Investors have long known that there can be huge money in rare diseases, and over the years they have rewarded stocks like Genzyme (now part of Sanofi (SNY)) and Alexion (ALXN) accordingly. As another player in the rare disease space, BioMarin (BMRN) already sports a nearly $4 billion market cap, but with a lot of key clinical data coming in the next few quarters, it's worth exploring how much more could be left in the tank.
The Businesses In Hand
BioMarin is a somewhat rare biotech in that it already has four drugs approved and on the market.
Read the complete article here:
How Much Further Can Rare Diseases Carry BioMarin?
Showing posts with label Genzyme. Show all posts
Showing posts with label Genzyme. Show all posts
Thursday, March 29, 2012
Tuesday, February 14, 2012
Seeking Alpha: Alexion Pharmaceuticals A Tricky Mix Of Biotech And Pharma
Alexion (ALXN) has done what so few biotechs ever manage to do. Not only has the company successfully developed a drug, it has stayed independent and achieved profitability on its own. Now the company is in that tricky area grey area between biotech and pharma, an area that can be dangerous to valuations and new investors.
Soliris A Powerful Engine
The Alexion story today is all about Soliris, the company's drug for paroxysmal noctural hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). PNH and aHUS are uncommon diseases, but like Genzyme (before it was acquired by Sanofi (SNY)), Alexion has built a lucrative franchise around a unique drug that commands incredible pricing.
Please click here for more:
Alexion Pharmaceuticals: A Tricky Mix Of Biotech And Pharma
Soliris A Powerful Engine
The Alexion story today is all about Soliris, the company's drug for paroxysmal noctural hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). PNH and aHUS are uncommon diseases, but like Genzyme (before it was acquired by Sanofi (SNY)), Alexion has built a lucrative franchise around a unique drug that commands incredible pricing.
Please click here for more:
Alexion Pharmaceuticals: A Tricky Mix Of Biotech And Pharma
Tuesday, February 22, 2011
Seeking Alpha: Clinical Data And Forest Labs Agree To Split The Risk
The tug of war between Clinical Data (CLDA) bulls and bears has ended in what has to be called a draw. Flying in the face of the bear argument that Clinical Data's recently-approved depression drug Viibryd is little more than a me-too drug with scant prospects, Forest Labs (FRX), a company that knows more than a little about depression drugs, has agreed to purchase the company for $30 a share in cash and up to $6 more in contingent payments.
Of course, bulls should not be limbering up for an unbridled victory lap either. At $30, the guaranteed part of Forest's bid represents a take-under to the tune of nearly $4 per share. Moreover, if Viibryd really takes the market by storm and becomes a $2 billion or even $3 billion a-year drug, this deal is hardly full and fair compensation.
To read the full piece, please go to:
http://seekingalpha.com/article/254167-clinical-data-and-forest-labs-agree-to-split-the-risk?source=mc_market
Of course, bulls should not be limbering up for an unbridled victory lap either. At $30, the guaranteed part of Forest's bid represents a take-under to the tune of nearly $4 per share. Moreover, if Viibryd really takes the market by storm and becomes a $2 billion or even $3 billion a-year drug, this deal is hardly full and fair compensation.
To read the full piece, please go to:
http://seekingalpha.com/article/254167-clinical-data-and-forest-labs-agree-to-split-the-risk?source=mc_market
Friday, February 18, 2011
Investopedia: A Deal At Last For Sanofi And Genzyme
Ultimately it looks like two major drug companies are getting what they both think they need. After months of posturing, Sanofi-Aventis (NYSE:SNY) and Genzyme (Nasdaq:GENZ) found common ground on the value and structure of a deal, and Genzyme will become part of Sanofi. Though this deal was long in the making, only time will tell whether shareholders on both sides of the deal really benefit.
Please find the full piece here:
http://stocks.investopedia.
Note: I realize how out of date this is now. My apologies for that ... I submitted it Wednesday morning, but it got held up in the queue.
The Deal
Sanofi-Aventis agreed to pay $74 a share in cash up front for Genzyme, a price that on its own virtually matches the all-time high set back in 2008. At that price, Sanofi is paying over four-times trailing revenue and over 26-times trailing EBITDA - a pretty generous premium compared to larger biotechs like Amgen (Nasdaq:AMGN) and Gilead (Nasdaq:GILD) as well as other growth names like Celgene (Nasdaq:CELG).
