Stock Market News & Stocks to Watch from StraightStocks » Rheumatoid Arthritis

Encouraging Data on J&J Drug – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 16:44:53 +0000

Johnson and Johnson (JNJ) recently presented long-term data from two phase III clinical trials of Simponi (golimumab), carried out on rheumatoid arthritis (RA) patients. It was observed that patients taking Simponi every four weeks achieved sustained improvements through one year. The data were presented at the 2009 American College of Rheumatology (ACR) Annual Scientific Meeting held last month.

Data from the first trial – GOlimumab After Former anti-TNF (tumor necrosis factor) Therapy Evaluated in RA (GO-AFTER) revealed that patients previously treated with TNF inhibitors (adalimumab, etanercept or infliximab) responded as well as showed continued response to the drug for an entire year. At week 52, data measured by American College of Rheumatology (ACR 20) response found a 20% improvement in arthritis symptoms in 63% of patients receiving the drug while 41% of the patients achieved a 50% improvement in arthritis symptoms measured by ACR 50 response.

Results from the second trial - GOlimumab FOR subjects With Active RA Despite Methotrexate (GO-FORWARD) study proved the effectiveness of Simponi in patients with active RA despite prior treatment with methotrexate. Like the earlier trial, this trial also presented positive results for Simponi. At week 52, 64% of patients taking the drug and methotrexate achieved ACR 20 response while 25% achieved a 70% improvement in arthritis symptoms as measured by ACR 70 response. Both these studies were carried out with Simponi in 50 mg dosage as a once-monthly subcutaneous injection.

Earlier in April 2009, Simponi received approval from the US Food and Drug Administration and Health Canada approved Simponi for the treatment of moderate to severe active RA, active psoriatic arthritis (PsA) and active ankylosing spondylitis. Thereafter, in October 2009, the drug received approval from the European Commission as well.

As a reminder, on May 27, 2009 Johnson & Johnson announced an arbitration demand against Schering-Plough (now a part of Merck, MRK) requesting a ruling regarding the ex-US rights of Remicade and Simponi. J&J developed both compounds and licensed marketing rights outside the US to Schering-Plough. However, J&J contends that the merger between Schering-Plough and Merck has triggered a change of control provision in the licensing agreement, resulting in its termination, thereby returning full rights to the compounds to J&J.

Remicade is approved for 15 indications in the US alone including RA. Remicade generated almost $5.9 billion in worldwide revenues in 2008, including $2.1 billion in sales outside the US, which Schering-Plough booked as revenues. The pending case is of great importance to both companies given the sales contribution from the product. We are Neutral on J&J.

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Arrayit Corp. (ARYC.OB) Technology Purchased by the Prestigious Johns Hopkins University

QualityStocks — Wed, 18 Nov 2009 14:54:18 +0000

The Sunnyvale, California based Arrayit Corporation has quickly evolved into a leader in the genetic, research, and diagnostic communities through the development and manufacture of state-of-the-art life science technologies which combat diseases. Today, the young corporation made national news with the announcement that the prestigious Johns Hopkins University School of Medicine in Baltimore, Maryland [...]

November 16th CEOcast Weekly Newsletter

QualityStocks — Mon, 16 Nov 2009 20:21:30 +0000

Companies featured in this edition of the newsletter: ACTC, CVM, CHIP, ENZ, HYTM, IWEB, ONEZ, PHC, SIHI, SRCO Markets continued their strong performance this week in the absence of any major market driving earnings or economic reports, as the broad based buying that characterized the previous week continued and led to gains in all of the [...]

Pozen Brings Good Data & Earnings – Analyst Blog

Zacks Market Commentaries — Wed, 28 Oct 2009 14:01:23 +0000

Vimovo Demonstrates Benefit Over Naproxen

Yesterday, at the American College of Gastroenterology meeting in San Diego, Pozen (POZN) released data from two phase III trials comparing Vimovo (formerly PN400) to enteric-coasted naproxen (ECN) in patients with osteoarthritis (OA), rheumatoid arthritis (RA) and ankylosing spondylitis (AS) who are at risk of developing NSAID-associated gastric ulcers.

The data demonstrated that patients taking Vimovo experienced significantly greater reduction in severity of dyspepsia (SODA) and overall treatment evaluation for dyspepsia (OTE-DP) compared to patients taking ECN. The OTE-DP results showed 43-46% of the patients on Vimovo reporting positive change at month six vs. only 28-34% on ECN.

The results were highly statistically significant. Plus, patients taking Vimovo also had discontinuation rates far below ECN, at 3-5% vs. 11-12%, respectively. The safety of Vimovo was also superior to ECN, with only 2% of the patients experiencing erosive duodenitis as compared to 10-14% for ECN. Rates of erosive gastritis were also far lower in the Vimovo group at 18-21% vs. 38-39% for ECN.

Early in October, at the American College of Rheumatology meeting, Pozen presented data showing a significant reduction in the risk of gastric ulcers (GU), the primary endpoint of the phase III program, vs. ECN at a rate of 4-7% for Vimovo vs. 23-24% for ECN.

Vimovo is a fixed-dose combination of enteric-coated naproxen with an immediate release esomeprazole. Given the high risk for gastrointestinal side-effects for patients with OA and RA that take naproxen, roughly 60%, and the lingering concern on the cardiovascular safety of Cox-II inhibitors such as Celebrex post the withdrawal of Vioxx and Bextra, we believe that Vimovo has significant sales potential. Our financial model assumes Vimovo peaks at over $500 million worldwide. Pozen has partnered with AstraZeneca (AZN) for the commercialization of Vimovo.

Vimovo is currently under U.S. FDA review with an action date set for late April 2010. In mid-October, AstraZeneca filed for approval in the European Union via the decentralized procedure. Approval in the U.S. entitles Pozen to a $20 million milestone payment from AstraZeneca. The first approval outside the U.S. entitles Pozen to another $25 million.

The strong clinical data on Vimovo give us confidence in the phase III program for Pozen’s second pipeline candidate, PA-325/20, a fixed-dose combination of enteric-coated aspirin and immediate-release omeprazole. Similar to Vimovo, patients taking daily aspirin for cardiovascular protection or the potential reduction in the development of colorectal adenomas, are at risk for significant gastrointestinal side-effects. Phase II data on PA-325/20 demonstrated a significant reduction in gastric ulcers, 0% vs. 20%, after a 28-day concept study.

Third Quarter Performance

This morning, Pozen released financial results for the third quarter 2009. Total revenues for the quarter were $14.3 million, and consisted of $13.1 million in licensing and development revenues and $1.2 million in royalties on U.S. sales of Treximet at GlaxoSmithKline (GSK).

During the third quarter Pozen received a $10 million milestone for the filing of the U.S. NDA for Vimovo. The company earned $6.7 million, or $0.22 during the third quarter, 5 cents above our forecast. Pozen also has $51.3 million in cash and investments. We continue to be very positive on the stock and recommend purchase at this level -- Pozen currently has a Zacks Recommendation of Outperform.
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Pfizer’s Big Penalty – Analyst Blog

Zacks Market Commentaries — Mon, 19 Oct 2009 18:07:22 +0000

Following the recent merger of Pfizer (PFE) and Wyeth, a U.S. court imposed a huge fine on the company’s subsidiary Pharmacia & Upjohn for fraudulent marketing of its painkiller Bextra (valdecoxib). The penalty of $1.195 billion was the largest criminal fine ever imposed in the U.S. In addition, a criminal forfeiture of $105 million was enforced on the company.

In September, Pfizer had agreed to pay an additional $1 billion along with interest to settle civil allegations related to fraudulent promotion of four drugs – Bextra, the anti-psychotic drug Geodon, the antibiotic Zyvox and the anti-epileptic drug Lyrica – as well as claims that the company paid kickbacks to physicians to prescribe these and nine other drugs.

In addition to the huge penalty, Pfizer had to agree to comply with the terms of a new and significantly expanded corporate compliance program. It seeks to ensure that in future the company will have proper checks to detect and avoid any such violations in time.

Bextra was used for the management of inflammation, stiffness and pain associated with osteoarthritis, adult rheumatoid arthritis and menstruation. However, long-term use of the drug led to various adverse events such as cardiovascular problems including heart attack and stroke and potentially life-threatening skin reactions. Due to these potential threats, the FDA compelled Pfizer to voluntarily withdraw Bextra from the market in April 2005, pending further investigations and trials. Patients on Bextra were also advised to contact their healthcare providers for alternate medications. Pharmacia & Upjohn was charged with promoting the sale of Bextra for some applications which had not been approved by the FDA such as general acute pain and surgical pain. The FDA had raised specific safety concerns about these.

Pfizer will not incur any additional charges for this penalty as the company had already taken $2.3 billion charges related to the off-label promotion of Bextra in the fourth quarter of 2008.
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AMGN, PWRM, JNJ, CSRH, GE, CVAT, TEVA, AQNM, DrStockPick.com Stock Report!

Dr. Stock Pick — Mon, 19 Oct 2009 15:53:08 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Monday October 19, 2009 DrStockPick.com Stock Report! AMGN, PWRM, JNJ, CSRH, GE, CVAT, TEVA, AQNM ************************************************************** AMGN, Amgen Inc. AMGN, a biotechnology company, engages in the discovery, development, manufacture, and marketing of human therapeutics based on advances in cellular and molecular biology. The Food and Drug Administration wants more information [...]

PFE, PWRM, BIIB, DrStockPick.com Stock Report!

Dr. Stock Pick — Mon, 19 Oct 2009 13:43:50 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Monday October 19, 2009 DrStockPick.com Stock Report! PFE, PWRM, BIIB ************************************************************** PWRM, Power 3 Medical Products Inc, PWRM.OB Power3 Medical Products, Inc. is a leading bio-medical company engaged in the commercialization of neurodegenerative disease and cancer biomarkers, pathways, and mechanisms of diseases through the development of diagnostic tests [...]

EU Nod for J&J/Schering Drug – Analyst Blog

Zacks Market Commentaries — Wed, 07 Oct 2009 17:30:52 +0000

Yesterday, Schering-Plough Corp. (SGP) and Johnson & Johnson (JNJ) announced the approval of their drug Simponi (golimumab) in the European Union for the treatment of rheumatoid arthritis and other immune system disorders. The drug was approved by the U.S. Food and Drug Administration (FDA) in April 2009.

As a reminder, Schering acquired co-development rights to Simponi in the third quarter of 2005 from Johnson & Johnson’s biotech arm, Centocor Inc., which had developed and discovered the drug. Johnson & Johnson enjoys exclusive marketing rights of Simponi in the U.S., while Schering-Plough holds marketing rights outside the U.S. excluding Japan, Indonesia and Taiwan where the drug will be co-marketed with other vendors subsequent to regulatory approvals.

Simponi, a next-generation, fully human, anti-tumor necrosis factor (TNF), received European approval as a once-a-month treatment for rheumatoid arthritis (RA), psoriatic arthritis (PA) and ankylosing spondylitis (AS), which is a painful, progressive form of spinal arthritis.

Simponi is a follow-up to Schering’s big revenue driver rheumatoid arthritis drug Remicade. An April 1998 distribution agreement with Centocor, Inc., allowed the company to market Remicade in Europe. Schering has rights to market the drug, which generated sales of $2,119 million in 2008, until 15 years after the first sale of Simponi. Remicade is currently approved for the treatment of RA, early RA, Crohn’s disease, AS, PA, psoriasis and for moderate-to-severe ulcerative colitis.

Schering-Plough and Johnson & Johnson are in arbitration over revenues from Remicade and Simponi. Johnson & Johnson is claiming entitlement to entire revenues since Schering-Plough will be bought by Merck & Co. (MRK) by year-end in a $41.1 billion deal.

Under the terms of the deal with Johnson & Johnson, Schering-Plough is obliged to return overseas rights if there is a change in Schering control.

In a bid to avoid losing the substantial revenues from the drugs, Merck has structured the transaction as a "reverse merger," implying that Schering-Plough would technically acquire the larger Merck and will continue as the surviving public corporation.

The strategy would allow Schering-Plough to claim that it has not undergone a change in control. Thereby, it would not have to give up overseas rights.

Currently, we are Neutral on Schering-Plough.
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Vertex Lowers 2009 Guidance – Analyst Blog

Zacks Market Commentaries — Tue, 06 Oct 2009 18:08:31 +0000

Last week, Vertex Pharmaceuticals (VRTX) lowered its 2009 revenue guidance. The company expects its net loss for the full year to increase to $650 million compared with an earlier prediction of $515 million to $550 million.

