Investopedia: Bristol-Myers Pays To Patch Up A Gap

Companies developing treatments for Hepatitis C were the hottest story in biotech for 2011, and at least some of that momentum has spilled over into 2012. Bristol-Myers Squibb (NYSE:BMY) won a competitive bidding process for Inhibitex (Nasdaq:INHX) and will be acquiring this small early-stage biotech for $2.5 billion in cash.

The Deal
The two companies announced this deal over the weekend, whereby Bristol-Myers will buy Inhibitex for $2.5 billion, or $26 per share, in cash. This valuation offers a 163% premium to Friday's close for Inhibitex shareholders and a close to an incredible run that began at less than 25 cents per share in early 2009. Although this offer is lower than Gilead's (Nasdaq:GILD) $11 billion bid for Pharmasset (Nasdaq:VRUS), Pharmasset has more drug candidates in its pipeline and is further along in clinical trials. (For related reading, see Biggest Merger And Acquisition Disasters.)


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Seeking Alpha: Roche Goes From Also-Ran To Darling

I didn't exactly win a lot of fans for myself last year when I decided it was time to jettison Johnson & Johnson (NYSE: JNJ) and turn my affections to other med-tech names – most notably Swiss giant Roche (Nasdaq: RHHBY.PK). At the time, few people seemed to like Roche. The company was under (theoretical) assault from biosimilar competition, the efficacy of major drug Avastin was in question, and the company didn't have much to offer in areas like vaccines, generics, and consumer health while investors started to drool over the supposed synergies of one-stop shops like Novartis (NYSE: NVS).

What a difference a year makes. Although J&J has done a little better than I thought it might, Roche has done about as well as I thought it would and last year's 20% gain was welcome indeed. More importantly, the situation around Roche today is one that warms the heart of many value investors – analyst sentiment has shifted and Roche has moved from a least-favored name to one of the more popular picks for 2012.

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Roche Goes From Also-Ran To Darling

Investopedia: The Top Biotech Performers of 2011

This has really been a year of the "haves" versus the "have nots" in biotechnology. Although a few dedicated biotech ETFs have done rather well and there have been some huge individual outperforming stocks, the sector as a whole has not necessarily been all that strong. Still, for those companies that could deliver encouraging data, particularly in the fields of hepatitis and cancer, the market was more than willing to reward the stocks with a higher valuation.


Hepatitis C - The Story of 2011
If any one theme should leap out at biotech investors in 2011, it is the explosion of interest in companies targeting hepatitis C. It is not as though hepatitis C is a new disease, but a host of companies have finally developed compounds that look to offer major improvements in disease management and quality of life for the millions of people with this condition.

Two of the top three performing biotechs with current market capitalizations above $250 million are hepatitis C plays. Pharmasset (Nasdaq:VRUS) has delivered the sort of year that biotech investors dream about for 2011, with the stock up nearly 500% in the last year. The stock was already doing incredibly well on the basis of very strong clinical data in PSI-7977 trials - data that basically showed 100% response in early administration of the drug. This stock found another level, though, when Gilead Sciences (Nasdaq:GILD) stepped up and offered to pay a considerable premium to acquire the company.


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Investopedia: Is Third Time The Charm For Gilead?

When in doubt, buy somebody out. Gilead Sciences (Nasdaq:GILD) has been trying for quite some time to diversify its business beyond HIV therapy. With November 21, 2011's announcement of a massive deal for biotech Pharmasset (Nasdaq:VRUS), Gilead is making a bold move for dominance in hepatitis C and perhaps acknowledging its own shortcomings. The real question for shareholders, though, is whether the extreme competition in the Hep C market will whittle away the value of Pharmasset's pipeline and make this yet another expensive blunder by Gilead management.

The Terms of the Deal  
Gilead announced on November 21, 2011 that it will acquire Pharmasset for $11 billion in cash, valuing Pharmasset at $137 per share in cash. That price is an 89% premium to November 18, 2011's close and makes Pharmasset nearly twice as valuable as Vertex (Nasdaq:VRTX) - a biotech with an interesting new hepatitis C drug already on the market, but one recently beset by worries of prescription trends and future competition.

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Seeking Alpha: Abbott May Be Doing The Right Thing At The Wrong Time

Health care conglomerate Abbott Labs (ABT) certainly knows how to bury a lede. With the tumult in the wake of the company's announced split in two, the company's quarterly earnings went by almost unnoticed. Perhaps that's just as well – too much is made of quarter-by-quarter performance, anyway. When it comes to this transformative move, though, investors might want to ask if this is really the right strategic move at this point in time.

Abbott To Humira – Thanks For The Cash, Now Get Out
Abbott will be splitting into two companies in a tax-free spin-off transaction. One company will continue Abbott's branded pharmaceutical business, while the other company (the one that will continue on as “Abbott”) will take everything else, including the branded generics business.

The branded drug business currently represents about 45% of the company's total sales, but over 60% of pre-tax profits. Of that, Humira (Abbott's incredibly successful monoclonal antibody for autoimmune diseases) is fully half. Unfortunately, Humira is getting a little long in the tooth and analysts have been incessantly worried about its future growth in the face of potential competition from compounds from Pfizer (PFE), Johnson & Johnson (JNJ), and Roche (RHHBY.PK), as well as threat of biosimilars (basically generic forms of biologic drugs).