In response to charges of opportunism from Genzyme's management, Sanofi agreed to sweeten the pot with so-called contingent value rights (CVR). If Genzyme's business reaches certain milestones after the deal, Genzyme shareholders will get additional payments. There are six different hurdles laid out for Genzyme, worth up to $14 per share in total (or about $3.8 billion), but only the first three (production levels for Cerezyme, approval of Lemtrada and Lemtrada sales in excess of $400 million in certain territories) seem highly likely to be reached. If those three are reached, it will cost Sanofi about $4 per Genzyme share, while the remaining hurdles are all tied to ever-higher levels of sales.
Please find the full piece here:
http://stocks.investopedia.
Note: I realize how out of date this is now. My apologies for that ... I submitted it Wednesday morning, but it got held up in the queue.
Wednesday, February 9, 2011
Investopedia: Tepid Teva Somewhat Tempting
Once again Israeli generic drug giant Teva Pharmaceutical (Nasdaq:TEVA) has proven that although generic competition may bedevil the branded drug industry, there are no free rides here either. Teva's results and outlook will likely leave the stock cooling its heels for a bit in this growth-obsessed market, but patient investors should find no particular causes for long-term concern.
A Sluggish End to the Year
Before delving into Teva's results, it is worth repeating that Wall Street is a game of relative performance; companies can report objectively good (if not great) results and nevertheless disappoint analysts and investors.
To that end, Teva's 16% revenue growth this quarter was not bad, even if it was about 5% shy of the consensus estimate. While the company's biggest drug, Copaxone for multiple sclerosis (MS), did well with 26% sales growth (more than one-fifth of the company's sales), North American generic sales declined 5%. That is a bit puzzling, particularly given the company's exclusivity on generic Effexor XR. Then again, with doctor visits down across the board in the U.S., maybe that is where the answer lies. (For more, see There's Nothing Generic About The Profits.)
Profitability was not too problematic this period. Gross margin improved by both GAAP and non-GAAP calculations, and the company's non-GAAP operating income grew about 23% for the quarter. All in all, the company missed the average analyst guess by about three cents, though a better-than-expected tax rate helped. (For more, see Zooming In On Operating Income.)
The Road Ahead
Perhaps it has been going on a bit too long now to still be ironic, but one of the major concerns surrounding Teva involves competition in its branded drug business. Novartis (NYSE: NVS) will likely take some business away from Teva with its new oral MS drug Gilenya, and Genzyme (Nasdaq:GENZ) likewise has big hopes and expectations for its entry into the market.
Continue on via the link below:
http://stocks.investopedia.
A Sluggish End to the Year
Before delving into Teva's results, it is worth repeating that Wall Street is a game of relative performance; companies can report objectively good (if not great) results and nevertheless disappoint analysts and investors.
To that end, Teva's 16% revenue growth this quarter was not bad, even if it was about 5% shy of the consensus estimate. While the company's biggest drug, Copaxone for multiple sclerosis (MS), did well with 26% sales growth (more than one-fifth of the company's sales), North American generic sales declined 5%. That is a bit puzzling, particularly given the company's exclusivity on generic Effexor XR. Then again, with doctor visits down across the board in the U.S., maybe that is where the answer lies. (For more, see There's Nothing Generic About The Profits.)
Profitability was not too problematic this period. Gross margin improved by both GAAP and non-GAAP calculations, and the company's non-GAAP operating income grew about 23% for the quarter. All in all, the company missed the average analyst guess by about three cents, though a better-than-expected tax rate helped. (For more, see Zooming In On Operating Income.)
The Road Ahead
Perhaps it has been going on a bit too long now to still be ironic, but one of the major concerns surrounding Teva involves competition in its branded drug business. Novartis (NYSE: NVS) will likely take some business away from Teva with its new oral MS drug Gilenya, and Genzyme (Nasdaq:GENZ) likewise has big hopes and expectations for its entry into the market.
Continue on via the link below:
http://stocks.investopedia.
Tuesday, December 21, 2010
InterMune - The Black Knight of Biotech?
Fans of Monty Python no doubt recall the exchange between King Arthur and the Black Knight early in the movie, where the Black Knight refused to back down and concede defeat no matter what damage King Arthur managed to inflict. While the FDA inflicted far more than a flesh wound on InterMune's (Nasdaq:ITMN) stock price when the agency went against its own panel's recommendation and rejected the application to market pirfenidone (Esbriet) for idiopathic pulmonary fibrosis (IBF), the company may yet win this battle.
