Seeking Alpha: Synergy Pharmaceuticals Could Be A Diamond In The Rough

For a biotech that has reported encouraging clinical results and seeks to address a significant market, Synergy Pharmaceuticals (NASDAQ:SGYP) can't get much love. I can appreciate that there's a funding overhang here and that the market doesn't always embrace drugs that look like "me too's", not to mention a general move away from risky smaller names, but I think those concerns miss a lot of positives at this development-stage biotech.

I don't think plecanatide is just a Linzess wannabe, and I believe direct-to-consumer marketing efforts from Sucampo (NASDAQ:SCMP) and Actavis (NYSE:ACT) (and maybe Salix (NASDAQ:SLXP) down the road) will raise awareness of prescription treatments for constipation and IBS. Moreover, I think plecanatide offers some meaningful quality-of-life advantages that may be underappreciated today. It seems to me that the market currently values Synergy as though it will be forced to market plecanatide on its own (an expensive proposition), but I believe some sort of partnering arrangement, if not an outright sale of the company, is more likely and these shares look undervalued today.

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Synergy Pharmaceuticals Could Be A Diamond In The Rough

Seeking Alpha: Nektar Therapeutics Has More To Give

This year has seen biotechs on a rockier road, but those companies that have continued to develop broad pipelines have fared a little better. Nektar Therapeutics (NASDAQ:NKTR) belongs on that list, as the company continues to move forward with an array of late-stage assets and a deep pipeline based upon its PEGylation technology (a technology that alters pre-existing drugs to improve efficacy, tolerability, and so on). Not only does Nektar still look undervalued, I believe that the assumptions underlining that valuation are still conservative enough that de-risking events (namely clinical trial results) can add meaningful value.

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Nektar Therapeutics Has More To Give

The Motley Fool: Can Anything Derail Salix Pharmaceuticals?

I promise that I don't have a contract that specifies a minimum number of Salix Pharmaceuticals (NASDAQ: SLXP  ) articles, but sometimes the news flow just seems to run that way. After a vague announcement of positive phase 3 data on Xifaxan in IBS-D on July 1 and the announcement of a tax inversion M&A transaction with Cosmo Tech on July 9, management has now announced a successful appeal to the FDA and the approval of sub-q Relistor for opioid-induced constipation (or OIC) in patients with chronic pain unrelated to cancer.

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Can Anything Derail Salix Pharmaceuticals?

The Motley Fool: Fleeing Taxes, Salix Pharmaceuticals Moves to Ireland

Large companies like Actavis have done it, small companies like Auxilium have done it, and huge companies like Medtronic have done it (and Pfizer wants to do it). Now count mid-cap specialty pharmaceutical company Salix Pharmaceuticals (NASDAQ: SLXP  )  is among the companies using M&A to shift their formal headquarters to a country with a lower tax rate. 

While there's more to Salix's merger with Cosmo Tech than just a tax inversion, that's the value driver to the transaction. This move appears to add about 5% to 10% to Salix's value, but it also makes it less likely that the company gets a buyout bid of its own, and that may be disappointing to some investors.

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Fleeing Taxes, Salix Pharmaceuticals Moves to Ireland

The Motley Fool: Why Salix Pharmaceuticals' Good Data Wasn't Great

Investors in Salix Pharmaceuticals (NASDAQ: SLXP  ) might have had some upset stomachs in the days leading up to today's announcement of positive results from the TARGET-3 study of Xifaxan in IBS-D. Although a medical journal review from mid-2012 had suggested that Xifaxan would pass this study of long-term retreatment, there are hundreds of millions of high-margin incremental sales riding on Salix ultimately securing FDA approval for a drug that has had a tough route to approval for this large indication.

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Why Salix Pharmaceuticals' Good Data Wasn't Great

Seeking Alpha: There May Be More Moves Involving Salix Before The Year's Done

There has been ample M&A activity in the drug sector, with companies like Valeant (VRX), Endo International (ENDP), and Actavis (ACT) all looking to add scale and exploit low interest rates and low tax rates. Salix (SLXP) has been busy too, paying around $2.6 billion to acquire Santarus and adding scale in primary care and GI drugs. Salix's valuation suggests that investors may still be expecting more action, as Salix's focused portfolio and high effective tax rate could make it a player either as an acquirer seeking a tax inversion deal or a target.