The increased losses are due to the company’s decision to retain its pipeline candidate, VX-509, for the treatment of rheumatoid arthritis for phase II clinical development and an estimated $115 million incurred for restructuring, acquisition, stock-based compensation costs and a loss on exchange of convertible subordinated notes.

The phase II trial of VX-509 will be conducted over a 12-week period enrolling 200 patients with moderate to severe rheumatoid arthritis. The trial is set to begin in the first quarter of 2010 with interim data being available by the middle of next year. Vertex is seeking collaborative opportunities with major pharmaceutical companies for the drug.

Vertex expects to receive $120 million in cash from the issuance of $155 million in notes secured by future milestone payments for telaprevir, the company’s candidate to treat hepatitis C. The company expects to mop up another $35 million from the sale of up to $95 million of rights to potential future milestone payments that Vertex is eligible to receive from the launch of the drug in Europe.

Vertex is also eligible to receive $105 million from Mitsubishi Tanabe Pharma Corp. related to an amended agreement for the development and commercialization of telaprevir in Japan and certain Far East countries. Following the expected addition of $260 million of cash arising out of the issuance of notes and other agreements, Vertex raised its full year guidance for cash, cash equivalents and marketable securities from approximately $700 million to approximately $800 million.

Telaprevir is being developed under a collaboration agreement with Johnson & Johnson (JNJ), under which Vertex received an upfront milestone payment of $165 million. Approximately 50% of the development costs are being reimbursed by Johnson & Johnson. Upon commercialization, Vertex will receive a mid-20% royalty on sales of telaprevir in Johnson & Johnson’s licensed regions including Europe, while Vertex will retain exclusive rights in the US. The company expects to file a New Drug Application for the drug in the second half of 2010.
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COV, PWRM, MSFT, CSRH, NKE, CVAT, ABT, DrStockPick.com Stock Report!

Dr. Stock Pick — Wed, 30 Sep 2009 18:36:27 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Wednesday September 30, 2009 DrStockPick.com Stock Report! COV, PWRM, MSFT, CSRH, NKE, CVAT, ABT ************************************************************** COV, Covidien plc COV engages in the development, manufacture, and sale of healthcare products for use in clinical and home settings worldwide. The company operates through four segments: Medical Devices, Imaging Solutions, Pharmaceutical Products, [...]

Benlysta Should Be a Blockbuster – Analyst Blog

Zacks Market Commentaries — Mon, 28 Sep 2009 16:52:15 +0000

Earlier this week, Human Genome Sciences Inc. (HGSI) announced that its eagerly anticipated lupus drug Benlysta is expected to cost patients about $20,000 a year. The actual price might also be slightly more than the figure.

Consequently, the drug could reach $1 billion in annual sales if taken by 50,000 patients, which represents a small fraction of those affected by the disease.

In July 2009, Human Genome Sciences and GlaxoSmithKline PLC (GSK) announced that Benlysta met the primary endpoint in BLISS-52, the first of two pivotal phase III trials in patients with serologically active systemic lupus erythematosus (SLE).

In the placebo-controlled BLISS-52 study, the results showed that Benlysta plus standard of care achieved a clinically and statistically significant improvement in patient response rate at Week 52 compared with standard of care alone. Study results also showed that Benlysta was generally well tolerated, with adverse event rates comparable between belimumab and placebo treatment groups.

We remind investors, that Human Genome and GlaxoSmithKline is co-developing Benlysta as a potential treatment for SLE. Benlysta is a human monoclonal antibody that specifically recognizes and inhibits the biological activity of B-lymphocyte stimulator (BLyS). BLyS is a naturally occurring protein discovered by HGS that is required for the development of B-lymphocyte cells into mature plasma B cells. Plasma B cells produce antibodies, the body’s first line of defense against infection.

In lupus, rheumatoid arthritis and certain other autoimmune diseases, elevated levels of BLyS are believed to contribute to the production of autoantibodies -- antibodies that attack and destroy the body’s own healthy tissues. The presence of autoantibodies appears to correlate with disease severity. Preclinical and clinical studies demonstrate that B-cell antagonists can reduce autoantibody levels and help control autoimmune disease activity.

In February and May 2007, Human Genome initiated BLISS-76 and BLISS-52, two pivotal phase III trials of Benlysta. Both phase III trials are double-blind, placebo-controlled, multi-center phase III superiority trials to evaluate the efficacy and safety of Benlysta plus standard of care, versus placebo plus standard of care, in the treatment of patients with active SLE.

Human Genome has completed the enrollment and initial dosing of 826 patients in BLISS-76 in August 2008. Data from BLISS-76 are expected in November 2009. Positive results should lead to a Biologics License Application (BLA) filing in the United States in the first half of 2010.We expect the US approval in early 2011

Positive data from the Bliss-52 study takes the company one step closer to being the first to have a new lupus drug approved in 50 years. Lupus affects about 1.5 million people in the United States and 5 million worldwide.
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XRX, PWRM, ABT, CSRH, CMCSA, CVAT, FMCN, DrStockPick.com Stock Report!

Dr. Stock Pick — Mon, 28 Sep 2009 16:34:01 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Monday September 28, 2009 DrStockPick.com Stock Report! XRX, PWRM, ABT, CSRH, CMCSA, CVAT, FMCN ************************************************************** XRX, Xerox Corp. XRX engages in the development, manufacture, marketing, servicing, and financing of document equipment, software, solutions, and services worldwide. XRX said Monday it will buy Affiliated Computer Services Inc. for $6.4 billion [...]

Pacific Biometrics, Inc. (PBME.OB) Announces Record Financial Results for FY2009

QualityStocks — Mon, 28 Sep 2009 15:13:33 +0000

Pacific Biometrics, Inc. today reported to investors its operating results for FY2009. For the twelve months ended June 30, 2009 (FY2009), the company generated a record $10,881,107 in revenues, a 32% increase compared to a year earlier. Operating income improved to $613,430, compared with an operating loss of $566,026. FY2009 net income totaled $1,235,947, or [...]

Favorable Data from Incyte – Analyst Blog

Zacks Market Commentaries — Thu, 24 Sep 2009 21:01:40 +0000

Recently, Incyte Corporation (INCY) presented impressive data from a mid-stage trial for its pipeline candidate INCB18424 for psoriasis treatment.

The phase IIb trial, carried out on 200 patients over a period of three months, compared three once-daily doses of the drug compared to the placebo. It was observed that patients treated with INCB18424 had a statistically significant improvement over the placebo in reducing total lesion score (erythema + scaling + thickness), which was also the primary endpoint of the trial.

In addition, the trial met its secondary endpoint which was the Physician Global Assessment score and the Psoriasis Area and Severity Index score. Apart from psoriasis, Incyte is conducting trials of INCB18424 for several other indications which include myelofibrosis, polycythemia vera/essential thrombocythemia, rheumatoid arthritis, refractory prostate cancer and multiple myeloma.

Incyte has other potential candidates targeting treatment for diabetes, breast cancer and HIV. However, the company’s liquidity crunch has forced it to focus on the candidates with greatest near term value and accordingly has prioritized the pipeline.

Although we are pleased to see the advancement in the company’s pipeline, we remain concerned about its cash position. At the end of the second quarter, the company had $148 million of cash and cash equivalents along with marketable securities, down from $218 million at the end of last year.

This situation led the company to tap the capital market. Following the liquidity crisis, Incyte announced its intention to offer 18 million shares, the proceeds from which will be used for general corporate purposes, including research and development activities.

The company is so hard pressed for cash that in addition to the share offering, it is issuing $250 million of Convertible Senior Notes due 2015 in a private placement so that it can retire its outstanding debt, which was $402 million at the end of the last quarter.
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New Pain Treatment Triumphs Morphine (OTC:NPHC)

Michael Vlaicu — Fri, 11 Sep 2009 05:52:41 +0000

Nutra Pharma Corp. (Public, OTC:NPHC) Step aside Morphine, the new king of chronic pain treatment has entered the building. With Nutra Pharma#8217;s stock rising nearly 2300% year-to-date, its time we see what all the commotion is about. StocksHaven Investments takes a closer look at Nutra Pharma Corp., which believes will begin generating significant revenues within the next [...]

Three Blockbuster Drugs Seeking NDA (AMEX:AEN)

Michael Vlaicu — Fri, 04 Sep 2009 06:15:47 +0000

Adeona Pharmaceuticals, Inc. (Public, AMEX:AEN) StocksHaven Investments takes a look at Adeona Pharmaceuticals, Inc. which currently has three blockbuster drugs in phase III, and are coming close to NDA status. The first being Trimesta, which tackles Multiple Sclerosis (MS) and Post-partum Depression. Secondly, Zinthionein, a product seeking treatment for Age Related Macular Degeneration (AMD). Lastly, Oral [...]

Huge Penalty for Pfizer – Analyst Blog

Zacks Market Commentaries — Thu, 03 Sep 2009 19:00:45 +0000

The world’s largest drugmaker Pfizer (PFE) now leads the list of largest healthcare fraud settlement payers. The company yesterday announced that it finalized with the U.S. Department of Justice (DoJ) to pay a total of $2.3 billion in penalty. The penalty is related to its off-label promotional practices for Bextra, and other fraudulent marketing practices for the promotion of four drugs. Pfizer also entered into an integrity agreement with the Health and Human Services Department under which it has agreed to ensure proper checks for a period of five years in order to avoid such issues.

In 2005, Bextra was voluntarily withdrawn from the market as it was illegally promoted for several unapproved indications and dosages. In order to resolve the matter, Pfizer agreed to pay a criminal fine of $1.3 billion, which is the largest criminal fine ever imposed in the U.S. In addition, the company agreed to pay $1 billion to settle its illegal promotional allegations of Bextra, anti-psychotic drug Geodon, antibiotic Zyvox, and anti-epileptic drug Lyrica.

Bextra (valdecoxib) was used for inflammation management, stiffness and the pain of osteoarthritis, adult rheumatoid arthritis and painful menstruation. Some adverse events were witnessed by the long term users of the drug like cardiovascular problems and life-threatening skin reactions. Due to these adverse events, Pfizer had to withdraw Bextra from the market in 2005.

The huge settlement payment made by Pfizer is way ahead of Eli Lilly & Co.'s (LLY) $1.42 billion payment to settle its off-label promotional expenses related to Zyprexa in the U.S. between 1999 and 2001 (announced Jan 15). Pfizer recorded the $2.3 billion charge in its fourth quarter and full-year 2008 results following the preliminary agreement reached (on Jan 26) with the U.S. Attorney for the District of Massachusetts.

Pfizer confirmed that no further charges related to this case will be recorded in future. The company will take a charge of $33 million in the current quarter under agreements reached with several state authorities to settle state civil consumer protection allegations related to its past promotional practices of Geodon.

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Wider Label for Bristol Drug – Analyst Blog

Zacks Market Commentaries — Thu, 27 Aug 2009 19:15:13 +0000

Bristol Myers Squibb Co. (BMY) yesterday announced the approval of a broader label for its rheumatoid arthritis drug Orencia by the U.S. Food and Drug Administration (FDA).

The agency approved an addition to the label that supports the use of Orencia (abatacept) in patients suffering from moderate to severe rheumatoid arthritis, duration of which is less than or equal to two years. The drug that recorded global sales of $129 million in 2008 is designed to reduce symptoms of rheumatoid arthritis. However, it should not be administered along with tumor necrosis factor (TNF) antagonists and is not recommended for use in tandem with other biologic rheumatoid arthritis therapies.

As a reminder, the drug was initially approved by the FDA in late 2005 and made commercially available in the U.S. in February 2006. At that time its label indicated the usage of the drug for patients with moderate to severe rheumatoid arthritis who did not respond to other treatment alternatives.

The approval of a broader label was based on clinical data from the Abatacept study that showed Orencia was of use to patients with moderate-to-severe rheumatoid arthritis of less than or equal to two years duration. The agency approved the addition of data from the AGREE trial (Abatacept study to Gauge Remission and joint damage progression in methotrexate-naïve patients with Early Erosive rheumatoid arthritis).

Rheumatoid arthritis is a chronic, autoimmune disease characterized by swollen joints, resulting in chronic pain, stiffness, swelling and fatigue. It restricts motion and results in loss of shape and alignment of joints. The indication affects women more than men.