Europe Comes To The Defense ... Maybe
InterMune's shares soared last week on the news that the Committee for Medicinal Products for Human Use (known by the very unfortunate acronym of CHMP) recommended approval of Esbriet within the European Union. Similar to the how the U.S. system works, the CHMP serves as a buffer between the company's application and final approval, and provides recommendations to the European Medicines Agency (like panels do for the FDA).
Like in the U.S., though, a favorable opinion/recommendation does not guarantee final approval, nor the possibility of restrictive labeling. Nevertheless, it is notable that this process moved along quite quickly - CHMP could have come back to the company with a further list of questions/issues, but instead decided it had enough information to issue its recommendation. At this point, then, a final decision will come within 60 calendar days. (For more, see Measuring The Medicine Makers.)
Please follow the link for the full piece:
http://stocks.investopedia.
Europe Comes To The Defense ... Maybe
InterMune's shares soared last week on the news that the Committee for Medicinal Products for Human Use (known by the very unfortunate acronym of CHMP) recommended approval of Esbriet within the European Union. Similar to the how the U.S. system works, the CHMP serves as a buffer between the company's application and final approval, and provides recommendations to the European Medicines Agency (like panels do for the FDA).
Like in the U.S., though, a favorable opinion/recommendation does not guarantee final approval, nor the possibility of restrictive labeling. Nevertheless, it is notable that this process moved along quite quickly - CHMP could have come back to the company with a further list of questions/issues, but instead decided it had enough information to issue its recommendation. At this point, then, a final decision will come within 60 calendar days. (For more, see Measuring The Medicine Makers.)
Please follow the link for the full piece:
http://stocks.investopedia.
Thursday, October 7, 2010
Immucor Investors Out For Blood
It's not uncommon for Wall Street to strike unspoken bargains with certain companies in the healthcare space; If companies provide reliable, by-the-numbers performance, they will receive rich valuation multiples in return. That deal worked well for specialty diagnostics company Immucor (Nasdaq:BLUD) and its shareholders for many years, but has fallen apart since the company was beset by problems starting in 2009. Although the company had been making some progress, this latest quarterly report is likely to send the stock straight back to the penalty box for some time. (For background reading, see The Ups And Downs Of Biotechnology and Investing In The Healthcare Sector.)
The Quarter That Was
Immucor reported that sales rose only 1% for the fiscal first quarter, falling slightly short of the average estimate on the Street. Although the company saw decent growth in instrument sales (up 18%) with the ongoing launch of the Neo, traditional reagent sales fell 9%. That's a problem given that this figure represents almost 60% of total revenue. Capture reagent sales did better, though, with 18% growth. What was more worrisome was the company's shortfall in instruments and the lower guidance for system sales throughout the year. New machine sales fuel future reagent sales, so a reduction in system sales has broad implications for future profits.
For the full article, please click here:
http://stocks.investopedia.com/stock-analysis/2010/Immucor-Investors-Out-For-Blood-BLUD-BIO-GENZ-BSX-ABT-GPRO1007.aspx
I hope these guys get it all sorted out. I followed the stock as an analyst, and there are some very good people working there.
By the way, Johnson & Johnson (JNJ - which I own) is the other half of the U.S. blood typing duopoly. Because I own the stock, I could not mention that in the piece...
The Quarter That Was
Immucor reported that sales rose only 1% for the fiscal first quarter, falling slightly short of the average estimate on the Street. Although the company saw decent growth in instrument sales (up 18%) with the ongoing launch of the Neo, traditional reagent sales fell 9%. That's a problem given that this figure represents almost 60% of total revenue. Capture reagent sales did better, though, with 18% growth. What was more worrisome was the company's shortfall in instruments and the lower guidance for system sales throughout the year. New machine sales fuel future reagent sales, so a reduction in system sales has broad implications for future profits.
For the full article, please click here:
http://stocks.investopedia.com/stock-analysis/2010/Immucor-Investors-Out-For-Blood-BLUD-BIO-GENZ-BSX-ABT-GPRO1007.aspx
I hope these guys get it all sorted out. I followed the stock as an analyst, and there are some very good people working there.
By the way, Johnson & Johnson (JNJ - which I own) is the other half of the U.S. blood typing duopoly. Because I own the stock, I could not mention that in the piece...
Thursday, September 23, 2010
Johnson & Johnson and Boston Scientific - Could They? Should They?