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There May Be More Moves Involving Salix Before The Year's Done

The Motley Fool: For Forest Labs, Inc, Deals Are Coming Fast And Furiex

This is definitely a season of deals in the health care space, with Forest Labs (NYSE: FRX  ) choosing to add another asset to its GI business ahead of its anticipated merger with Actavis (NYSE: ACT  ) . Forest Labs is offering a significant premium for Furiex Pharmaceuticals (NASDAQ: FURX  ) and there are still FDA-related risks in play, but it seems like a reasonable offer for what could prove to be a highly synergistic asset.

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For Forest Labs, Inc, Deals Are Coming Fast And Furiex

Seeking Alpha: 2014 Looking Like A Big Year For Nektar

Long-term investors in Nektar Therapeutic (NKTR) have had a roller coaster ride over the years, as these shares have traded up and down on for particular products like inhaled insulin and Nektar's PEGylation licensing royalty streams in general. Over the last few years, though, the company has been focusing on not only increasing its share of value in its partnered programs, but using the cash generated by them to support its own proprietary development portfolio.

The next year is looking like a big one for the company, as it should have considerably more clarity about the future of its opioid-induced constipation drug and its metastatic breast cancer drug. Together these drugs encompass about half of the value I see in the shares. While Nektar must deal with the same risks and uncertainties as any biotech, I think the Street may be underpricing these shares. Even with what I think are relatively conservatives estimates for many of the lead programs, I think the shares may be almost 30% undervalued and Nektar does offer a deep pipeline of potential drug candidates.

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2014 Looking Like A Big Year For Nektar

The Motley Fool: Salix Scores Santarus in a Savvy Deal

Salix Pharmaceuticals (NASDAQ: SLXP  ) has long been a solid, if volatile, specialty pharmaceutical company. Salix has long relied upon its rifamycin-based drug Xifaxan for a significant percentage of its revenue (almost two-thirds as of the most recent quarter), while hoping that other approved products like Apriso and Solesta and pipeline drugs like Relistor (for opiod-induced constipation) could add both growth and diversity.

Now the company has taken a significant step forward in diversifying its revenue base and leveraging its balance sheet. Last week, Salix announced an agreement to acquire Santarus (NASDAQ: SNTS  ) for $2.6 billion in cash. The deal may look expensive at more than seven times estimated 2013 sales, but the collection of assets that Salix is acquiring should deliver above-average growth with strong synergies with Salix's existing business.

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Salix Scores Santarus in a Savvy Deal

Seeking Alpha: Salix Still Offers Both Potential Reward And Risk

When I last wrote on Salix Pharmaceuticals (SLXP) in the fall of 2012, I thought the shares of this specialty pharmaceutical company held solid potential for those investors who could accept the risks that went with the story. Since then, the shares are up about 60% - a pretty solid return even when considering the bull market in healthcare names.

I don't believe that these shares have hit their ceiling yet. Management has shown its ability to identify, develop, and/or acquire promising products in the gastrointestinal field. Investors can also look forward to upcoming data on Xifaxan in the treatment of IBS-D and an FDA panel meeting tied to the company's appeal of a complete response letter for a subcutaneous form of Relistor to treat opiod-induced constipation. I consider both of these events to be high-risk/high-reward situations, but I believe there's still a case to be made for Salix delivering long-term cash flow growth of 20%-plus, and I believe these shares remain undervalued on that basis.

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Salix Still Offers Both Potential Reward And Risk

Seeking Alpha: Uncertainty Is The Trade-Off For Salix's Appealing Price

If a quality specialty pharmaceutical company like Salix Pharmaceuticals (SLXP) is trading at a discount, you can usually rest assured that it's because the story has a little too much of what Wall Street hates most - uncertainty. In the case of Salix, the uncertainty surrounds just why the FDA rejected its application for subcutaneous form of Relistor and what, if anything, that means for the oral form of the drug. FDA issues are no trivial thing for a company like Salix, but nevertheless this stock looks like a name worth owning.