Bristol Myers operates in a highly competitive industry consisting of a large number of pharmaceutical and biotechnology companies. In addition to branded competition, it is facing a large number of industry patent expirations and aggressive generic competition. Specifically, the patent expiration of Bristol-Myers’ lead drug, Plavix, in 2011 is a matter of concern. Additionally, the drug, an antiplatelet blood thinner indicated to reduce the risk of heart attack in patients with atherosclerosis (the build-up of plaque and hardening of the arteries), will face new competition from Eli Lilly & Co.’s (LLY) recently approved Effient.

However, the company is taking several steps like the recently announced $1 billion extension in cost cuts in 2012-2013, the extension of the Abilify agreement with Otsuka, and the acquisition of Medarex (MEDX) to prepare for the loss of exclusivity of Plavix. We have an Outperform rating on the stock.
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August 17th CEOcast Weekly Newsletter

QualityStocks — Mon, 17 Aug 2009 20:32:35 +0000

Companies featured in this edition of the newsletter: ACTC, CVM, CUR, DKAM, FMTI, ICLK, IMUC, IWEB, OMCM, ONEZ, SIHI, TAGS Markets took pause from their four week run this week, as some less than encouraging economic reports coupled with profit taking led to slight declines in all of the major indices. All told, the [...]

Human Genome Revises Offering – Analyst Blog

Zacks Market Commentaries — Thu, 30 Jul 2009 17:52:42 +0000

Human Genome Sciences Inc. (HGSI) announced that it plans to raise approximately $310 million as net proceeds by selling 23.2 million common shares at $14 per share. This reflects an expansion of the initial public offering where the company had planned to sell 18 million shares in public.

The Rockville, Maryland-based company further stated that the underwriters would be given a month to buy up to an additional 3.48 million common shares to cover any over-allotments. The offering, expected to close on August 3, will lead to considerable dilution in the shareholder base.

Human Genome intends to use the proceeds for general corporate and acquisition or investment purposes. Additionally, this funding arrangement is also expected to provide cash for further development of the pipeline.

As a reminder, Human Genome has a robust and diversified pipeline which includes drugs to treat hepatitis C, lupus, anthrax, cancer, rheumatoid arthritis and HIV/AIDS. The company has recently filed a Biologics License Application for ABthrax for the treatment of inhalation anthrax. Zalbin (formerly Albuferon) has completed phase III development. The filing of global marketing applications is expected in fall 2009.

Additionally, the company has collaborations with pharmaceutical and biotech companies such as Amgen (AMGN), Genentech (DNA) (now part of Roche [RHHBY]), GlaxoSmithKline PLC (GSK), etc. These companies are conducting trials of additional drugs to treat cardiovascular, metabolic and central nervous system diseases.

The recently announced encouraging results of its lupus drug Benlysta is a big positive for the company. However, we would like to see results from another late-stage study for the same indication in November this year, before recommending the shares to investors as it is a high-risk program. Historically, lupus has been found to be difficult to treat. Therefore we are neutral on HGSI’s shares.
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Human Genome Raising Money – Analyst Blog

Zacks Market Commentaries — Wed, 29 Jul 2009 20:54:20 +0000

This week, biopharmaceutical company Human Genome Sciences Inc. (HGSI) announced the commencement of an underwritten public offering of up to 18 million shares of its common stock. The Maryland-based company stated that the underwriters would be given a month’s period to buy up to an additional 2.7 million common shares. While the company should be able to raise funds sufficient to finance operations through this operation, the issuance of shares will lead to considerable dilution in the shareholder base.

The company intends to use the proceeds for general corporate and acquisition or investment purposes. Additionally, this funding arrangement is also expected to provide cash for further development of the pipeline.

As a reminder, Human Genome has a robust and diversified pipeline, which includes drugs to treat hepatitis C, lupus, anthrax disease, cancer, rheumatoid arthritis and HIV/AIDS. The company has recently filed a Biologics License Application (BLA) for ABthrax for the treatment of inhalation anthrax while Zalbin (formerly Albuferon) has completed phase III development, and the filing of global marketing applications is expected in fall 2009.

Additionally, the company has collaborations with pharmaceutical and biotech companies such as Amgen (AMGN), Genentech (DNA) (now part of Roche [RHHBY]), GlaxoSmithKline PLC (GSK), etc. who are conducting trials of additional drugs to treat cardiovascular, metabolic and central nervous system diseases.

The recently-announced encouraging results of its lupus drug Benlysta have caused Human Genome's price to soar. However, we would like to see results from another late-stage study for the same indication in November this year, before recommending the shares to investors as it is a high-risk program. Historically, lupus has been found to be difficult to treat. Therefore, we are neutral on Human Genome’s shares.

Read the full analyst report on "HGSI"
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RXi Pharmaceuticals Corp. (RXII) Acquires License to Advirna Technology

QualityStocks — Mon, 27 Jul 2009 20:35:06 +0000

RXi Pharmaceuticals Corporation, a biopharmaceutical company pursuing proprietary therapeutics based on RNA interference (RNAi), today announced that it has acquired an exclusive license to novel technologies from Advirna LLC that enables in vivo delivery of RNAi therapeutics. The terms of the agreement were not disclosed. The RNAi delivery technologies encompass four distinct approaches, primarily focusing on [...]

Human Genome Achieves BLISS – Analyst Blog

Zacks Market Commentaries — Mon, 20 Jul 2009 16:53:55 +0000

HGSI’s Benlysta meets its endpoints in Bliss-52 phase III trial for lupus

Earlier today, Human Genome Sciences, Inc. (HGSI) and GlaxoSmithKline PLC (GSK) announced that Benlysta met the primary endpoint in BLISS-52, the first of two pivotal phase III trials in patients with serologically active systemic lupus erythematosus (SLE).

In the placebo-controlled BLISS-52 study, the results showed that Benlysta plus standard of care achieved a clinically and statistically significant improvement in patient response rate at Week 52 compared with standard of care alone. Study results also showed that Benlysta was generally well tolerated, with adverse event rates comparable between belimumab and placebo treatment groups.

As a reminder, HGSI and GSK is co-developing Benlysta as a potential treatment for SLE. Benlysta is a human monoclonal antibody that specifically recognizes and inhibits the biological activity of B-lymphocyte stimulator (BLyS). BLyS is a naturally occurring protein discovered by HGS that is required for the development of B-lymphocyte cells into mature plasma B cells. Plasma B cells produce antibodies, the body’s first line of defense against infection.

In lupus, rheumatoid arthritis and certain other autoimmune diseases, elevated levels of BLyS are believed to contribute to the production of autoantibodies -- antibodies that attack and destroy the body’s own healthy tissues. The presence of autoantibodies appears to correlate with disease severity. Preclinical and clinical studies demonstrate that B-cell antagonists can reduce autoantibody levels and help control autoimmune disease activity.

In August 2006, HGSI entered into a definitive worldwide agreement with GSK for the co-development and commercialization of Benlysta. Pursuant to the agreement, HGS is responsible for conducting the Benlysta phase III trials, with assistance from GSK. The companies will share equally in phase III/IV development costs, sales and marketing expenses, and profits of any product commercialized under the agreement.

In February and May 2007, HGS initiated BLISS-76 and BLISS-52, two pivotal phase III trials of BENLYSTA. Both phase III trials are double-blind, placebo-controlled, multi-center phase III superiority trials to evaluate the efficacy and safety of BENLYSTA plus standard of care, versus placebo plus standard of care, in the treatment of patients with active SLE. The primary efficacy endpoint of both trials is the patient response rate at Week 52, as defined by a reduction from baseline in the SELENA SLEDAI score of at least 4 points, no worsening in Physician’s Global Assessment and no worsening in BILAG.

Important secondary endpoints will include the patient response rate at Week 76, the SF-36 Health Survey physical component summary score, fatigue measures and the percentage of patients with reduction from baseline in average prednisone dose at Weeks 40-52.

HGSI has completed the enrollment and initial dosing of 826 patients in BLISS-76 in August 2008. Data from BLISS-76 are expected in November 2009.

Results from the Bliss-52 study showed 57.6 percent of patients taking a high dose of Benlysta experienced an improvement in their symptoms, compared with 43.6 percent who took a placebo. The result was statistically significant and met the main goal of the clinical trial. Of patients who took a low dose of the drug, which is administered once a month by IV infusion, 51.7 percent showed improvement in their symptoms, a figure that was also statistically significant.

With positive data from the Bliss-52 trial, we are anticipating similar results from the Bliss-76 trial. The positive results reduce the risks greatly associated with Benlysta. It is anticipated that a BLA will be filed in the United States in 1H10. We expect the US approval in early 2011. If approved, we expect Benlysta to become a blockbuster for HGSI.

Positive data from the Bliss-52 study takes the company one step closer to being the first to have a new lupus drug approved in 50 years. Lupus affects about 1.5 million people in the United States and 5 million worldwide.
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Array Seeks Cancer Treatment – Analyst Blog

Zacks Market Commentaries — Fri, 17 Jul 2009 22:53:29 +0000

On Jul 15, 2009, Colorado-based biopharmaceutical company Array BioPharma Inc. (ARRY) filed an investigational new drug application (NDA) with the objective of initiating a phase I trial in cancer patients with its most advanced, wholly-owned MEK inhibitor, ARRY-162.

The open-label, multiple dose study is designed to evaluate the tolerability, safety and efficacy of the inhibitor following the oral administration of the drug to advanced cancer patients with solid tumors on a daily basis. The study is expected to commence in the third quarter of 2009.

Array is also evaluating the candidate for arthritis and chronic obstructive pulmonary disease (COPD). Currently, a worldwide phase II, double-blinded study (n=200) for ARRY-162 with active rheumatoid arthritis is in progress.

We think that Array's decision to evaluate its most advanced MEK inhibitor in the field of cancer will benefit cancer patients immensely. Further, management believes that ARRY-162 is not only well-suited for cancer treatment but possesses significant advantages over other MEK inhibitors currently in development, including greater potency, and improved safety and pharmacokinetics.

In addition to its proprietary pipeline, the company has entered into collaborations with leading pharmaceutical and biotechnology companies like AstraZeneca (AZN) and Celgene Corporation (CELG). However, we are concerned about all of Array's R&D programs being in a very early stage of development. This contains high operational risks. Any trial failure(s) is bound to affect its share price adversely. It has no product in the market and, given the early-stage of its pipeline, an Array product hitting the market looks like a distant possibility.

The company is currently seeking to enter new drug discovery collaborations, which will provide research funds. We have a Hold rating on the company's shares since Array possesses a higher risk profile than most investors may be interested in undertaking due to its early-stage pipeline, and its reliance on third-party clinical support.

Read the full analyst report on "ARRY"
Read the full analyst report on "AZN"
Read the full analyst report on "CELG"
Zacks Investment Research

Array’s Arthritis Drug Shows Promise – Analyst Blog

Zacks Market Commentaries — Thu, 09 Jul 2009 21:23:25 +0000

On July 8, 2009, biopharmaceutical company Array BioPharma Inc. (ARRY) presented top-line results from two phase I trials for its lead p38 inhibitor ARRY-797. While one of the studies evaluated ARRY-797 in healthy volunteers in a seven-day dose escalation trial, the other one involved evaluating the inhibitor in a 28-day trial in stable rheumatoid arthritis patients taking methotrexate. The latter study compared two doses of ARRY-797 to placebo.

Although a good tolerance level and a pharmacokinetic profile consistent with earlier trials were revealed by preliminary analysis, the company intends to conduct further detailed studies regarding the inhibitor. Complete results are expected to be presented in 2010.

Early stage of drug development programs & cash burn concern us

All the R&D programs of the company are still in a very early stage. The lead candidate, the ARRY-886 MEK inhibitor program, just entered phase II clinical trial. The negative phase II results from its lead candidate AZD6244 (ARRY-886) is a further cause of disappointment.

The company has a collaboration agreement with AstraZeneca (AZN) for co-development and commercialization of the candidate. We cannot rule out other trial failures especially considering the early stage characteristics of the company’s programs. The company has also collaborated with Celgene Corporation (CELG) for the discovery, development and commercialization of novel therapeutics in cancer and inflammation.

The company’s fragile cash position is also a concern. It has no products in the market and majority of its revenues come from collaborations, license fees and milestone payments. The company laid off 40 employees (about 10% of its work-force) and plans to scale back its discovery research activities. It also intends to enter new drug discovery collaborations which will provide fresh research funds.