I'm sure I'm not the only person thinking about whether or not Johnson & Johnson (NYSE: JNJ) and Boston Scientific (NYSE: BSX) might end up together. I think this subject was raised recently by a long-term correspondent of mine and it's been rattling around in my brain since.
JNJ has definitely been busy of late - acquiring Micrus and publicly entering into a mating dance with vaccine biotech Crucell (Nasdaq: CRXL). Likewise, BSX has been active as well - buying Asthmatx and reportedly talking about selling its neurostim and neurovascular businesses.
So maybe it's time for these two long-time rivals to get together. It would probably cost less than $12B for JNJ ... certainly not an impossible deal to contemplate.
Why would JNJ do this? Well, it is pretty clear from the stagnant growth at JNJ that management needs to figure out some additional ways to grow and growth-through-acquisition is a tried-and-true (if qualitatively poor) way of growing. For BSX, it would be tantamount to a mercy killing for this long-underperforming company.
Beyond that, though, JNJ did once want to get into the CRM business (by buying Guidant) until BSX pushed the bidding up to a ridiculous level - a decision that has effectively crushed BSX ever since. Beyond that beyond, there are some other compelling reasons BSX could appeal to JNJ. It would potentially reinvigorate JNJ's drug-eluting stent business, even though both JNJ and BSX are losing the race against Abbott Labs (NYSE: ABT). I hope I don't sound too cynical, though, when I suggest that combining two has-beens seldom leads to a new leader...
Stents aside, BSX does have some solid business units that would not only round out JNJ's offerings, but could represent fix-er-up turnaround opportunities (the BSX IVUS business, which has been all but ceded to Volcano (Nasdaq: VOLC) comes to mind).
I don't believe that JNJ would the only suitor for BSX, were it to become clear that BSX was amenable to a sale. Covidien (NYSE: COV) could be a consideration and maybe Stryker (NYSE: SYK) would see that as a way of achieving some major diversification (although I highly, *highly* doubt that one).
Likewise, BSX would not be the only large target that JNJ could consider. Bard (NYSE: BCR), Becton Dickinson (NYSE: BDX), and CareFusion (NYSE: CFN) could all make sense (though BDX is quite a bit larger), as well as any number of fast-growing (and expensive) smaller companies like Nuvasive (Nasdaq: NUVA) or Thoratec (Nasdaq: THOR). Hell, even ZOLL (Nasdaq: ZOLL) could make sense and JNJ's salesforce could do amazing things with the LifeVest product.
Then again, maybe JNJ buys up a few more biotechs or takes a run at a big pharmaceutical company like Genzyme (Nasdaq: GENZ) or Lilly (NYSE: LLY). But then again, here is the precise problem playing the "who might buy who" game - once you get started, it's kinda hard to stop!
All in all, the safest bet to make in M&A speculation is that nothing happens. I think a JNJ-BSX deal *could* happen, and it probably would not be the worst deal that JNJ has made. But I'm still going to bet on the side that says JNJ won't be buying BSX any time soon.
Disclosure - I own shares of JNJ
JNJ has definitely been busy of late - acquiring Micrus and publicly entering into a mating dance with vaccine biotech Crucell (Nasdaq: CRXL). Likewise, BSX has been active as well - buying Asthmatx and reportedly talking about selling its neurostim and neurovascular businesses.
So maybe it's time for these two long-time rivals to get together. It would probably cost less than $12B for JNJ ... certainly not an impossible deal to contemplate.
Why would JNJ do this? Well, it is pretty clear from the stagnant growth at JNJ that management needs to figure out some additional ways to grow and growth-through-acquisition is a tried-and-true (if qualitatively poor) way of growing. For BSX, it would be tantamount to a mercy killing for this long-underperforming company.
Beyond that, though, JNJ did once want to get into the CRM business (by buying Guidant) until BSX pushed the bidding up to a ridiculous level - a decision that has effectively crushed BSX ever since. Beyond that beyond, there are some other compelling reasons BSX could appeal to JNJ. It would potentially reinvigorate JNJ's drug-eluting stent business, even though both JNJ and BSX are losing the race against Abbott Labs (NYSE: ABT). I hope I don't sound too cynical, though, when I suggest that combining two has-beens seldom leads to a new leader...