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Uncertainty Is The Trade-Off For Salix's Appealing Price

Seeking Alpha: Plenty Of Analysts Scared To Go Into Forest Labs

"If you go out in the woods today,
You'd better not go alone.
It's lovely out in the woods today,
But safer to stay at home. " Teddy Bear's Picnic, J.Kennedy

It's hard to find a healthcare stock where there is such a wide divergence of opinion and range of possible outcomes as with Forest Labs (FRX). Despite an exemplary record of free cash flow production and sales execution, many analysts still cannot find the will to believe that the company can reload after the loss of Lexapro and resume a growth trajectory. While there are in fact good reasons to wonder about the future growth of the company, this is a story where the courageous could come out with sizable capital gains.

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Plenty Of Analysts Scared To Go Into Forest Labs

Seeking Alpha: What's It Going To Take To Get Salix Cheap?

For the most part, a company actually missing estimates on an operating basis and significantly increasing estimated expenses for the next year is enough to drive the stock down. Salix Pharmaceuticals (SLXP) is not an ordinary stock, though, and investors seem happy to look past the near-term turbulence in favor of the long-term opportunity in this focused specialty pharmaceutical company.

A Mixed End To The Fiscal Year
To its credit, if there's a good way to miss earnings, Salix pretty much found it. Revenue rose over 30% for the quarter (with sales of lead drug Xifaxan up 29%) and gross margins were flat. That the company exceeded estimates for SG&A spending and missed sell-side analyst estimates for operating income by about 10% was pretty much moot against the 40% overall growth and the ongoing momentum in its class-leading drug.

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What's It Going To Take To Get Salix Cheap?

Seeking Alpha: Nektar Therapeutics - Often Forgotten, But Worth A Look

A few weeks into 2012, it looks like investors are much more eager to take on some risk in their portfolios and biotechs are coming back into favor. With that in mind, it makes sense to check out some of the promising biotechs that languished a bit in 2011. Although Nektar Therapeutics (NASDAQ: NKTR) hasn't had much bad news in a while, in the world of biotech "no news" can be almost just as bad and it seems that the market has perhaps forgotten this name a bit.

Changing Course
Nektar has long been in the business of partnering with larger pharmaceutical companies and licensing its proprietary PEGylation technology. PEGylation basically introduces polyethylene glycol into a compound and alters its performance in the body - most notably by slowing the process of clearing in from the body. Companies including Amgen (NASDAQ: AMGN), Pfizer (NYSE: PFE), and Merck (NYSE: MRK) have licensed this technology for major drugs like Neulasta and PEG-INTRON, but Nektar gets only relatively small royalties for this technology.

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Nektar Therapeutics: Often Forgotten, But Worth A Look

Investopedia: The Salix Story Keeps Improving

Investors have a solid dozen investment options in Big Pharma and hundreds of biotechs to choose from, but the specialty pharmaceutical space has always been a little thin. That gives Salix Pharmaceuticals (Nasdaq:SLXP) a little bit of scarcity value - it has excellent growth credentials but also some of the security that comes with patents and the requirement for rivals to go through the FDA approval process.

One Drug to Lead the Way  
One of the problems with specialty pharmaceutical companies like Salix, Forest Labs (NYSE:FRX), and Endo Pharmaceuticals (Nasdaq:ENDP) is that they're often highly dependent on a very small number of drugs. For Salix, it's Xifaxam - a non-systemic antibiotic that works especially well in the GI system. Xifaxam is approved for traveler's diarrhea and hepatic encephalopathy (where it has orphan drug status) and currently contributes about two-thirds of the company's sales.

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Seeking Alpha: Cancer Risks May Delay, But Shouldn't Derail, The Gattex Train

In the “shoot-first analyze later” world of biotechnology, NPS Pharmaceuticals (NPSP) is getting shot up on potentially scary safety data about the company's late-stage GI drug Gattex (teduglutide). Although investors should not blithely dismiss the risk that this data could knock NPSP off track, the recent sharp sell-off looks harsh relative to the data available and the prospects of the company's pipeline.