We feel that given the early-stage in the pipeline and the company’s reliance on third-party clinical support, Array possesses a higher risk profile than most investors may be interested in undertaking. So we are neutral on the company’s shares at present.

Read the full analyst report on "ARRY"
Read the full analyst report on "AZN"
Read the full analyst report on "CELG"
Zacks Investment Research

Access Pharmaceuticals, Inc.’s (ACCP.OB) Thiarabine Demonstrates Remarkable Ability to Prevent and Treat Rheumatoid Arthritis

QualityStocks — Tue, 07 Jul 2009 15:35:29 +0000

Access Pharmaceuticals, Inc. announced earlier this morning new preclinical data demonstrating that thiarabine, one of the company’s advanced drug delivery technologies, shows extraordinary efficacy in preventing and treating rheumatoid arthritis (RA). In a well-established animal model for RA, a remarkable restoration of joint structure was observed. The studies were conducted at Wayne State University School [...]

Zacks Analyst Blog Highlights: Pozen, Kimberly-Clark Corporation, Enterprise Products Partners, Teppco Partners and Chevron Corporation – Press Releases

Zacks Market Commentaries — Wed, 01 Jul 2009 14:00:43 +0000

For Immediate Release

Chicago, IL - July 1, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Pozen (POZN), Kimberly-Clark Corporation (KMB), Enterprise Products Partners (EPD), Teppco Partners (TPP) and Chevron Corporation (CVX).

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Here are highlights from Tuesday's Analyst Blog:

Pozen Files For Approval of Vimovo

Today, Pozen (POZN) announced the submission of the new drug application (NDA) to the U.S. FDA, seeking marketing approval for Vimovo (proposed trade name for PN-400) for the treatment of signs and symptoms of osteoarthritis, rheumatoid arthritis and ankylosing spondylitis in patients who are at risk for developing NSAID-associated ulcers.

Vimovo is a combination of 500mg enteric coated naproxen and 20mg immediate release esomeprazole. In early December 2008, Pozen released positive top-line data from its 400-301/-302 phase III program testing PN-400 (20mg esomeprazole / 500mg naproxen) vs. 500mg enteric coated naproxen alone. Results show that 400 patients total in both trials taking PN-400 experienced statistically significant fewer number of confirmed gastric ulcers by endoscopy compared to 400 subjects receiving enteric coated naproxen during the six-month period.

Kimberly-Clark to Reduce Workforce by 3%

Kimberly-Clark Corporation (KMB) announced plans to reduce its salaried workforce by approximately 1,600 positions (or 3%) by the end of 2009, which management believes will yield annualized savings of $150 million.

The organizational changes will require charges of $140 million to $150 million (or between $0.24 and $0.26 per share), mostly in the second quarter of 2009 (about $0.19 per share). Management expects to achieve $0.10 per share in savings during the second half of 2009.

Enterprise to buy Teppco

Enterprise Products Partners (EPD) and Enterprise GP Holdings L.P. announced a definitive agreement to merge with Teppco Partners (TPP) along with Teppco's general partner. The merger of the master limited partnerships (MLPs) will take place on a unit-for-unit basis to form the largest publicly traded energy partnership with an enterprise value of more than $26 billion.

The combined partnership will operate under the Enterprise name and trade under the 'EPD' ticker symbol. Post merger, Teppco and its general partner - Texas Eastern Products Pipeline Co. LLC - will become wholly owned subsidiaries of Enterprise. The completion of the merger is subject to regulatory approvals and is expected to take place in the fourth quarter of 2009.

Chevron Begins Steamflood

The Saudi Arabian subsidiary of Chevron Corporation (CVX) started steam injection in its large-scale pilot steamflood project at Wafra field. This Eocene heavy-oil carbonate reservoir lies in the Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia. The $340 million pilot is the final test phase for steamflooding the reservoir. Upon completion, the project would be the world's first commercial conventional steamflood in a carbonate reservoir.

Steamflood technology is an enhanced oil recovery method that involves injecting steam into heavy-oil reservoirs to heat the crude oil underground, reducing its viscosity and allowing its extraction through wells. Chevron has been using this method over the years to produce heavy oil from reservoirs at Kern River, California, and Duri Field, Indonesia. Duri is the biggest producing field that Chevron operates in the country.

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Pozen Files For Approval of Vimovo – Analyst Blog

Zacks Market Commentaries — Tue, 30 Jun 2009 19:42:48 +0000

Today Pozen (POZN) announced the submission of the new drug application (NDA) to the U.S. FDA, seeking marketing approval for Vimovo (proposed trade name for PN-400) for the treatment of signs and symptoms of osteoarthritis, rheumatoid arthritis and ankylosing spondylitis in patients who are at risk for developing NSAID-associated ulcers.

Pozen expects to receive a milestone payment of $10 million when the NDA is formally accepted for review by the FDA. We model this payment (in full) in the third quarter 2009. Assuming a standard review period, the FDA should be set to rule on Vimovo in April or May of 2010.

Given the enormous size of the osteoarthritis market (OA) - estimated at 20-30 million people in the U.S., as well as use in rheumatoid arthritis (RA) and other instances of pain such as ankylosing spondylitis - we see Vimovo as a potential $500 million product. Cox-II drugs such as Vioxx and Celebrex, designed to provide safer gastrointestinal profile, peaked sales at over $7 billion worldwide in 2004 before the Vioxx cardiovascular issues.

The Vimovo "safer naproxen" product looks to have efficacy on par with Vioxx and Celebrex, with low-risk GI damage thanks to the esomeprazole component, and a cardiovascular risk profile determined to be no greater than placebo (risk ratio = 0.97, 95%: 0.87-1.07, McGettigan et al., JAMA, September 12, 2006).

We remind investors that drugs such as Prilosec and Nexium are already approved for daily use with naproxen. Physicians that prescribed Celebrex and Vioxx often recommended patients also take esomeprazole as a safety precaution.

The combination into one pill will greatly improve patient compliance and ease of use. We believe there is significant unmet prescription need caused by the removal of the Cox-II drugs. We believe Vimovo represents a safer option for patients than Cox-II drugs or enteric-coated naproxen.

In fact, we would not be surprised to see AstraZeneca (AZN) and Pozen develop a lower-dose version of PN seeking a potential move to over-the-counter (OTC) once the prescription candidate loses patent protection.

Our only concern is a potential direct competitor to Vimovo from Horizon Therapeutics. HZT-501 is an ibuprofen/famotidine (Advil/Pecid) product currently in phase III trials.

At today's price, Pozen is trading with a market value of only $235 million. The company has no debt and $52 million in cash. Pozen should burn very little cash in 2009. Management's guidance is that the company will exit 2009 with still $45 million on the books - and this assumes no deal for MT-400 Ex-U.S.

Therefore, the "technology" value of Pozen is only about $200 million. Treximet royalties are going to increase significantly in 2010 based on the ramp in sales and the bump-up in rate (from 5% to 18%). The NDA application on Vimovo looks strong.

We expect a similarly strong application in 2011 on PA. By 2013 Pozen should be posting revenues near $200 million, with high profitability. We see 2013 EPS at $2.40 per share. The 2013 P/E multiple is only 3.3x. At this level the stock can still double in value and still be considered "cheap".

Read the full analyst report on "POZN"
Read the full analyst report on "AZN"
Zacks Investment Research

Pharmaceuticals & Biotech – Industry Outlook

Zacks Market Commentaries — Mon, 08 Jun 2009 20:15:11 +0000

The pharmaceutical industry is entering a period of substantial change in 2009. Most of the names in the industry are facing significant patent challenges in the years to come. U.S.-based firms are facing foreign exchange headwinds, as well. Revenue growth is non-existent, and earnings growth is being driven primarily by mergers, cost-cutting and share buybacks. Knowing that investors rarely pay-up for this type of manufactured earnings growth, we struggle to see a broad-based out-performance for the large-cap pharmaceutical sector in 2009.

Valuations, however, are attractive, with several of the largest players trading at PEs below 10x, including: Pfizer (PFE, 7.5x), Eli Lilly (LLY, 8.1x), Merck (MRK, 8.3x), Sanofi (SNY, 7.5x), AstraZeneca (AZN, 7.6x) and GlaxoSmithKline (gsk, 9.3x) based on our fiscal 2009 estimates. Attractive valuations, along with big dividend yields, should protect investors against significant downside risk even if the economy continues to languish well into the second half of the year.

Additionally, expectations are low. Knowing that most of the companies are not expected to generate significant revenue growth, and that cost-cutting initiatives have generally out-paced guidance and financial modeling, any bit of revenue upside could lead to select out-performance at times during the year.

M&A activity remains the wildcard for investment in the sector. We have already seen three significant mega-deals so far in 2009, with Pfizer's $62 billion acquisition of Wyeth (WYE) leading the way. Roche's $46 billion takeover of Genentech and Merck's (MRK) $42 billion acquisition of Schering-Plough (SGP) prove that companies are desperately seeking for ways to grow the top-line while cutting-costs all at the same time.

Big pharmaceutical names are keenly aware of their patient situations, and ARE turning to deal-making for the answer. Most of the industry's largest players are sitting on significant cash balances, and Pfizer, Merck and Roche all proved that capital is available for the top players. We expect more deals to come.

Buy-rated names, including Bristol-Myers (BMY) and Johnson & Johnson (JNJ), are sitting on $9 billion and $14 billion, respectively. Given the difficult cash-raising environment during the second half of 2008, most small to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009.

According to a recent analysis by the Wall Street Transcript, 25% to 35% of all publically traded biotech firms are sitting on less than six months' cash. That has created a frenzy within the sector to form alliances and strike deals. The recent emphasis has been on cancer biotech firms heading up to and now post the American Society of Clinical Oncology (ASCO) meeting. J&J just recently announced its intensions to acquire Cougar Biotech (cgrb) for approximately $1.0 billion in cash.

Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 -- something most managements have been hesitant to do in the past. This should create a much better environment for the biotech industry to push higher in 2009, as sentiment on smaller names has clearly turned positive.

OPPORTUNITIES

We have three 'Buy-rated' names within the large-cap space: Bristol-Myers, Johnson & Johnson, and Abbott Labs (ABT).

For growth funds, we recommend Bristol and Abbott. Bristol is expected to grow earnings by 12% CAGR through 2013. That's tops in the industry. Growth is sustainable with a product suite heavy in attractive areas such as biologics, cancer and cardiovascular drugs. The late-stage pipeline includes three very promising candidates, belatacept, apixaban and Onglyza (saxagliptin), all of which could be blockbusters if approved. We expect an FDA action on Onglyza later this month.

Bristol is also sitting on nearly $10 billion in cash, and has made it clear they are interested in acquiring biologic assets in 2009. The company came up short last year in their bid to acquire ImClone (they lost to Eli Lilly), however rumors earlier in the week were that the company was in talks to establish a stake in Elan Pharmaceuticals (ELN). Regardless, we think Bristol already has an excellent biologic platform, and would view any move to enhance their position with small-to-mid sized strategic acquisitions as a plus.

Growth at Abbott Labs is being driven by blockbuster drugs such as Humira for rheumatoid arthritis and the company's drug-eluting stent, Xience. Plus, Abbott has also been highly acquisitive over the past few years, most recently paying $175 million to pick up Ibis Biosciences, a subsidiary of Isis Pharmaceuticals (ISIS), to enhance the company's position in molecular diagnostics for infectious disease. New products at Abbott that could offer blockbuster sales include TriLipix, which Abbott recently announced AstraZeneca would co-promote in the U.S., and ABT-874 for T-cell driven autoimmune diseases such as psoriasis and Crohn's disease.

Our top-pick for value-focused portfolios is Johnson & Johnson. The company is trading around 1X growth (PE/G) and sitting on $14 billion in cash. Much like Abbott, J&J has been highly acquisitive over the past year, most recently paying $1.1 billion to acquire medical product maker Mentor Corp. in December 2008 and $1.0 billion for cancer biotech firm, Cougar Biotechnology in May 2009. We expect that J&J will continue to look for acquisition targets in both pharma and medical devices throughout the year.

The big opportunity to out-perform in 2009 is to own the names that are going to be acquired. We have no crystal ball, but names that certainly look attractive and fit the model for a large pharmaceutical company to gobble them up include Biogen-Idec (BIIB), Amylin Pharmaceuticals (AMLN), Vertex Pharmaceuticals (VRTX), Acorda Therapeutics (ACOR), Osiris Therapeutics (oSIR), Auxilium Pharmaceuticals (AUXL), OSI Pharmaceuticals (OSIP) and Elan Corp. All of these companies have what big pharma is looking for -- novel compounds with potential blockbuster sales levels at reasonable valuations.