Stents aside, BSX does have some solid business units that would not only round out JNJ's offerings, but could represent fix-er-up turnaround opportunities (the BSX IVUS business, which has been all but ceded to Volcano (Nasdaq: VOLC) comes to mind).
I don't believe that JNJ would the only suitor for BSX, were it to become clear that BSX was amenable to a sale. Covidien (NYSE: COV) could be a consideration and maybe Stryker (NYSE: SYK) would see that as a way of achieving some major diversification (although I highly, *highly* doubt that one).
Likewise, BSX would not be the only large target that JNJ could consider. Bard (NYSE: BCR), Becton Dickinson (NYSE: BDX), and CareFusion (NYSE: CFN) could all make sense (though BDX is quite a bit larger), as well as any number of fast-growing (and expensive) smaller companies like Nuvasive (Nasdaq: NUVA) or Thoratec (Nasdaq: THOR). Hell, even ZOLL (Nasdaq: ZOLL) could make sense and JNJ's salesforce could do amazing things with the LifeVest product.
Then again, maybe JNJ buys up a few more biotechs or takes a run at a big pharmaceutical company like Genzyme (Nasdaq: GENZ) or Lilly (NYSE: LLY). But then again, here is the precise problem playing the "who might buy who" game - once you get started, it's kinda hard to stop!
All in all, the safest bet to make in M&A speculation is that nothing happens. I think a JNJ-BSX deal *could* happen, and it probably would not be the worst deal that JNJ has made. But I'm still going to bet on the side that says JNJ won't be buying BSX any time soon.
Disclosure - I own shares of JNJ
Tuesday, September 14, 2010
Lab Corp And Genzyme Find Some Common Ground
Apparently Genzyme (Nasdaq:GENZ) is not adverse to all deals, just the current deal that Sanofi-aventis (NYSE:SNY) is offering. On Monday morning, Genzyme announced that it had reached an agreement to sell Genzyme Genetics to Laboratory Corporation (NYSE:LH) for $925 million in cash. It had been widely known that Genzyme was looking to sell some non-core businesses (including a diagnostics product and pharmaceutical intermediaries), and Genyzme did not waste a lot of time finding a buyer.
A Buyer's Market for Labs
Although this division goes by the name of "Genzyme Genetics", it is basically a laboratory testing business; one that has a rather strong brand in prenatal and hematopathology testing. Accordingly, it fits in pretty well with Lab Corp.'s stated interest in expanding its genetic and esoteric testing business.
Genzyme made the unfortunate decision to sell in the middle of a tough market. Labs are struggling with weak volume as doctor visits are down and people seem to be foregoing health care during the current economic troubles. With weak volume and strong competition from major players like Lab Corp., Quest (NYSE:DGX) and Bio-Reference Laboratories (Nasdaq:BRLI), a lot of labs are choosing to sell out and routine deals are going for about 1.5x sales.
Click below for the full article:
http://stocks.investopedia.com/stock-analysis/2010/Lab-Corp-And-Genzyme-Find-Some-Common-Ground-GENZ-LH-SNY-DGX-BRLI-LMNX-GXDX0914.aspx
A Buyer's Market for Labs
Although this division goes by the name of "Genzyme Genetics", it is basically a laboratory testing business; one that has a rather strong brand in prenatal and hematopathology testing. Accordingly, it fits in pretty well with Lab Corp.'s stated interest in expanding its genetic and esoteric testing business.
Genzyme made the unfortunate decision to sell in the middle of a tough market. Labs are struggling with weak volume as doctor visits are down and people seem to be foregoing health care during the current economic troubles. With weak volume and strong competition from major players like Lab Corp., Quest (NYSE:DGX) and Bio-Reference Laboratories (Nasdaq:BRLI), a lot of labs are choosing to sell out and routine deals are going for about 1.5x sales.
Click below for the full article:
http://stocks.investopedia.com/stock-analysis/2010/Lab-Corp-And-Genzyme-Find-Some-Common-Ground-GENZ-LH-SNY-DGX-BRLI-LMNX-GXDX0914.aspx
Thursday, September 9, 2010
4 Companies That Should Have Sold Out
Mergers and buyouts are part and parcel of the investing experience. While a buyout bid can give a nice return to a short-term investor, longer-term investors often fret that a bid may entice management to sell a company for less than its true long-term value. What is also true, though, is that sometimes managers are unreasonably and unproductively stubborn - refusing to hand over the reins (and their large executive salaries) and allow shareholders to book a profit or own shares in a larger enterprise. (For related reading, take a look at Mergers: The Sign Of Economic Recovery?)
