Yesterday, ZymoGenetics Inc (ZGEN) announced that its rheumatoid arthritis drug Atacicept, failed to reach its goal of controlling the disease in mid-stage studies. The data did not support a direct move to late-stage trials. However, the study confirmed the biological effect of Atacicept, and did not display any unexpected side effects. Atacicept is being developed in collaboration with Merck Serono S.A. (formerly Serono S.A.), an affiliate of Merck KGaA, Darmstadt, Germany.  Under this agreement, ZymoGenetics will co-promote Atacicept with Merck Serono in the US, while Merck Serono will promote Atacicept ex-US. In view of the disappointing results, Merck Serono has not decided whether the late-stage trials will be conducted. Atacicept is also being developed for other indications such as lupus and multiple sclerosis. As a reminder, Recombinant human thrombin (rhThrombin, Recothrom) was approved by the U.S. Food and Drug Administration (FDA) on January 17, ...

ZymoGenetics, Inc. (ZGEN) has filed a Citizen Petition (CP) with the U.S. Food and Drug Administration (FDA) requesting the agency to remove King Pharmaceuticals’ (KG) Thrombin-JMI from the market in the interest of patient safety. ZymoGenetics filed the CP based on reports of serious or fatal bleeding-related adverse events in surgical patients exposed to bovine (cattle-derived) thrombin. Thrombin-JMI is indicated as an aid to hemostasis whenever oozing blood and minor bleeding from capillaries and small venules is accessible. The source material for Thrombin-JMI comes from bovine plasma and lung tissue. The treatment is a key product in King’s portfolio. For the twelve months ended December 31, 2008, Thrombin-JMI accounted for 16.3% of total revenues. As such, the removal of the product from the market would be a major blow for the company. Thrombin-JMI revenues have been under pressure lately due to the entry ...

King Pharmaceuticals Inc. (KG) recently received the US Food and Drug Administration’s (FDA) approval for marketing Embeda, its new drug for moderate to severe chronic pain. The company plans to launch the product next month.

Embeda is made of morphine and naltrexone, with morphine being its primary ingredient. When the pill is taken as directed, it releases morphine that relieves pain. When the pill is crushed or chewed, it releases naltrexone, thereby reversing the subjective and analgesic effects of morphine.

The approval will boost the company’s top line. Embeda has been under FDA review since June 2008. King acquired Embeda through its acquisition of Alpharma Inc.

King Pharmaceuticals is a vertically integrated pharmaceutical company that focuses on the development and marketing of branded prescription pharmaceutical products and animal health products. The company primarily focuses on specialty markets, particularly specialty-driven branded prescription pharmaceutical markets.

The company is in the

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For Immediate Release

Chicago, IL – August 14, 2009 – Zacks Equity Research highlights Gafisa S.A. (GFA) as the Bull of the Day and King Pharmaceuticals (KG) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bally (BYI), International Game Technology (IGT) and WMS Industries Inc. (WMS).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We are reiterating our Outperform recommendation on Gafisa S.A. (GFA). We have been encouraged by the stimulus package and the new value-added tax relief recently announced by the Brazilian government.

Second quarter 2009 results were positive, mainly considering the international crisis, which has affected Brazil's construction sector.

The new Government Housing Program and the R$600 million debenture from Caixa Economica will help Tenda to expand its business plan

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div style="text-align: justify;"Merrill Lynch/BAM is upgrading span style="font-weight: bold;"King Pharmaceuticals (NYSE:KG)/span to Buy from Neutral with a $14 target (prev. $10).br /br /Firm notes that while KG faces near-term headwinds, they believe these issues are already largely reflected in the stock’s low relative valuation. They believe that the approval and commercial success of Embeda, which could be the first “abuse-deterrent” opioid available in the US, could drive the shares higher over the next 12 months.br /br /span style="font-weight: bold;"Big market opportunity for less abusable product/spanbr /KG’s clinical work has shown that crushed Embeda capsules have a similar abuse potential relative to intact capsules, and significantly lower abuse potential relative to immediate-release morphine. This is important given that opioid abusers commonly crush drug to facilitate faster absorption (through oral, injectable, and nasal routes). At branded pricing, the firm estimates the long-acting morphine and opioid markets represent sales opportunities of $1.5bn and ...