Our top-pick for biotech continues to be Biogen-Idec. Rituxan and Avonex continue to dominate the top-line, but with Tysabri expectations significantly lowered and a late-stage pipeline that boasts seven phase III candidates, we think Biogen is set to out-perform expectations in the years to come. Biogen also possess an enormous biologic manufacturing footprint -- a key asset that could help attract interested suitors during the year.

On the small-cap, or riskier front, we would point investors towards Acorda Therapeutics, with its phase III multiple sclerosis candidate, Fampridine-SR. Finally, two biotech firms are the center of the obesity market, Arena Pharmaceuticals (ARNA) and Vivus Inc. (VVUS), will be looking to do deals in the second half of the year, and both could fetch a hefty premium over their current price if the phase III data continues to look strong for their respective candidates.

WEAKNESSES

We continue to recommend avoiding names that offer little growth or opportunity for a take-out. These include companies developing "me-too" type drugs on hanging on the hopes and prayer's of an FDA approval. Now is not the time to be taking on unnecessary risk. The number of new entity approvals was 24 in 2008, up from 18 in 2007, but the number of rejections and delays was also up.

Throughout 2008 it seemed as though just about every FDA action (PDUFA) date was pushed back and delayed. In 2008, we saw our share of surprise rejections and clinical failures as well. Drug development is a risky business; the success rate on new drugs from preclinical to approval is less than 5%.

Stay away from companies that are all ideas and no assets. Above we discussed some key measures to hang your hat on: cash, dividends, pipelines and strategic assets like biologic manufacturing. If your target company has none of these, now is probably not the best time to roll the dice.

Run from any company looking for money or looking to raise money in the next year. Interest rates on direct financing loans are going to be through the roof, and stock prices are down so big that share offerings will be painfully dilutive. Unless the company is looking to partner with large-cap pharma, expect out-of-cash small-cap biotech to remain out-of-favor.

Above we listed several names that could potentially be taken-out by large-cap pharmaceuticals at some point during the year. In contrast, owning the name doing the acquiring is often a sure-fire way to see quick under-performance. Pfizer's stock dropped by 25% shortly after announcing the Wyeth acquisition.

We would be cautious on three names in particular: Sanofi, AstraZeneca and Eli Lilly, as these are the three largest players in the sector that are likely to "go shopping." We continue to believe the acquisition of Wyeth by Pfizer simply creates an even bigger struggling company. Wyeth is not the saving grace for Pfizer. Both companies have significant patent expirations in the years to come, and both companies have been severely lacking in their R&D productivity over the past few years. We recommend avoiding both names.

Our "counter-point" idea for those seeking a contrary investment is to short Amgen (AMGN). Results over the past few quarters demonstrate the challenging environment for Amgen, specifically with its key products, Aranesp and Enbrel. Management believes that the first quarter represents a trough with respect to product sales. That may be true, but we struggle to see what re-accelerates Amgen's top-line in the second half of the year from the trough.

Management's revenue guidance of $14.4 to $14.8 billion looks high to us, and seems to include significant inventory stocking on key product and/or a big upfront licensing deal for denosumab. We are hesitant to model either. Amgen should be able to meet its EPS target of between $4.55 and $4.75, but with the top-line most likely staying weak, we struggle to see how the stock moves higher.

In our opinion, buying Amgen now means you are supremely confident of denosumab approval in October 2009. Denosumab may just be a surefire blockbuster for Amgen, but there are still three major phase III programs ongoing with the drug, and betting that the FDA will give the thumbs up to a drug like complex biologic drug like denosumab -- on time, on first-cycle -- is something we are not comfortable recommending.

Zacks Investment Research

FDA, Clinical Trial Updates: Pro-Pharma (OTC:PRWP) Looks Promising

Bullish Bankers — Thu, 30 Apr 2009 11:00:21 +0000

Below is a summary of updates to the BioMedReports.com database of over 200 entries included in the FDA and Clinical Trial Calendars. The FDA Calendar includes companies with pending new drug, biological agent, or medical device new product decisions at the FDA sorted by their PDUFA decision deadline dates while the Clinical Trial Calendar encompasses pending [...]

Zacks Industry Outlook Highlights: Bristol-Myers, Johnson & Johnson and Abbott Labs – Press Releases

Zacks Market Commentaries — Fri, 03 Apr 2009 12:33:20 +0000

For Immediate Release

Chicago, IL - April 3, 2009 - Zacks.com releases the latest Industry Outlook. Today's interview is with senior analyst Jason Napodano, who talks about the Pharmaceutical Industry, including Bristol-Myers

(BMY), Johnson & Johnson (JNJ) and Abbott Laboratories (ABT).

A synopsis of today's Industry Outlook is presented below. The full article can be read at http://at.zacks.com/?id=2678.

We have three Buy-rated names within the large-cap space: Bristol-Myers (BMY), Johnson & Johnson (JNJ) and Abbott Laboratories (ABT).

For growth funds, we recommend Bristol and Abbott. Bristol is expected to grow earnings by 12% CAGR through 2012. That's tops in the industry. Growth is sustainable with a product suite heavy in attractive areas such as biologics, cancer and cardiovascular drugs. The late-stage pipeline includes two very promising candidates: apixaban and saxagliptin -- both of which could be blockbusters if approved.

Growth at Abbott is being driven by blockbuster drugs such as Humira for rheumatoid arthritis and the company's drug-eluting stent, Xience. Abbott has also been highly acquisitive over the past few years, most recently paying $175 million to pick up Ibis Biosciences, a subsidiary of Isis Pharmaceuticals, to enhance the company's position in molecular diagnostics for infectious disease.

Our top-pick for value focused portfolios is Johnson & Johnson. The company is trading around 1X growth (PE/G) and sitting on $16 billion in cash. Much like Abbott, J&J has been highly acquisitive over the past year, most recently paying $1.1 billion to acquire medical product maker Mentor Corp. in December 2008. We expect that J&J will continue to look for acquisition targets in both pharma and medical devices throughout the year.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2679.

About Zacks

The performance of the Zacks Rank portfolios shown above for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from Jan 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month.

The portfolios created monthly from 1988 through September 2006 exclude ADRS and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. 2007 returns are for the period of Jan 1 - Jun 30, 2007. These performance numbers have been audited from 1995 through 2003 by Autschuler Melovan, a division of American Express Financial.

Contacts:

Mark Vickery

312-265-9380

Visit: www.zacks.com

Zacks Investment Research

Pharmaceutical Industry – Industry Outlook

Zacks Market Commentaries — Fri, 03 Apr 2009 05:00:00 +0000

Knowing that investors rarely pay-up for this type of manufactured earnings growth, we struggle to see a broad-based out-performance for the large-cap pharmaceutical sector in 2009.

Valuations, however, are attractive, with several of the largest players trading at PEs below 10x, including Pfizer (7x), Eli Lilly (8x), Merck (8x), Sanofi (7x), AstraZeneca (7x) and GlaxoSmithKline (9x) based on our fiscal 2009 estimates. Attractive valuations, along with big dividend yields, should protect investors against significant downside risk even if the economy continues to languish well into the second half of the year.

Additionally, expectations are low. Knowing that most of the companies are not expected to generate significant revenue growth, and that cost-cutting initiatives have generally out-paced guidance and financial modeling, any bit of revenue upside could lead to select out-performance at times during the year.

M&A activity remains the wildcard for investment in the sector. We have already seen three significant deals so far in 2009, with PfizerÕs $62 billion acquisition of Wyeth leading the way. RocheÕs $46 billion takeover of Genentech and MerckÕs $42 acquisition of Schering-Plough prove that companies are desperately seeking for ways to grow the top-line while cutting-costs all at the same time.

Big pharmaceutical names are keenly aware of their patient situations and turning to deal-making for the answer. Most of the industryÕs largest players are sitting on significant cash balances, and Pfizer, Merck, and Roche all proved that capital is available for the top players. We expect more deals to come.

Buy rated names, including Bristol-Myers and Johnson & Johnson, are sitting on $10 billion and $16 billion, respectively. Given the difficult cash-raising environment during the second half of 2008, most small- to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009.

Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 -- something most managements have been hesitant to do in the past. This should create a much better environment for the biotech industry to push higher in 2009 as sentiment on smaller names is starting to turn positive.

OPPORTUNITIES

We have three Buy-rated names within the large-cap space: Bristol-Myers (BMY), Johnson & Johnson (JNJ) and Abbott Laboratories (ABT).

For growth funds, we recommend Bristol and Abbott. Bristol is expected to grow earnings by 12% CAGR through 2012. ThatÕs tops in the industry. Growth is sustainable with a product suite heavy in attractive areas such as biologics, cancer and cardiovascular drugs. The late-stage pipeline includes two very promising candidates: apixaban and saxagliptin -- both of which could be blockbusters if approved.

Growth at Abbott is being driven by blockbuster drugs such as Humira for rheumatoid arthritis and the companyÕs drug-eluting stent, Xience. Abbott has also been highly acquisitive over the past few years, most recently paying $175 million to pick up Ibis Biosciences, a subsidiary of Isis Pharmaceuticals, to enhance the companyÕs position in molecular diagnostics for infectious disease.

Our top-pick for value focused portfolios is Johnson & Johnson. The company is trading around 1X growth (PE/G) and sitting on $16 billion in cash. Much like Abbott, J&J has been highly acquisitive over the past year, most recently paying $1.1 billion to acquire medical product maker Mentor Corp. in December 2008. We expect that J&J will continue to look for acquisition targets in both pharma and medical devices throughout the year.

The big opportunity to out-perform in 2009 is to own the names that are going to be acquired. We have no crystal ball, but names that certainly look attractive and fit the model for a large pharmaceutical company to gobble them up include Biogen-Idec, Amylin Pharmaceuticals, Vertex Pharmaceuticals, Acorda Therapeutics, Osiris Therapeutics, Auxilium Pharmaceuticals, OSI Pharmaceuticals, and Elan Corp. All of these companies have what big pharma is looking for -- novel compounds with potential blockbuster sales levels at reasonable valuations.

Our top-pick for biotech continues to be Biogen-Idec (BIIB). Rituxan and Avonex continue to dominate the top-line, but with Tysabri expectations significantly lowered and a late-stage pipeline that boasts seven phase III candidates, we think Biogen is set to out-perform expectations in the years to come. Biogen also possess an enormous biologic manufacturing footprint -- a key asset that could help attract an interested suitor during the year.

On the small-cap, or riskier front, we would point investors towards Osiris Therapeutics (OSIR) with its phase III stem cell candidate, Prochymal, and Acorda Therapeutics (ACOR), with its phase III multiple sclerosis candidate, Fampridine-SR.

WEAKNESSES

We continue to recommend avoiding names that offer little growth or opportunity for a take-out. These include companies developing "me-too" type drugs on hanging on the hopes and prayers of an FDA approval. Now is not the time to be taking on unnecessary risk. The number of new entity approvals was 24 in 2008, up from 18 in 2007, but the number of rejections and delays was also up.

Throughout 2008 it seemed as though just about every FDA action (PDUFA) date was pushed back and delayed. In 2008 we saw our share of surprise rejections and clinical failures as well. Drug development is a risky business; the success rate on new drugs from preclinical to approval is less than 5%.

Stay away from companies that are all ideas and no assets. Above, we discussed some key measures to hang your hat on: cash, dividends, pipelines and strategic assets like biologic manufacturing. If your target company has none of these, now is probably not the best time to roll the dice.

Run from any company looking for money or looking to raise money in the next year. Interest rates on direct financing loans are going to be through the roof, and stock prices are down so big that share offerings will be painfully dilutive. Unless the company is looking to partner with large-cap pharma, expect out-of-cash small-cap biotech to remain out-of-favor.

