Cytyc shares, convertibles gain big; Alkermes slips on FDA news; NPS Pharma off amid uncertainty

By Ronda Fears

Memphis, Feb. 17 - Ahead of the long holiday, as the markets are closed Monday for Presidents Day, biotech stock traders said Friday they were lightening up by and large but remarked of several sharp gains attributed to short covering and the like.

"It was a good week, and I think a lot of guys were just a little antsy about being long over the three-day weekend, so they were locking in profits," said a trader in New York. But, he added that February options expired Friday "so volume was heavier and there was a spike in volatility, which of course we like."

Indevus Pharmaceuticals, Inc. and Alexion Pharmaceuticals, Inc. were two biotechs the trader mentioned specifically in regard to options-related trading. Indevus shares (Nasdaq: IDEV) gained 53 cents on the day, or 9.47%, to $6.12, while Alexion shares (Nasdaq: ALXN) added 47 cents, or 1.33%, to $35.93.

Cytyc Corp. saw a nice gain, too, but the stock trader said it was seeing some players build positions in the story, and a convertible trader said there was "pretty decent" volume in the Cytyc 2.25% convertible bonds as well. There was no news on the wires about Cytyc, but the stock trader said the equity has been getting plugged by a couple of shops this week.

"The company [Cytyc] is still the 800-pound gorilla in the LBP pap [liquid-based pap smear for cervical cancer screening] market and nemesis of some pathetic wannabes," the equity trader said. "I have great respect for the business acumen of Cytyc's management, and it's finally getting noticed. The downside is that Cytyc still has somewhat of a niche market business model."

Earlier this week, it was on the tape that Marlborough, Mass.-based Cytyc was moving to Palo Alto, Calif. The company concentrates on women's health, including cervical cancer screening, breast cancer risk assessment, endometrial ablation and treatment of breast cancer.

Cytyc shares (Nasdaq: CYTC) on Friday rose by $1.01, or 3.54%, to settle at $29.54. The company's 2.25% convertible traded up by 2.25 points to 114.25.

Alkermes dips on Vivitrol news

Alkermes, Inc. was easier Friday after announcing it had submitted a response to the Food and Drug Administration regarding its New Drug Application for Vivitrol - a once-monthly shot to treat alcoholism. Traders remarked pro and con about the development, but one said the stock merely fell victim to the phenomena of players not wanting to hold a long position over the long weekend.

"I would suspect it will drop below that [Friday's close] before the approval comes out," said a buyside market source in Dallas. "It's a guessing game, though. You might miss a really good up day if you sit out and wait. I'd probably err on the latter, though."

Alkermes shares (Nasdaq: ALKS) dropped 20 cents, or 0.84%, to close Friday at $23.55. A convertible trader said the Alkermes 2.5% convertible bonds fell in tandem but he saw no trades in the paper. He pegged the issue closing out at 171.625 bid, 172, 125 offered, off 1.5 points from Thursday.

Cambridge, Mass.-based Alkermes said it expects the FDA to classify its response as a class 1 resubmission for Vivitrol, under which the FDA will seek to complete its review of the resubmission within 60 days from the time of resubmission.

Vivitrol is under review for the treatment of alcoholism in combination with a program that includes psychosocial support. In March 2005, Alkermes submitted an NDA for Vivitrol. In June 2005, Alkermes and Cephalon, Inc. entered into a collaboration to develop and commercialize the drug in the United States.

Cephalon also was weaker in Friday's session. Cephalon shares (Nasdaq: CEPH) lost 82 cents, or 1.09%, to $74.39. Its convertible bonds were active, the convertible trader said, particularly the two zero-coupon issues, which were both off about 1.5 points on an outright basis. The Cephalon 2% convertible due 2015 was marked lower by about 2 points, he said.

NPS green pastures in sight

NPS Pharmaceuticals, Inc. reported a narrower fourth-quarter loss, and Standard & Poor's stock analyst Frank DiLorenzo said in a report Friday that the Salt Lake City-based company could see profitability by 2009, assuming costs come under control in the next year or so.