With news swirling around 3Par's (NYSE:PAR) willingness to sell to either Dell (Nasdaq:DELL) or Hewlett-Packard (NYSE:HPQ), there is the sharp contrast of Genzyme's (Nasdaq:GENZ) resistance to a bid from Sanofi-aventis. Let us take a look at examples where shareholders really would have been better-served if their managers had signed on the dotted line and taken the deal. (Find out how you can cash in, read Trade Takeover Stocks With Merger Arbitrage.)
To read the complete column, please click on the link:
http://stocks.investopedia.com/stock-analysis/2010/4-Companies-That-Should-Have-Sold-Out-PAR-DELL-HPQ-GENZ-MSFT-YHOO-ERTS-TTWO-UTX-DBD-CPWM-PIR0909.aspx
With news swirling around 3Par's (NYSE:PAR) willingness to sell to either Dell (Nasdaq:DELL) or Hewlett-Packard (NYSE:HPQ), there is the sharp contrast of Genzyme's (Nasdaq:GENZ) resistance to a bid from Sanofi-aventis. Let us take a look at examples where shareholders really would have been better-served if their managers had signed on the dotted line and taken the deal. (Find out how you can cash in, read Trade Takeover Stocks With Merger Arbitrage.)
To read the complete column, please click on the link:
http://stocks.investopedia.com/stock-analysis/2010/4-Companies-That-Should-Have-Sold-Out-PAR-DELL-HPQ-GENZ-MSFT-YHOO-ERTS-TTWO-UTX-DBD-CPWM-PIR0909.aspx
Wednesday, September 1, 2010
Sanofi Ups The Pressure On Genzyme
It is not exactly a hostile bid, but French drug company Sanofi-aventis (NYSE:SNY) has certainly stepped up its efforts to acquire American rare disease drug specialist Genzyme (Nasdaq:GENZ). Over the weekend, Sanofi went public with an offer for Genzyme of $69 per share in cash. Nothing about this announcement was really a surprise; there had been ample talk of a deal for weeks at this price, but it does move the proceedings from plausible rumor to truth.
An Opportunistic Bid for Genzyme
Genzyme's formal response to Sanofi's offer was predictable, if a bit confrontational. Genzyme not only rejected the bid, but deemed it so low as not to be worthy of further discussion with Sanofi's management. Those sound like bold words from a management team that has not delivered much shareholder value over the last five years until this bid.
http://stocks.investopedia.
An Opportunistic Bid for Genzyme
Genzyme's formal response to Sanofi's offer was predictable, if a bit confrontational. Genzyme not only rejected the bid, but deemed it so low as not to be worthy of further discussion with Sanofi's management. Those sound like bold words from a management team that has not delivered much shareholder value over the last five years until this bid.
http://stocks.investopedia.
Friday, July 30, 2010
Sanofi Has To Do Something
The problems facing French drug giant Sanofi-Aventis (NYSE:SNY) these days are nothing out of the ordinary for the big-cap pharmaceutical sector. The company is facing some major generics competition and has very little in the way of potential blockbusters to immediately replace that revenue. On top of that, Wall Street's growth addiction has left the shares languishing.
The question now, though, is what Sanofi's management is going to do about it. Whatever decisions they make are going to have a tremendous influence on whether shareholders can wait patiently for this stock to recover.
To read the full piece:
http://stocks.investopedia.
The question now, though, is what Sanofi's management is going to do about it. Whatever decisions they make are going to have a tremendous influence on whether shareholders can wait patiently for this stock to recover.
To read the full piece:
http://stocks.investopedia.
Tuesday, July 6, 2010
Time For Gilead To Open Its Wallet
When you see a person or company referred to as a "one-trick pony", it is supposed to be an insult, or at least a serious criticism. But what if that one trick is really, really good?
That is the dilemma for investors considering adding shares of Gilead Sciences (Nasdaq: GILD) to their portfolios.Gilead has one of the best HIV portfolios in the world, and that contributes about 77% of the company's revenue. But can this company continue to grow and attract institutional investors with just one stellar business?
Not Too Many Comparables
If you look around at the large-cap biotech companies and pharmaceutical companies that are Gilead's most logical peers, you notice something important - none of those other companies are quite as dependent on a single disease. Amgen built itself with a focus on hematology, but it has since expanded into cancer, osteoporosis and inflammatory disease. Genzyme has a broad focus on rare diseases, Biogen Idec is diversified across several categories, and though Celgene is focused keenly on cancer, different types of cancer are often treated like completely different diseases.
