to $7 per share from $11 to $13 per share, and syndicate sources said the deal would price after the close Thursday.

"They cut the range by around half. They are pushing to get it done," said a buyside source who focuses on IPOs. "We were told it would price come hell or high water. That doesn't give you the warm fuzzies. Not me, anyway. I will probably pass on it."

As a result of the cheapened price talk, the company estimated net proceeds will decrease to $31.1 million from $59.3 million at the midpoint of the new price range, or about $36.1 million if the greenshoe is fully exercised.

The number of shares remains the same at 5.5 million with a greenshoe of up to 825,000 shares.

The Hawthorne, N.Y.-based firm is a commercial-stage biopharmaceutical company dedicated to the identification, development and commercialization of therapies that improve neurological function in people with multiple sclerosis, spinal cord injury and other disorders of the central nervous system.

Proceeds will be used for general corporate purposes, except that Acorda said it intends to use about $20 million to $25 million of the net proceeds principally to complete its current Fampridine-SR clinical trial and for other research and development purposes.

Amylin extends gains after bell

Amylin Pharmaceuticals, Inc. was sharply higher ahead of earnings due after the closing bell, as players anticipate a good report. After the bell rang, the company reported a wider net loss for fourth quarter but blowout revenues.

Short covering was attributed to a large portion of the gains, with traders noting that the stock came off the day's high significantly by the close. Amylin shares (Nasdaq: AMLN) closed up by 95 cents, or 2.56%, at $38.10 after having traded as high as $39.38 during the session. But in after-hours activity, the stock resumed the climb and rocketed past the day's mark to $39.46 by 5:07 p.m. ET. It began to come off that during the conference call, however, and was last seen at $38.99 at 5:18 p.m. ET.

"Let's assume 15 million or so short positions need to be covered. Today's action so far barely touches the surface," said a sellside trader. "So, yeah, it's up after-hours and probably will be tomorrow, for several days."

Some 4 million shares traded Thursday, compared with the three-month running average of 2 million.

San Diego-based Amylin posted a fourth-quarter net loss of $67.2 million, or 61 cents a share, versus a net loss of $46.4 million, or 49 cents a share, in the 2004 period. Revenues, though, shot up to $63.5 million from $6.6 million.

"In 2005, Amylin transformed from a research and development organization to a fully commercial enterprise, achieving $87 million in net product sales. We launched two first-in-class products, Byetta and Symlin, both of which are growing in their acceptance by health care providers, patients, and payors," said Ginger Graham, chief executive of Amylin.

"As we enter 2006, demand for both products continues to accelerate, we have two compounds in late-stage development: one for diabetes and one for obesity, and expect to introduce two novel compounds into the clinic."

Amylin figures sideline some

Some lingered on the sidelines while the hedge funds covered short positions, however.

"I will wait to see what the conference call brings," said one biotech fund manager in Florida. "Remember how we flew into earnings last time? And then dropped 5 bucks."

Rather, he said he would be looking for an update on Amylin's new dosing study for its diabetes drug Byetta, administered twice daily, in the form of Byetta-LAR (long acting release), which would be administered once weekly.

"The purpose of a phase 2 trial is to determine the proper dosing levels to ensure the design of subsequent phase 3 trials will show efficacy and safety in the context of what is expected of the final drug product. The results released from the prior phase 2 study showed better efficacy than twice-daily dosing with Byetta, and no safety concerns were raised," the fund manager said.

"The remaining questions must be answered with large patient groups over an extended time, and by definition that is phase 3. If the results of the ongoing studies are in agreement with what has already been released, there is no need for any additional phase 2 studies. Positive results would argue for proceeding into phase 3 as quickly as possible, though Amylin and Lilly [Eli Lilly & Co., Amylin's partner on Byetta] will show prudence by taking the time necessary to design the studies properly. So a Byetta-LAR launch in mid to late 2008 is entirely possible."

CV Therapeutics up on data

CV Therapeutics, Inc. shot up Thursday after saying that the study of its heart medication Ranexa - an extended release tablet of its ranolazine - will continue as planned based on results of an interim efficacy analysis.

Preliminary study results for the Merlin TIMI-36 study could be available in the fourth quarter of 2006 or the first quarter of 2007, the company added.

"Back the truck up," said one buyside trader, using the market euphemism for loading up, or buying.

CV Therapeutics shares (Nasdaq: CVTX) added 99 cents on the day, or 4.06%, to $25.37.

"After the recent FDA approval of Ranexa [on Jan. 27], the Merlin TIMI-36 study is an important study to potentially expand the indication," said Louis Lange, chief executive of CV Therapeutics, in a news release.

The approval of Ranexa marked the first new pharmaceutical approach to treat angina in more than 20 years in the United States, according to Palo Alto, Calif.-based CV Therapeutics. The company anticipates it will be available in pharmacies in late March.

Charles River Labs climbs 8%

Charles River Laboratories International, Inc. advanced sharply Thursday after posting fourth-quarter earnings that beat analysts' projections, but analysts remained somewhat cautious on the story.

Late Wednesday, the Wilmington, Mass.-based contract research organization that also provides research tools and equipment such as lab rats to the biotech industry, report fourth-quarter earnings $50.4 million, or 69 cents per share, up from $20.1 million, or 32 cents per share, in the 2004 period. Revenue rose to $291.2 million from $238.1 million. Analysts, on average, were looking for profits of 57 cents a share, with revenue of $283 million.

"Needless to say, this is a company without a peer," said a buyside fan of Charles River. "This is a high barrier business with huge upside potential. Charles River is a high growth company with a very reasonable PE [price to earnings ratio]."

Jefferies & Co. analyst David Windley kept a hold recommendation on the stock, however, saying that to become more positive, he'd like to see stabilization in the company's research models and services businesses and some sign of growth in its clinical services business.

For 2006, excluding stock compensation costs and one-time items, Charles River forecast earnings in a range of $2.34 to $2.40. The company anticipates revenue growth will be in a range of 7% to 9% for 2006.

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