On July 2, 2009, King Pharmaceuticals (KG) met with the U.S. Food and Drug Administration (FDA) to discuss the complete response letter regarding the new drug application (NDA) for Remoxy. King is collaborating with Pain Therapeutics (PTIE) on Remoxy, a unique controlled release formulation of oxycodone for moderate-to-severe chronic pain designed to reduce the potential risks of abuse or misuse. According to King, the outcome of the meeting with the FDA provided a clear path forward to resubmit the Remoxy NDA and address all FDA comments listed in the complete response letter. Remoxy approval had previously been expected in December 2008; however, the FDA requested additional information relating to long-term (six month) stability of the product prior to granting approval. No new clinical trials will be necessary to satisfy the FDA’s requests. This is clearly a positive, as during an FDA advisory panel meeting ...

Durect (DRRX) has had a rocky past six months. The immediate concern of biotech investors when they see a $2 stock is the cash position. Any stock trading at $2 must have significant cash burn concerns, right?Well, like Lee Corso says, "Not so fast my friend!" Durect exited the first quarter with $47.0 million in cash on hand and virtually no debt. Burn for the first quarter was only $5.7 million, and we expect that to decline in the coming quarters based on the March 2009 headcount reductions. Plus, we see several potential non-dilutive cash-raising opportunities in 2009 and 2010.Firstly, once Remoxy is finally approved, management will begin receiving payments from King Pharmaceuticals (KG). This will help reduce burn. However, management can sell the rights to these royalties for upfront cash if they choose.Second, management is going to re-partner the TRANSDUR-Sufentanil ...

Last year was challenging for King Pharmaceuticals (KG), with most of the company's key products facing increasing competition, generic threats, and declining prescription trends. Plus, the entry of generic Altace in late 2007 was a major hit for the company, as the drug was a significant contributor (about 30%) to the top-line. As a result, Altace sales declined sharply (-74%) in 2008.Now, another drug in King's portfolio is facing a patent challenge - Actavis is planning to market a generic version of pain drug Avinza. King has faced pipeline setbacks as well with the termination of its marketing and development agreement for Bremelanotide, a phase II candidate.The company did receive its share of good news with the settlement of its patent infringement case with Core Pharma (CLB) for Skelaxin. This was indeed a smart move by King, though there are still other generic ...

Highlighted stocks include Durect Corp. (DRRX), Endo Pharmaceuticals (ENDP) and King Pharmaceuticals (KG).Durect Corp. (DRRX) has had a rocky past few months. The stock was hit harder than we expected in December 2008 when the FDA rejected the application on Remoxy. From our standpoint, the rejection of the NDA was not a surprise, but the reaction for Durect stock was.Nevertheless, we think the FDA's issues -- most likely around the labeling, the abuse ability and the risk management program -- should only delay final approval by a year. We think that Remoxy will be on the market and generating royalties for Durect by the middle of 2010.The 2nd big sell-off in the stock came in early March 2009 when Durect announced that Transdur development partner, Endo Pharmaceuticals (ENDP), was returning U.S. and Canadian rights to the product to ...

DURECT Corporation (NASD: DRRX), an emerging specialty pharmaceutical company developing innovative drugs for pain and other chronic diseases, recently reported its financial results for the third quarter ended September 30, 2008. Total quarterly revenue reached $6.6 million, compared to $4.9 million for the same period in 2007, and the company’s net loss for the quarter was reported at $9.2 million, or a loss of $0.11 per share, compared to a net loss of $7.9 million, or a loss of $0.11 per share, for the corresponding period one-year earlier.

The company plans to earn its first product royalties from REMOXY®, a long-acting, abuse-resistant oral formulation of oxycodone intended to treat moderate to severe pain, in early 2009. King Pharmaceuticals is the company’s commercialization partner for REMOXY®, and DURECT will receive royalties on product sales that begin at 6 percent and scale up to 11.5 percent.

James E. Brown, D.V.M., president and

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