For the complete piece, please go to:
http://stocks.investopedia.
That is the dilemma for investors considering adding shares of Gilead Sciences (Nasdaq: GILD) to their portfolios.
Not Too Many Comparables
If you look around at the large-cap biotech companies and pharmaceutical companies that are Gilead's most logical peers, you notice something important - none of those other companies are quite as dependent on a single disease. Amgen built itself with a focus on hematology, but it has since expanded into cancer, osteoporosis and inflammatory disease. Genzyme has a broad focus on rare diseases, Biogen Idec is diversified across several categories, and though Celgene is focused keenly on cancer, different types of cancer are often treated like completely different diseases.
For the complete piece, please go to:
http://stocks.investopedia.
Friday, July 2, 2010
Is Another Wave of Biotech M&A On The Way?
There is an old joke among sell-side research analysts that if you are going to make predictions, you should make a lot of them to increase your odds that you will make at least a few correct guesses. With that in mind, I am predicting that we are going to start seeing a wave of acquisitions in the biotech space as larger companies need to recharge their pipelines and better leverage their infrastructure and smaller companies find it increasingly onerous to launch drugs on their own.
Sanofi Goes for the Esoteric
Sanofi-aventis (NYSE:SNY) announced a relatively small deal on Wednesday, telling investors that the company is buying privately-held TargeGen for $75 million in cash. Should TargeGen's compounds hit certain milestones (in other words, if the drugs work), the payout could increase to up to $560 million.
For the full piece, please go to:
http://stocks.investopedia.
Sanofi Goes for the Esoteric
Sanofi-aventis (NYSE:SNY) announced a relatively small deal on Wednesday, telling investors that the company is buying privately-held TargeGen for $75 million in cash. Should TargeGen's compounds hit certain milestones (in other words, if the drugs work), the payout could increase to up to $560 million.
For the full piece, please go to:
http://stocks.investopedia.
Thursday, July 1, 2010
Sanofi's Going Shopping?
According to a rumor posted on Bloomberg, Sanofi-aventis (NYSE: SNY) is supposedly closing in on a "major" acquisition in the U.S. Equally supposedly, the talks are in early stages, so plenty could go wrong.
It certainly has the ring of truth, though. Since coming into the top spot, Sanofi's CEO has led the company to 25 acquisitions costing $17 billion (also according to Bloomberg). That's pretty good work for two year's time. Most of those deals were small, though, and added drugs to the pipeline with a long march towards approval. Because of that, the company is still facing some pretty serious revenue hits from upcoming generic competition.
So, even though it's still an early-stage rumor, why not play around with who Sanofi might buy?
First, I'm going to put a range of $20B - $50B on the most Sanofi might be willing to pay.
At that level, Bristol-Myers Squibb (NYSE: BMY) and Lilly (NYSE: LLY) could both be doable, though with little premium. Bristol, though it has an interesting oncology portfolio, has the same problem as Sanofi as the companies are partnered on drugs about to go generic. Likewise, Lilly could see up to 40% of its sales go to generics between now and 2013.
Gilead (Nasdaq: GILD) would give the company a great franchise in HIV/AIDS and an okay pipeline outside of virology (mostly cardiopulmonary). Genzyme (Nasdaq: GENZ) would not make much sense as I don't think Sanofi wants to focus on rare disease. Biogen Idec (Nasdaq: BIIB) is definitely interesting. The company has a strong MS franchise and a good cancer drug, as well as a pretty good collection of Phase 3 candidates and an irritating activist investor (Icahn).
Below that level, you're looking at names like Human Genome Sciences (Nasdaq: HGSI), Amylin (Nasdaq: AMLN), and Incyte (Nasdaq: INCY). HGSI and Amylin would cost less than $10B, and Incyte probably less than $4B. All three have a lot going for them, with interesting drugs very close to the market, but are they big enough? Maybe ... Human Genome has great technology and a good cancer pipeline, and Amylin would definitely expand the company's diabetes business. Incyte, likewise, has a great portfolio and would give Sanofi a host of options, though minimal revenue contribution.
So... my guess(es)? I think Biogen, and Amylin are the best bets. Gilead makes a lot of sense, but a take-out of Gilead would probably cost more than Sanofi wants to spend.