Above we listed several names that could potentially be taken out by large-cap pharmaceuticals at some point during the year. In contrast, owning the name doing the acquiring is often a sure-fire way to see quick under-performance. PfizerÕs stock dropped by 25% shortly after announcing the Wyeth acquisition. We would be cautious on three names in particular: Sanofi (SNY), AstraZeneca (AZN) and Eli Lilly (LLY), as these are the three largest players in the sector that are likely to "go shopping."Zacks Investment Research

Pharmaceutical Industry – Industry Outlook

Zacks Market Commentaries — Thu, 02 Apr 2009 21:26:38 +0000

The Best Pipeline In Biotech – Analyst Blog

Zacks Market Commentaries — Mon, 30 Mar 2009 20:56:29 +0000

Highlights include Biogen Idec, Inc. (BIIB), AstraZeneca plc (AZN), Bristol-Myers Squibb, Inc. (BMY) and Sanofi-Aventis SA (SNY).

R&D Day Highlights the Best Pipeline In Biotech

Last week, Biogen Idec (BIIB) held an R&D Day, highlighting the broad depth of the company's pipeline. In total, Biogen Idec boasts 7 programs in phase III registration programs and 20 other programs in phase II "proof-of-concept" programs. Biogen's development programs span oncology, neurology and cardiovascular disease, and include both small molecules and biologics. In our opinion, it's the best pipeline in biotech.

Phase III / Registration programs include:

BG-12: An anti-inflammatory second generation oral fumaric acid molecule that offers a more convenient and potentially neuroprotective treatment option for multiple sclerosis. BG-12 is currently in 2 phase III trials, DEFINE and CONFIRM, with data expected in 2010 and 2011.
Ocrelizumab: A second generation humanized monoclonal antibody designed to target CD20 positive B-cells as a treatment for rheumatoid arthritis (RA) in phase III and relapsing / remitting multiple sclerosis (RRMS) in phase II. Biogen is building off its experience with Rituxan, the first-generation anti-CD20 molecule, and collaborating with partners Genentech (DNA) and Roche.
BIIB-017: A pegylated interferon beta-1a that offers similar efficacy and tolerability to traditional interferon beta with potentially reduced frequency of administration designed to improve convenience and compliance. Biogen is currently designing a phase III program called ADVANCE for BIIB-017 that will seek to enroll over 1200 patients and follow 2 doses of PEG-IFN b-1a over 2 years.
Lixivaptan: A V2 receptor small molecule antagonist that suppresses the action of vasopressin, an antidiuretic hormone, for the potential treatment of hyponatremia and chronic heart failure. The registration program for lixivaptan in hyponatremia includes 3 phase III trials, BALANCE, LIBRA and HARMONY.
Adentri: A small molecule adenosine A1 receptor antagonist designed to disrupt tubular glomerular feedback to preserve renal function and increase sodium reabsorption leading to increases in natriuresis and dieresis in patients with heart failure. Biogen is currently in 2 phase III programs with Adentri, TRIDENT and POSIDON, testing an intravenous and oral form of Adentri, respectively, in patients with acute decompensated heart failure and renal insufficiency.
Galiximab: A first-in-class monoclonal antibody that targets CD80 to induce antibody dependent mediated cellular cytotoxicity (ADCC) on malignant B cells in patients with follicular lymphomas. Biogen believes that galiximab is synergistic with Rituxan, and has potential uses in relapsed follicular non-Hodgkin's lymphoma (NHL) and Hodgkin's disease. Phase II data shows that galiximab, when added to Rituxan, significantly improves response rate and event-free survival.
Lumiliximab: A monoclonal antibody that binds human CD23 at a high affinity with the goal of apoptotic cell death via intrinsic mitochondrial pathway in patients with relapsed chronic lymphocytic leukemia (CLL). Biogen is currently testing lumiliximab in a phase II/III combination program with Rituxan and chemotherapy.

Besides these late-stage candidates, Biogen has several interesting early-stage programs, including: GA101, a 3rd-generation anti-CD20 Mab with preclinical data suggesting superiority to Rituxan, CDP-323 and daclizumab, two Mabs with potential use in multiple sclerosis, and BIIB-014, an A2a antagonist for Parkinson's Disease.

We note that our financial models assume contribution from none of these candidates to the revenue line between now and 2013, but dose assumes all the cost to develop these candidates to commercialization. As biotech development typically goes, not all the data readouts on these above candidates will be positive. We had previously includes baminercept, a failed phase II candidate for rheumatoid arthritis in our financial model, as well as sales of Rituxan in lupus nephritis.

However, Biogen Idec management and the R&D capabilities of the company are among the best in the business, and we expect upside to our revenue forecast to ensue over the next several years as several of the above late-stage products reach commercialization.

Normalcy is returning to the financial markets, and well-capitalized large-cap pharmaceutical companies are going shopping. We have already seen three significant deals with Pfizer-Wyeth, Merck-Schering, and Roche-Genentech. We think Biogen should be at the top of anyone's shopping list. Names including AstraZeneca (AZN), Bristol-Myers (BMY) and Sanofi-Aventis (SNY) seem to make the most sense. Today, at $52, the name is significantly under-valued. Our target is $62 per share.

Read the full analyst report on "BIIB"
Read the full analyst report on "AZN"
Read the full analyst report on "BMY"
Read the full analyst report on "SNY"
Zacks Investment Research

How to Play the Healthcare Sector

Bullish Bankers — Mon, 30 Mar 2009 11:00:43 +0000

The recent volatility from the Healthcare sector has left many investors weary about where to place their money. General market swings aside, M&A activity and legislative developments have intensified the uncertainty in the sector, but have also lead to many investment opportunities. M&A has been very exciting and has ramped up heavily in the last few [...]

Waxman’s Bill Bad for Biotech – Analyst Blog

Zacks Market Commentaries — Thu, 12 Mar 2009 18:12:36 +0000

Highlighted companies include Genentech, inc. (DNA), Amgen, Inc. (AMGN) and Wyeth (WYE).

Waxman's Bill Bad for Biotech Companies (and Doctors, Patients and America)

California Representative Henry Waxman (D-CA), Chairman of the House Energy and Commerce Committee, has proposed legislation, along with his colleagues, that would give the U.S. Food and Drug Administration (FDA) the authority to approve generic (bioequivalent) versions of biotech drugs. As of now, there exists no path to approval for so called follow-on biologics as there is with small-molecule pharmaceutical products.

According to the Wall Street Journal, the main contention on the bill remains how many years of market exclusivity a product would receive after approval. Mr. Waxman is calling for 5 years, whereas the biotech companies and trade organizations are asking for 14 years.

This is a serious issue for investors in biotechnology stocks, in our view. Allowing only 5 years of market exclusivity would be devastating to the industry. Biologic drugs are enormously expensive to develop, and often take the companies several years of strong sales to recoup those costs. Allowing only 5 years of exclusivity would stiffen development of lifesaving drugs and send major biotechnology companies scrambling to survive.

The Development of Blockbuster Avastin

Take for example Genentech's (DNA) blockbuster cancer drug, Avastin. Avastin was approved in early 2004 for the treatment of first-line colorectal cancer. If Mr. Waxman had had his way back in 2004, Avastin would now be off patent protection and available for generic firms to create a copycat product.

This may sound like a fantastic idea. After all, Avastin can cost over $100,000 per year depending on the indication and the dosing prescribed. In the first 5 years on the market, Avastin posted U.S. sales of $8.4 billion. If we look at Genentech's average operating margin over that time of around 38%, we can estimate that Avastin has contributed approximately $3.2 billion in operating profits to the company over the first 5 years. Not bad, not bad at all.

But in total, Genentech (and partner Roche) have spent close to $3 billion on Avastin's development. The drug was approved for use in lung cancer in 2007 and breast cancer in 2008. The product is currently under FDA review for brain cancer and renal cell cancer as well. Additional clinical programs are also underway in ovarian cancer, prostate cancer and pancreatic cancer.

Remember, if Mr. Waxman had his way, Avastin would now be non-exclusive. Would Genentech have spent any of the additional dollars to develop Avastin in lung, breast, brain, or renal cancer knowing the exclusivity on the drug was set expire in early 2009? Genentech is currently testing the drug as an adjuvant to colon cancer surgery -- an indication that, if approved, could add billions to the products peak sales level. This data is expected in April / May 2009.

Certainly this is a program that would never have initiated under Mr. Waxman's proposal. Avastin is a drug with proven statistical significance in extending people's lives. In its 6th year on the market, Genentech is still spending hundreds of millions in its development. The company clearly deserves more than 5 years to reap the rewards.

Another Example: Herceptin

Genentech's Herceptin is another example of where a company clearly needs more than 5 years of exclusivity to develop its drugs. Herceptin was approved in late 1998 for the treatment of metastatic breast cancer. In its first 5 years on the market, Herceptin posted sales of $1.5 billion in the U.S. In April 2005 -- 2 years after Mr. Waxman's new proposal would have taken away the exclusivity on Herceptin -- Genentech release some of the most impressive data on cancer treatment to date. A phase III trial demonstrated that Herceptin, when used as an adjuvant to breast cancer surgery, demonstrated a 52% reduction in disease recurrence and a 33% reduction in death for women taking the drug.

Sales of Herceptin soared on the news. Herceptin posted sales in 2006 of $1.3 billion, up 74% from 2005. Genentech never would have conducted this adjuvant breast cancer program if Herceptin would have lost exclusivity in 2003, and hundreds of thousands of women since that time never would have received the drug's life-saving abilities in the adjuvant setting.

Avastin is an example of where Mr. Waxman's bill would be bad for a biotech company. Avastin's enormously profitable for Genentech now, especially given all the additional indications. But those are indications we may have never seen without extended periods of market protection. Similarly, keeping Herceptin exclusive has clearly benefited patients. But there are arguments that allowing generic biotech products after five years would hurt doctors, as well.

The Case of Amgen's Aranesp

Amgen's (AMGN) Aranesp, one of the world's best selling biotechnology products, was approved in September 2001 for anemia associated with cancer treatment. Over the following 5 years, Aranesp delivered global sales to Amgen totaling an astonishing $11.8 billion. As doctors became more and more comfortable with Aranesp's anti-anemia properties, many began using the drug in patients where the underlying anemia was caused by the cancer (not the cancer medication).

Amgen conducted a clinical trial in an attempt to prove this theoretical use and in January 2007 -- 4 months after the exclusivity would have expired under Mr. Waxman's proposal -- the data came out showing exactly the opposite conclusion. Aranesp was doing more harm than good to cancer anemia patients. To everyone's surprise, the drug was actually increasing the mortality rate.

Sales of the drug plunged 25% since that time, and doctors have since stopped using Aranesp in anemia of cancer patients. Amgen would have never conducted this program knowing the data would not be expected until after market exclusivity, and doctors would to this day still continue to be using the drug in a harmful manner.

Amgen is conducting 2 additional large-scale programs with Aranesp that are ongoing right now. The TREAT program is a 4,000-patient trial studying whether or not Aranesp can help reduce cardiovascular events in patients with renal insufficiency, and the RED-HF program is a 3,400-patient trial studying whether or not Aranesp can help reduce anemia in patients with heart failure. These clinical trial results -- not expected until several years after the 5 year market anniversary -- will also help guide doctors on how best to use Amgen's blockbuster drug.

The Downside of Going Generic

Mr. Waxman's motivation is to save consumers thousands of dollars by allowing cheaper alternatives to biotech drugs. We noted above Avastin's steep price of nearly $100,000 per year. A generic product could cost half the price. But generic companies do not conduct clinical trials to expand indications. Generic companies do not spend time with doctors explaining the benefits, the risk, and how to best use their drugs. The sales forces are significantly smaller, and there are no advertising dollars spent on convincing you to "ask your doctor" about the drug.

One Final Example: Enbrel

Amgen and Wyeth's (WYE) Enbrel was approved in 1998 for the treatment of rheumatoid arthritis in the U.S. Enbrel posted sales of $6.1 billion worldwide in 2008, making it the world's best selling biologic drug and one of the top ten pharmaceutical products on the market today.

The infrastructure that exists today to get Enbrel to patients in enormous, from the hundreds of thousands of sales representatives, to the multiple manufacturing facilities, and to the print, radio and television advertising dollars both Amgen and Wyeth spend to market the product. Plus, Amgen and Wyeth are still spending hundreds of millions of dollars to conduct clinical programs to support Enbrel's use and quantify Enbrel's risk.

A small fraction of this infrastructure would exist today if Enbrel had lost market exclusivity in 2003. Plus, since 2003, Enbrel has been approved for psoriasis, ankylosing spondylitis, psoriatic arthritis and juvenile rheumatoid arthritis. None of those approvals, or any of the economic growth created by those approvals, would exist today if Enbrel went generic 6 years ago.