DiLorenzo, however, reiterated a hold rating on the stock and a $17 target price.

NPS Pharma posted a net loss of $44.3 million, or 96 cents per share, compared with a loss of $52 million, or $1.34 per share, a year before. Revenue grew to $4.3 million from $1.1 million. For 2005, NPS posted a net loss of $169.7 million, or $4.14 per share, compared with a loss of $168.3 million, $4.43 per share, in 2004. Revenue was off 10% to $12.8 million.

"I thought the conference call went well. Jackson [NPS chief executive Hunter Jackson] has done what he has always done, which is not give guidance on Preos [an osteoporosis drug]," said a buyside market source in Connecticut. "You could tell that the analysts are getting impatient with this, but after approval of Preos there will be an update. I expect good news in the next couple of weeks. The management team seemed very upbeat, confident and ready for the Preos launch. And they beat guidance."

NPS chief executive Hunter Jackson said 2005 was a turning point for the company.

"In 2005 NPS continued its transformation from a research and development company to an integrated pharmaceutical enterprise by building a commercial sales and marketing capability while continuing to develop our pipeline. This year, we look forward to launching Preos if it is approved, advancing our pipeline and moving a new product into preclinical development."

NPS' Preos uncertainty weighs

NPS Pharma anticipates the FDA's decision on its osteoporosis drug Preos on or about March 10 and, unlike S&P's DiLorenzo, sellside brokerages were a bit leery on the NPS Pharma story because of uncertainty surrounding the drug although most shops are bullish on the stock.

NPS shares (Nasdaq: NPSP) ended Friday off by a nickel, or 0.36%, at $13.89.

Some analysts "surmise a problem with [the Preos] launch," said the afore-mentioned buysider. "Maybe that's why there has been massive dumping lately."

Jefferies & Co. analyst Adam Walsh maintained a buy rating on NPS Pharma stock and said he was "encouraged" by the fourth-quarter results, but JMP Securities analyst Charles Duncan saw the results as mixed and Merrill Lynch analyst Eric Ende said Preos approval poses some risks.

"Although we expect ultimate approval, there is risk that FDA may extend the PDUFA [Prescription Drug User Fee Act] date by 90 days or grant an approvable letter for Preos," Merrill's Ende said in a report Friday. "However, at the current price, we believe the stock is already pricing in the risk that Preos approval will be delayed."

NPS plans to begin a phase 3b/4 study for Preos, Ende said, and "the market may interpret the news as a potential problem with the filing and a need for additional data. But, we do not believe more data is needed as the study is likely designed for commercialization/positioning purposes."

"While we expect volatility in the near term as the debate on the likelihood of an extended PDUFA for Preos persists, we recommend continued accumulation of NPSP shares," said JMP's Duncan in a report Friday. "Our view is based on our expectations of an eventual approval within 2006 and the belief that Preos could become, though not projected in our model, the leader in PTH-based [parathyroid hormone] treatment of severe osteoporosis."

Pfizer sells upsized yen bonds

Pfizer, Inc. sold an upsized ¥115 billion of bonds in two parts with a ¥60 billion tranche of five-year 1.2% notes priced at 99.94 to yield 1.2007% and a ¥55 billion tranche of 10-year 1.8% notes priced at 99.56 to yield 1.808%, according to a market source.

The deal was boosted from ¥50 billion.

Proceeds are for general corporate purposes.

A week ago, Pfizer forecast flat sales in 2006 amid increased competition from generic medicines. The pharmaceutical giant also is exploring various options such as the sale of its over-the-counter pharmaceuticals unit, which is estimated to be worth nearly $4 billion.

Pfizer shares (NYSE:PFE) traded in very light volume Friday, adding a penny, or 0.04%, to settle the day at $25.82. Some 25 million shares changed hands, versus the three-month running average of 37.1 million shares.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.