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Abbott May Be Doing The Right Thing At The Wrong Time

Seeking Alpha: Roche May Be Hoping That Anadys Is Cheap Insurance

There is no question that hepatitis C treatments are garnering a great deal of attention from investors in biotech and pharmaceuticals these days. Investors seemingly can't wait to hear the latest clinical data from Pharmasset (VRUS) or the latest prescription data on Vertex's (VRTX) Incivek. So leave it to Roche (RHHBY.PK) then to draw everybody's attention back to a small hepatitis C drug developer that has been largely forgotten by many investors.

A Surprising Deal
Analysts and investors have been waiting for quite a while to see Anadys Pharmaceuticals (ANDS) either find a partner for setrobuvir and ANA773 or find a buyer for the entire company. As often seems to be case, few had Roche on the list of most likely partners, but it is Roche that has stepped up to buy the entire company.

Please read the full story at the link below:
Roche May Be Hoping That Anadys Is Cheap Insurance

Investopedia: More To Merck Than Meets The Eye?

The past few years have been a rough stretch for pharmaceutical companies, as patent expirations and a lack of exciting new products have led to lower revenue growth, rampant mergers and extensive restructuring. With a relatively manageable patent cliff and some interesting new products, Merck (NYSE:MRK) may be worth a second look from value-oriented investors.

A Solid Franchise in Cardiology and Inflammatory Disease
Like virtually all of the major pharmaceutical companies, Merck sells a large number of branded pharmaceuticals but focuses most of its attention on a few particular segments. For Merck those areas of focus include cardiology (with drugs like Zetia and Vytorin), immunology (Singular and Remicade) and diabetes (Januvia and Janumet).

Although Merck has had some issues developing its own late-stage pipeline, the acquisition of Schering-Plough helped address some of those issues. At the same time, the company has restructured its operations and in doing so it has given its salesforce the ability to act with more independence - a move that could pay dividends in the long run.

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http://stocks.investopedia.com/stock-analysis/2011/More-To-Merck-Than-Meets-The-Eye-MRK-VRTX-BMY-ABT-LLY-NVO-PFE0622.aspx

Investopedia: A Foursome Of Pharma Earnings Suggests Business Is Still Tough

Medical progress is a tricky thing, especially since the pace of that progress follows no particular rule or trajectory. Pharmaceutical companies increasingly find that they must spend considerably more money on R&D only to develop drugs that are incrementally better than generics that have been available for two decades. Add to that fierce global competition, occasionally hostile regulator behavior and opportunistic generic drug developers laying in wait, and it is not altogether surprising to see a mixed bag as pharmaceutical companies report their fourth quarter results. 

AstraZeneca - Sharing the Wealth, But Taking Some Blows
AstraZeneca did a little better than expected, but sales were still down about 4% in the fourth quarter. The company's largest drugs had mixed performance, as Crestor sales jumped 26% and Nexium sales fell 2%. Investors should note, though, that just four drugs accounted for 57% of revenue and AstaZeneca is one of the most "concentrated" drug companies out there. (For more, see UK's Global Footprint Stocks.)

AstraZeneca has had some rough going of late including a complete response letter for Brillinta and the decision to discontinue a range of drugs including olaparib, Certriad, and Iressa. On a more positive note, the company is moving ahead with an exciting first-of-its-kind oral diabetes drug, as well as an oral rheumatoid arthritis drug that could threaten large franchises of Abbott Labs (NYSE:ABT) and Roche (Nasdaq:RHHBY). 

On a happier note, AstraZeneca is not being miserly with its wealth - the company doubled its buyback to $4 billion and pays a respectable dividend. Investors may question, though, whether that money would be better spent in the lab, as pipeline disappointments have taken more than $1 billion out of the mid-term revenue outlook.
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Bristol-Myers Pays A Premium For Its Partner

Bristol-Myers Squibb (NYSE:BMY) may have the unfortunate distinction of being among the most highly-concentrated pharmaceutical companies in the U.S. (For a quick refresher on this, check out Top-Heavy Pharmaceuticals), but management is certainly looking to do something about that. After Monday's close, Bristol-Myers announced a friendly buyout of its partner ZymoGenetics (Nasdaq:ZGEN) in a deal that gives shareholders of this small biotech $9.75 a share in cash, or an 84% premium to the prior closing price.

What is Bristol-Myers Buying?
ZymoGenetics actually has quite a lot going on, but Bristol-Myers is almost certainly buying the company in order to have 100% ownership of its PEG-Interferon lambda drug. This promising hepatitis C therapy is in Phase 2 testing, but could be a blockbuster ($1 billion or more in sales) in less than five years' time. Moreover, this drug could fit in nicely with Bristol-Myers' other clinical HCV candidates, and lead to a potential combination therapy. Just as Gilead (Nasdaq:GILD) has significantly changed the HIV treatment landscape with its combination therapies, Bristol-Myers could possibly do something similar in hepatitis C. 


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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:
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