Five years of market exclusivity for newly approved biologic drugs is absurd. But it is not only bad for biotech companies; it is bad for doctors, patients and America as well. Two industry trade groups -- Pharmaceutical Research and Manufacturers of America and Bio -- are calling for 14 years of market exclusivity instead.

President Obama's healthcare reform proposal looks to compromise with 10 years of exclusivity. We are hoping that Mr. Waxman and his colleagues listen to reason as the debate continues. This would clearly be better for all.

Read the full analyst report on "DNA"
Read the full analyst report on "AMGN"
Read the full analyst report on "WYE"
Zacks Investment Research

Beacon Equity Research Featured Company: Amgen Inc. (AMGN)

QualityStocks — Tue, 24 Feb 2009 15:00:17 +0000

Amgen Inc. is a global biotechnology company engaged in the discovery, development, manufacture and commercialization of human therapeutics based on advances in cellular and molecular biology. The company has research programs in metabolic disorders and osteoporosis, inflammation, oncology, neuroscience and hematology. Amgen is regarded to be the largest independent biotechnology company in the U.S. The [...]

Pharmaceuticals – Zacks Analyst Interviews

Zacks Market Commentaries — Wed, 11 Feb 2009 00:00:00 +0000

Large pharmaceutical companies all seem to be in a similar boat heading into 2009. Most of the names in the industry are facing significant patent challenges in the years to come. U.S.-based firms are facing foreign exchange headwinds as well. Revenue growth is non-existent, and earnings growth is being driven primarily by cost-cutting and share buybacks.

Knowing that investors rarely pay-up for this type of manufactured earnings growth, we struggle to see a broad-based out-performance for the large-cap pharmaceutical sector in 2009.

Valuations, however, are attractive, with several of the largest players trading at PEs below 10x, including Pfizer (PFE, 7x), Eli Lilly (LLY, 9x), Merck (MRK, 9x), Sanofi (SNY, 9x), and Schering-Plough (SGP, 10x) based on our fiscal 2009 estimates. Attractive valuations, along with big dividend yields, should protect investors against significant downside risk even if the economy continues to languish well into the second half of the year.

M&A activity remains the wildcard for investment in the sector. We have already seen a significant number of deals so far in 2009, with Pfizer's $62 billion acquisition of Wyeth (WYE) leading the way. Roche's $42 billion offer to Genentech (DNA) is not too far behind, showing that big pharmaceutical names are keenly aware of their patients' situations and turning to biotech for answers.

Most of the industry's largest players are sitting on significant cash balances, and if Pfizer's five-bank model for short-term funding holds, additional capital is available for the top players. This should allow for a significant deal activity later in the year.

Buy-rated names, including Bristol-Myers (BMY) and Johnson & Johnson (JNJ), are sitting on $10 billion and $16 billion, respectively. Given the difficult cash-raising environment during the second half of 2008, most small to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009.

Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 -- something most managements have been hesitant to do in the past. This should create a much better environment for the biotech industry to push higher in 2009, as sentiment on smaller names is starting to turn positive.

OPPORTUNITIES

We have three Buy-rated names within the large-cap space: Bristol-Myers (BMY), Johnson & Johnson (JNJ) and Abbott Labs (ABT). For growth funds, we recommend Bristol and Abbott.

Bristol is expected to grow earnings by 12% CAGR [compound annual growth rate] through 2012. That's tops in the industry. Growth is sustainable with a product suite heavy in attractive areas such as biologics, cancer and cardiovascular drugs. The late-stage pipeline includes two very promising candidates, apixaban and saxagliptin, both of which could be blockbusters if approved.

Growth at Abbott is being driven by blockbuster drugs such as Humira for rheumatoid arthritis and the company's drug-eluting stent, Xience. Abbott has also been highly acquisitive over the past few years, most recently paying $175 million to pick up Ibis Biosciences, a subsidiary of Isis Pharmaceuticals (ISIS), to enhance the company's position in molecular diagnostics for infectious disease.

Our top-pick for value-focused portfolios is Johnson & Johnson. The company is trading around 1X growth (PE/G) and sitting on $16 billion in cash. Much like Abbott, J&J has been highly acquisitive over the past year, most recently paying $1.1 billion to acquire medical product maker Mentor Corp. in December 2008. We expect that J&J will continue to look for acquisition targets in both pharma and medical devices throughout the year.

The big opportunity to out-perform in 2009 is to own the names that are going to be acquired. We have no crystal ball, but names that certainly look attractive and fit the model for a large pharmaceutical company to gobble them up include Biogen-Idec (BIIB), Amylin Pharmaceuticals (AMLN), Vertex Pharmaceuticals (VRTX), Acorda Therapeutics (ACOR), Osiris Therapeutics (OSIR), Auxilium Pharmaceuticals (AUXL), Arena Pharmaceuticals (ARNA), OSI Pharmaceuticals (OSIP) and Elan Corp. (ELN). All of these companies have what big pharma is looking for -- novel compounds with potential blockbuster sales levels at reasonable valuations.

Our top-pick for biotech continues to be Biogen-Idec. Rituxan and Avonex continue to dominate the top-line, but with Tysabri expectations significantly lowered and a late-stage pipeline that boasts six phase III candidates, we think Biogen is set to out-perform expectations in the years to come. Biogen also possess an enormous biologic manufacturing footprint -- a key asset that could help attract an interested suitor during the year.

On the small-cap, or riskier front, we would point investors towards Osiris Therapeutics with its phase III stem cell candidate, Prochymal, and Acorda Therapeutics, with its phase III multiple sclerosis candidate, Fampridine-SR.

WEAKNESSES

We continue to recommend avoiding names that offer little growth or opportunity for a take-out. These include companies developing "me-too" type drugs hanging on the hopes and prayers of FDA approval. Now is not the time to be taking on unnecessary risk.

The number of new entity approvals was 24 in 2008, up from 18 in 2007, but the number of rejections and delays was also up. Throughout 2008 it seemed as though just about every FDA action (PDUFA) date was pushed back and delayed. In 2008, we saw our share of surprise rejections and clinical failures as well. Drug development is a risky business; the success rate on new drugs from preclinical to approval is less than 5%.

Stay away from companies that are all ideas and no assets. Above we discussed some key measures to hang your hat on: cash, dividends, pipelines and strategic assets like biologic manufacturing. If your target company has none of these, now is probably not the best time to roll the dice.

Above we listed several names that could potentially be taken-out by large-cap pharmaceuticals at some point during the year. In contrast, owning the name doing the acquiring is often a sure-fire way to see quick under-performance. Pfizer's stock dropped by 25% shortly after announcing the Wyeth acquisition.

We would be cautious on three names in particular: Sanofi (SNY), AstraZeneca (AZN) and Merck (MRK), as these are the three largest players in the sector that are likely to "go shopping."
"BIIB" Free Stock Analysis: Buy? Sell? Hold?
"BMY" Free Stock Analysis: Buy? Sell? Hold?
"ABT" Free Stock Analysis: Buy? Sell? Hold?
"PFE" Free Stock Analysis: Buy? Sell? Hold?
"JNJ" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Pharmaceuticals

Zacks Market Commentaries — Tue, 10 Feb 2009 13:22:05 +0000

Knowing that investors rarely pay-up for this type of manufactured earnings growth, we struggle to see a broad-based out-performance for the large-cap pharmaceutical sector in 2009.

Valuations, however, are attractive, with several of the largest players trading at PEs below 10x, including Pfizer (PFE, 7x), Eli Lilly (LLY, 9x), Merck (MRK, 9x), Sanofi (SNY, 9x), and Schering-Plough (SGP, 10x) based on our fiscal 2009 estimates. Attractive valuations, along with big dividend yields, should protect investors against significant downside risk even if the economy continues to languish well into the second half of the year.

M&A activity remains the wildcard for investment in the sector. We have already seen a significant number of deals so far in 2009, with Pfizer's $62 billion acquisition of Wyeth (WYE) leading the way. Roche's $42 billion offer to Genentech (DNA) is not too far behind, showing that big pharmaceutical names are keenly aware of their patients' situations and turning to biotech for answers.

Buy-rated names, including Bristol-Myers (BMY) and Johnson & Johnson (jnj), are sitting on $10 billion and $16 billion, respectively. Given the difficult cash-raising environment during the second half of 2008, most small to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009.

Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 -- something most managements have been hesitant to do in the past. This should create a much better environment for the biotech industry to push higher in 2009, as sentiment on smaller names is starting to turn positive.

OPPORTUNITIES

We have three Buy-rated names within the large-cap space: Bristol-Myers (BMY), Johnson & Johnson (JNJ) and Abbott Labs (ABT). For growth funds, we recommend Bristol and Abbott.

Growth at Abbott is being driven by blockbuster drugs such as Humira for rheumatoid arthritis and the company's drug-eluting stent, Xience. Abbott has also been highly acquisitive over the past few years, most recently paying $175 million to pick up Ibis Biosciences, a subsidiary of Isis Pharmaceuticals (ISIS), to enhance the company's position in molecular diagnostics for infectious disease.

The big opportunity to out-perform in 2009 is to own the names that are going to be acquired. We have no crystal ball, but names that certainly look attractive and fit the model for a large pharmaceutical company to gobble them up include Biogen-Idec (BIIB), Amylin Pharmaceuticals (AMLN), Vertex Pharmaceuticals (VRTX), Acorda Therapeutics (ACOR), Osiris Therapeutics (OSIR), Auxilium Pharmaceuticals (AUXL), Arena Pharmaceuticals (ARNA), OSI Pharmaceuticals (OSIP) and Elan Corp. (ELN). All of these companies have what big pharma is looking for -- novel compounds with potential blockbuster sales levels at reasonable valuations.

WEAKNESSES

We would be cautious on three names in particular: Sanofi (SNY), AstraZeneca (AZN) and Merck (MRK), as these are the three largest players in the sector that are likely to "go shopping."

"BMY" Free Stock Analysis: Buy? Sell? Hold?
"BIIB" Free Stock Analysis: Buy? Sell? Hold?
"ABT" Free Stock Analysis: Buy? Sell? Hold?
"JNJ" Free Stock Analysis: Buy? Sell? Hold?
"PFE" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Biogen Too Attractive to Ignore – Analyst Blog

Zacks Market Commentaries — Fri, 06 Feb 2009 15:37:57 +0000

Highlighted companies include Biogen Idec (BIIB), Genentech (DNA), Merck (MRK) and Sanofi-Aventis (SNY).

At 13x our 2009 EPS of $4.05 per share, we believe that Biogen Idec's (BIIB) stock is too attractive to ignore. Valuation is below the biotech peer-group average, where several names are trading at a significant premium.

The company should post non-GAAP EPS up roughly 11% in 2009, even with all the Tysabri PML issues. However, valuation alone is not enough of a reason to buy the stock. We are comfortable with owning the name here based on two other reasons.

Firstly, Biogen has a significant late-stage pipeline. There are 22 programs in phase II or beyond. Six of these products are in phase III registration programs right now: lumiliximab for chronic lymphocytic leukemia (CLL), galiximab for non-Hodgkin's lymphoma (NHL), BG-12 for relapsing / remitting multiple sclerosis (RR-MS), lixivaptan for hyponatremia, Adentri for acute decompensated congestive heart failure (ADHF), and ocrelizumab for rheumatoid arthritis and lupus nephritis.

There are also several programs in phase II trials, including daclizumab for RR-MS, volociximab for ovarian cancer, the HSP-90 inhibitor for gastrointestinal stromal tumors (GIST), CDP-323 for RR-MS, BIIB-014 for Parkinson's disease, and rFactor IX in hemophilia B.

Additionally, Biogen and Rituxan development partner Genentech (DNA) are in phase III trial called LUNAR with Rituxan for lupus nephritis, and just released positive phase III data for chronic lymphocytic leukemia (CLL) with the CLL-08 and REACH programs, and in RA with the IMAGE study. In our opinion, this is the best pipeline in all of biotech.

And secondly, Biogen has one of the largest biologic manufacturing capacities in the world. There are significant operations on both the East and West Coast of the U.S., as well as internationally. Independent sources (like Evaluate Pharma) predict that by 2012, biotechnology products will account for nearly a fourth of the entire market, up from only 16% in 2007. As large pharmaceutical companies move with greater and greater force into the biologic market, manufacturing capacity and intellectual property become highly coveted assets. Biogen possess perhaps the strongest acquirable biologic platform in the world (assuming Roche takes out Genentech).