Disclosure - I own shares of Amylin.
It certainly has the ring of truth, though. Since coming into the top spot, Sanofi's CEO has led the company to 25 acquisitions costing $17 billion (also according to Bloomberg). That's pretty good work for two year's time. Most of those deals were small, though, and added drugs to the pipeline with a long march towards approval. Because of that, the company is still facing some pretty serious revenue hits from upcoming generic competition.
So, even though it's still an early-stage rumor, why not play around with who Sanofi might buy?
First, I'm going to put a range of $20B - $50B on the most Sanofi might be willing to pay.
At that level, Bristol-Myers Squibb (NYSE: BMY) and Lilly (NYSE: LLY) could both be doable, though with little premium. Bristol, though it has an interesting oncology portfolio, has the same problem as Sanofi as the companies are partnered on drugs about to go generic. Likewise, Lilly could see up to 40% of its sales go to generics between now and 2013.
Gilead (Nasdaq: GILD) would give the company a great franchise in HIV/AIDS and an okay pipeline outside of virology (mostly cardiopulmonary). Genzyme (Nasdaq: GENZ) would not make much sense as I don't think Sanofi wants to focus on rare disease. Biogen Idec (Nasdaq: BIIB) is definitely interesting. The company has a strong MS franchise and a good cancer drug, as well as a pretty good collection of Phase 3 candidates and an irritating activist investor (Icahn).
Below that level, you're looking at names like Human Genome Sciences (Nasdaq: HGSI), Amylin (Nasdaq: AMLN), and Incyte (Nasdaq: INCY). HGSI and Amylin would cost less than $10B, and Incyte probably less than $4B. All three have a lot going for them, with interesting drugs very close to the market, but are they big enough? Maybe ... Human Genome has great technology and a good cancer pipeline, and Amylin would definitely expand the company's diabetes business. Incyte, likewise, has a great portfolio and would give Sanofi a host of options, though minimal revenue contribution.
So... my guess(es)? I think Biogen, and Amylin are the best bets. Gilead makes a lot of sense, but a take-out of Gilead would probably cost more than Sanofi wants to spend.
Disclosure - I own shares of Amylin.
Wednesday, June 30, 2010
What Ails Amgen?
Biotech giant Amgen (Nasdaq:AMGN) may not be considered a pharmaceutical company yet, but the market is certainly treating it like one. Whether you consider the P/E ratio, the price-book, price-cash flow, or EV/EBITDA ratios, Amgen trades more or less in line with the likes of Pfizer (NYSE:PFE), Lilly (NYSE:LLY) and GlaxoSmithKline (NYSE:GSK) than Celgene (Nasdaq:CELG) or Genzyme (Nasdaq:GENZ).
This would be all well and good if Amgen was just another typical big-cap pharmaceutical company. Though Amgen does have some issues in common, I think the differences are more significant than the similarities. Most significantly, it looks as though the market is assuming that Amgen is going to grow at a pace similar to most of these large companies (which is to say, "not much"), and this is where the stock could ultimately outperform.
The full article can be read at:
http://stocks.investopedia.
This would be all well and good if Amgen was just another typical big-cap pharmaceutical company. Though Amgen does have some issues in common, I think the differences are more significant than the similarities. Most significantly, it looks as though the market is assuming that Amgen is going to grow at a pace similar to most of these large companies (which is to say, "not much"), and this is where the stock could ultimately outperform.
The full article can be read at:
http://stocks.investopedia.
Tuesday, June 22, 2010
There Is Life After Death, At Least In Biotech
Crushing disappointment is not an uncommon occurrence in the stock market, but it is practically commonplace in the biotech sector. For every Gilead Sciences (Nasdaq: GILD) or Celgene (Nasdaq: CELG), there are many companies whose compounds fail and whose stocks wither away to mere penny prices.
That said, biotech may also be one of the resilient sectors you can find. So long as you still have a few compounds (or a few ideas) and enough cash, you will get a second chance. And if that second chance works out, you will find the market is more than willing to let bygones be bygones.
For the full column, please go to:
http://stocks.investopedia.
That said, biotech may also be one of the resilient sectors you can find. So long as you still have a few compounds (or a few ideas) and enough cash, you will get a second chance. And if that second chance works out, you will find the market is more than willing to let bygones be bygones.
For the full column, please go to:
http://stocks.investopedia.
Subscribe to:
Posts (Atom)