Will Cancer Haunt Gattex?
NPS Pharmaceuticals released new data on Halloween from the company's Phase 3 STEPS 2 study of Gattex in short bowel syndrome. Much of the data was consistent with prior studies – Gattex significantly reduces the amount of parenteral and IV nutrition relative to placebo, and a large number of recipients respond.
The adverse effects part of the data is where the warning sirens went off. Tolerability could be an issue, as some patients elected to discontinue because of GI side-effects (though it should be noted that a large number of patients in the first STEPS trial elected to continue on).

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Cancer Risks May Delay, But Shouldn't Derail, The Gattex Train

Seeking Alpha: Cubist Fills Its Sales Bag And Pipeline With Adolor

Stuck in a trading range for about five years, Cubist Pharmaceuticals (CBST) has had a pretty good year in 2011. The company resolved a patent dispute with Teva Pharmaceuticals (TEVA) on reasonably good terms, got some patent extensions that should further boost its profit potential on Cubicin, and struck marketing deals with Optimer (OPTR) and AstraZeneca (AZN) to make better use of its own sales force. But that's not all that's working in Cubist's favor recently. The company's pipeline has also come along nicely, as the Calixa deal has delivered two promising compounds, one of which is now in late-stage studies.

That said, it has not been all sweetness and light for Cubist. Investors have been troubled by this company's heavy reliance on Cubicin and the inevitable declines that are coming in operating income, to say nothing of the inefficiencies of operating a salesforce with few compounds to sell. Investors have been waiting for Cubist to do a deal or two and now management has done just that – giving the company an additional product to sell and also adding some clinical compounds outside of its core anti-infective space.

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Cubist Fills Its Sales Bag And Pipeline With Adolor

Investopedia: Valeant Offers A Princely Sum For Cephalon

The news Tuesday evening that Cephalon (Nasdaq:CEPH) had received a bid was not all that surprising. Cephalon had long been a fixture on analysts' short-lists of biotech/specialty pharma companies that could be sellers in M&A transactions. To see the bid come from Valeant (NYSE:VRX), though, was surprising as few people had talked about this pharma company as an active bidder in high-value deals. 

That said, and while the deal is far from a sure thing at this point, this deal makes quite a bit of sense and may be the best opportunity for Cephalon shareholders to get value for some time.  

The Terms of the Deal 

After what appears to be weeks of frustrated attempts to strike a friendly deal, Valeant went public with an unsolicited bid of $5.7 billion for Cephalon. This deal would deliver $73 a share in cash to Cephalon shareholders, an amount that Valeant would fund with debt from Goldman Sachs (NYSE:GS).

All in all, it does not look like a bad bid for Cephalon. It represents a 24% premium to Cephalon's prior close, and a 12% premium to the consensus analyst price target on the shares (for the very little that those are often worth). The deal also represents an EV/EBITDA of just under five and a forward P/E of over eight on 2011 earnings and almost 13 on 2012 earnings.

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Investopedia: Salix Proves There Is Still Growth In Pharma

For those investors bored or disgusted with the current theme in Big Pharma of minimal top-line growth and mass firings, maybe Salix Pharmaceuticals (Nasdaq:SLXP) can be an antidote. As Salix is ably demonstrating these days, it is still possible to launch new drugs and see solid growth as a result. Of course, Salix has the benefit of a tiny base from which to grow, but in a pharma world that is starved for growth, Salix may be looking increasingly appetizing. 

An OK End to the Fiscal Year
Salix reported respectable results for the fourth quarter. Sales rose 69% from last year, as revenue from Xifaxan soared and has quickly become 70% of the company's overall business. The company saw a decent improvement in product gross margins and operating income reversed from a year-ago loss.

Looking out into 2011, management guided to $520 million in revenue - a level that was a bit lower than the Street's old number, but still representing over 50% year-on-year growth. (For more, see Can Earnings Guidance Accurately Predict The Future?)


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