When normalcy returns to the financial markets, and well-capitalized large-cap pharmaceutical companies look to go shopping in 2009, we believe Biogen will be at the top of the list. We have already seen two significant deals (Pfizer-Wyeth and Roche-Genentech). Names including Merck (MRK) and Sanofi-Aventis (SNY) seem to make the most sense. Today, at $50, the name is significantly under-valued. Carl Icahn agrees. Our target is $62 per share.

Read the full analyst report on BIIB

Read the full analyst report on DNA

Read the full analyst report on MRK

Read the full analyst report on SNY

"BIIB" Free Stock Analysis: Buy? Sell? Hold?
"MRK" Free Stock Analysis: Buy? Sell? Hold?
"DNA" Free Stock Analysis: Buy? Sell? Hold?
"SNY" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Pharmaceuticals – Zacks Analyst Interviews

Zacks Market Commentaries — Tue, 06 Jan 2009 00:00:00 +0000

We are generally positive on the pharmaceutical industry heading into 2009. We expect the majority of stocks to fair far better in 2009 than they did in 2008, based on a number of attributes.

Firstly, almost all the names in the group are trading at very reasonable valuations. Several of the largest players are trading at PEs below 10x, including Pfizer Ltd. (PFE, 8x), Eli Lilly & Co. (LLY, 9x), Merck (MRK, 9x), AstraZeneca (AZN, 9x) and Wyeth (WYE, 10x) based on our fiscal 2009 estimates.

Secondly, expectations are low. Most of the companies are not expected to generate significant revenue growth, and earnings growth is primarily being drive by cost-cutting and share buybacks. Therefore, there seems little downside risk to our financial models, even should the economy continue to struggle throughout the entire year. So we do not see much risk in the names becoming "sneaky expensive" based on massive downward revisions to earnings. Most of the names are dirt cheap based on low expectations -- that presents substantial potential for upside.

Thirdly, the industry's cash position has never been stronger. Pfizer, one of our top-picks for 2009, is sitting on over $30 billion in cash. Other Buy-rated names, including Bristol-Myers Squibb (BMY) and Johnson & Johnson (JNJ), are sitting on $8 billion and $15 billion, respectively. This should allow for a significant deal activity later in the year.

Given the difficult cash-raising environment during the second half of 2008, most small to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009. Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 -- something most managements have been hesitant to do in the past. This should create a much better environment for the entire industry to push higher in 2009 as sentiment on small biotech turns positive perhaps later in the year.

Finally, large-cap pharmaceutical names are paying hefty dividends. That's something all investors should be looking for given the rocky financial markets. Pharmaceutical companies are well-capitalized with financial sound business models. Pfizer's huge dividend of 7% is not only very attractive, it is also safe. Bristol, Merck and Lilly are all yielding 5%. Two of our top-picks for 2009, Johnson & Johnson and Abbott Labs (ABT), are both yielding 3%.

OPPORTUNITIES

We recommend an over-weight exposure to large-cap pharmaceuticals in 2009. For growth funds, our two top-picks are Bristol-Myers (BMY) and Abbott Labs (ABT). Bristol is expected to growth earnings by 12% CAGR [compound annual growth rate] through 2012. That's tops in the industry. Growth is sustainable with a product suite heavy in attractive areas such as biologics, cancer and cardiovascular drugs. The late-stage pipeline includes two very promising candidates, apixaban and saxagliptin, both of which could be blockbusters if approved.

Our two top-picks for value-focused portfolios are Pfizer (PFE) and Johnson & Johnson (JNJ). Both companies are trading around 1X growth (PE/G). Pfizer will struggle to grow the top-line over the next few years, but the company's big dividend and big cash balance should make it a great investment for the long-haul.

Here is one of our favorite stats: Pfizer's $30+ billion in cash is enough to buy Biogen Idec (BIIB), Amylin (AMLN), Forest Labs (FRX), Sepracor (SEPR), Dendreon (DNDN), Arena (ARNA), Onyx (ONXX), OSI Pharma (OSIP) and Elan (ELN) -- all without issuing one share. Watch for Pfizer to put its cash to work in 2009 to help grow that stagnant top-line in the future.

J&J's defensive nature allowed the company to hold up well over the past year. J&J was the third-best-performing DOW stock in 2008 thanks to the reliability and consistency of its medical device and consumer healthcare business. We expect J&J to be acquisitive in 2009 as well, and the pharmaceutical pipeline is among the largest in the industry.

In the large-cap biotechnology market, we remain bullish on Genentech (DNA) and Biogen Idec (BIIB). Both core businesses remain solid, and both companies have an enormous biologic pipeline and manufacturing footprint. These are two key assets that should allow both Genentech and Biogen to outperform when normalcy returns to the market.

We also favor Amgen (AMGN) and Gilead (GILD) on a pullback. Large-cap biotech was strong in 2008; that trend should continue in 2009.

WEAKNESSES

Avoid names that are in the opposite position. Stay away from anyone trading on the hopes and prayers of a phase III trial outcome or the decision of the FDA. Now is not the time to be taking on risk. The number of new entity approvals was 24 in 2008, up from 18 in 2007, but the number of rejections and delays was also up.

Throughout 2008, it seemed as though just about every FDA action (PDUFA) date was pushed back and delayed. We saw our share of surprise rejections and clinical failures last year, as well. Drug development is a risky business; the success rate on new drugs from preclinical to approval is less than 5%.

Finally, do not try to predict which companies are going to be taken out. There are far too many small-cap names, and big pharma rarely comes in to rescue of stocks below $5. We do not recommend trying to catch falling knives such as Amylin (AMLN), Forest Labs (FRX), Arena (ARNA), Sepracor (SEPR) or United Therapeutics ([url=http://www.zacks.com/research/report.php?t=UTHR]UTHR[/url]). Rather, wait for the recovery and buy any one of the above down-and-out names when confidence returns. Until then, now is not the time to try to be a hero.

Pharmaceuticals Industry

Zacks Market Commentaries — Mon, 05 Jan 2009 14:19:09 +0000

We are generally positive on the pharmaceutical industry heading into 2009. We expect the majority of stocks to fair far better in 2009 than they did in 2008, based on a number of attributes.

Firstly, almost all the names in the group are trading at very reasonable valuations. Several of the largest players are trading at PEs below 10x, including Pfizer Ltd. (PFE, 8x), Eli Lilly & Co. (LLY, 9x), Merck (MRK, 9x), AstraZeneca (AZN, 9x) and Wyeth (WYE, 10x) based on our fiscal 2009 estimates.

Secondly, expectations are low. Most of the companies are not expected to generate significant revenue growth, and earnings growth is primarily being drive by cost-cutting and share buybacks. Therefore, there seems little downside risk to our financial models, even should the economy continue to struggle throughout the entire year. So we do not see much risk in the names becoming "sneaky expensive" based on massive downward revisions to earnings. Most of the names are dirt cheap based on low expectations -- that presents substantial potential for upside.

Thirdly, the industry's cash position has never been stronger. Pfizer, one of our top-picks for 2009, is sitting on over $30 billion in cash. Other Buy-rated names, including Bristol-Myers Squibb (BMY) and Johnson & Johnson (JNJ), are sitting on $8 billion and $15 billion, respectively. This should allow for a significant deal activity later in the year.

Given the difficult cash-raising environment during the second half of 2008, most small to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009. Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 -- something most managements have been hesitant to do in the past. This should create a much better environment for the entire industry to push higher in 2009 as sentiment on small biotech turns positive perhaps later in the year.

Finally, large-cap pharmaceutical names are paying hefty dividends. That's something all investors should be looking for given the rocky financial markets. Pharmaceutical companies are well-capitalized with financial sound business models. Pfizer's huge dividend of 7% is not only very attractive, it is also safe. Bristol, Merck and Lilly are all yielding 5%. Two of our top-picks for 2009, Johnson & Johnson and Abbott Labs (ABT), are both yielding 3%.

OPPORTUNITIES

We recommend an over-weight exposure to large-cap pharmaceuticals in 2009. For growth funds, our two top-picks are Bristol-Myers (BMY) and Abbott Labs (ABT). Bristol is expected to growth earnings by 12% CAGR [compound annual growth rate] through 2012. That's tops in the industry. Growth is sustainable with a product suite heavy in attractive areas such as biologics, cancer and cardiovascular drugs. The late-stage pipeline includes two very promising candidates, apixaban and saxagliptin, both of which could be blockbusters if approved.

Growth at Abbott is being driven by blockbuster drugs such as Humira for rheumatoid arthritis and the company's drug-eluting stent, Xience. Abbott has also been highly acquisitive over the past few years, most recently paying $175 million to pick up Ibis Biosciences, a subsidiary of Isis Pharmaceuticals (ISIS), to enhance the company's position in molecular diagnostics for infectious disease.

Our two top-picks for value-focused portfolios are Pfizer (PFE) and Johnson & Johnson (JNJ). Both companies are trading around 1X growth (PE/G). Pfizer will struggle to grow the top-line over the next few years, but the company's big dividend and big cash balance should make it a great investment for the long-haul.

Here is one of our favorite stats: Pfizer's $30+ billion in cash is enough to buy Biogen Idec (BIIB), Amylin (AMLN), Forest Labs (FRX), Sepracor (SEPR), Dendreon (DNDN), Arena (ARNA), Onyx (ONXX), OSI Pharma (OSIP) and Elan (ELN) -- all without issuing one share. Watch for Pfizer to put its cash to work in 2009 to help grow that stagnant top-line in the future.

J&J's defensive nature allowed the company to hold up well over the past year. J&J was the third-best-performing DOW stock in 2008 thanks to the reliability and consistency of its medical device and consumer healthcare business. We expect J&J to be acquisitive in 2009 as well, and the pharmaceutical pipeline is among the largest in the industry.

In the large-cap biotechnology market, we remain bullish on Genentech (DNA) and Biogen Idec (BIIB). Both core businesses remain solid, and both companies have an enormous biologic pipeline and manufacturing footprint. These are two key assets that should allow both Genentech and Biogen to outperform when normalcy returns to the market.

We also favor Amgen (AMGN) and Gilead (GILD) on a pullback. Large-cap biotech was strong in 2008; that trend should continue in 2009.

WEAKNESSES

Avoid names that are in the opposite position. Stay away from anyone trading on the hopes and prayers of a phase III trial outcome or the decision of the FDA. Now is not the time to be taking on risk. The number of new entity approvals was 24 in 2008, up from 18 in 2007, but the number of rejections and delays was also up.

Throughout 2008, it seemed as though just about every FDA action (PDUFA) date was pushed back and delayed. We saw our share of surprise rejections and clinical failures last year, as well. Drug development is a risky business; the success rate on new drugs from preclinical to approval is less than 5%.

Stay away from companies that are all ideas and no assets. Above we discussed some key measures to hang your hat on: cash, dividends, pipelines and strategic assets like biologic manufacturing. If your target company has none of these, now is probably not the best time to roll the dice.

Run from any company looking for money or looking to raise money in the next year. Interest rates on direct financing loans are going to be through the roof, and stock prices are down so big that share offerings will be painfully dilutive. Unless the company is looking to partner with large-cap pharma, expect out-of-cash small-cap biotech to remain out-of-favor.

Finally, do not try to predict which companies are going to be taken out. There are far too many small-cap names, and big pharma rarely comes in to rescue of stocks below $5. We do not recommend trying to catch falling knives such as Amylin (AMLN), Forest Labs (FRX), Arena (ARNA), Sepracor (SEPR) or United Therapeutics (UTHR). Rather, wait for the recovery and buy any one of the above down-and-out names when confidence returns. Until then, now is not the time to try to be a hero.

Last updated: January 2, 2009

"PFE" Free Stock Analysis: Buy? Sell? Hold?
"LLY" Free Stock Analysis: Buy? Sell? Hold?
"MRK" Free Stock Analysis: Buy? Sell? Hold?
"AZN" Free Stock Analysis: Buy? Sell? Hold?
"WYE" Free Stock Analysis: Buy? Sell? Hold?
"BMY" Free Stock Analysis: Buy? Sell? Hold?
"JNJ" Free Stock Analysis: Buy? Sell? Hold?
"ABT" Free Stock Analysis: Buy? Sell? Hold?
"BIIB" Free Stock Analysis: Buy? Sell? Hold?
"DNA" Free Stock Analysis: Buy? Sell? Hold?
"AMGN" Free Stock Analysis: Buy? Sell? Hold?
"GILD" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

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