Stocks and Sectors

Tom Lydon (ETF Trends) submits:

Mergers and acquisitions are starting to be a sign of the times. An unexpected decline in wholesale inventories wasn’t enough to put the markets in the red in early trading, thanks to a slew of M&A deals in the biotechnology and financial sectors.

Abbott Laboratories (ABT) is going to buy Facet Biotech Corp. (FACT) for $450 million. Abbott’s bid bested a failed bid from Biogen Idec Inc. (BIIB). The move would add immunology and oncology to Abbott’s repertoire. These deals signal more than just the health of aspects of the biotech sector; it’s a sign of renewed confidence in the economic recovery. It wouldn’t be surprising to see more deals in this and other sectors take place in the coming months. iShares Nasdaq Biotechnology (IBB) is up about 1% this morning.

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QLT Inc. (QLTI)

Q4 2009 Earnings Call

March 10, 2010 8:30 am ET

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David Greene submits:

With the announcement after yesterday’s market close that Abbott Laboratories (NYSE:ABT) is buying Facet Biotech Corp. (NASDAQ:FACT) for approximately $450 million in cash or $27/share – a nice 67% premium to yesterday’s closing market price – the focus will be on other potential targets for acquisition. Abbott said the Facet Biotech acquisition expands the company’s access in immunology and oncology. The compounds include daclizumab that is expected to move into Phase III development in the second quarter 2010 to treat multiple sclerosis (MS).

But there are more companies with promising drugs under development which could attract generous valuations by other Big Pharma’s. Cell Therapeutics (NASDAQ:CTIC) recently announced that the Food and Drug Administration (FDA) approved a third-party manufacturing site for the production of the company’s experimental cancer drug. CTIC’s drug, Pixantrone, is being reviewed by the FDA as a potential therapeutic for aggressive non-Hodgkin’s lymphoma that has not responded to other approved therapies or if the lymphoma returned after initially appearing to be responding to other therapies. The FDA had expressed concerns on the efficacy and safety of Pixatrone in early February, prompting a sharp selloff in CTIC stock which is just recently rebounding from.

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David Greene submits:

With the announcement after yesterday’s market close that Abbott Laboratories (NYSE:ABT) is buying Facet Biotech Corp. (NASDAQ:FACT) for approximately $450 million in cash or $27/share – a nice 67% premium to yesterday’s closing market price – the focus will be on other potential targets for acquisition. Abbott said the Facet Biotech acquisition expands the company’s access in immunology and oncology. The compounds include daclizumab that is expected to move into Phase III development in the second quarter 2010 to treat multiple sclerosis (MS).

But there are more companies with promising drugs under development which could attract generous valuations by other Big Pharma’s. Cancer Therapeutics (NASDAQ:CTIC) recently announced that the Food and Drug Administration (FDA) approved a third-party manufacturing site for the production of the company’s experimental cancer drug. CTIC’s drug, Pixantrone, is being reviewed by the FDA as a potential therapeutic for aggressive non-Hodgkin’s lymphoma that has not responded to other approved therapies or if the lymphoma returned after initially appearing to be responding to other therapies. The FDA had expressed concerns on the efficacy and safety of Pixatrone in early February, prompting a sharp selloff in CTIC stock which is just recently rebounding from.

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Exelixis, Inc. (EXEL)

Q4 2009 Earnings Call

March 9, 2010 8:00 am ET

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In my February 19th blog: “How to lose a lot of money in the market,” we looked at how investing in companies that are the target of unsolicited takeovers could be detrimental to the health of one’s portfolio. To illustrate this point I chose scientific equipment maker Zygo (NASDAQ: ZIGO) as my posterchild.

A brief history of the proposed merger
Briefly, II-VI (Nasdaq: IIVI) made an unsolicited offer for Zygo in January for $10 per share, well over the current $7 per share price. Hoping for a bidding war, investors were willing to pay up to $11 for the stock, but Zygo’s board threw cold water on that notion by rejecting the deal. The stock instantly shed a buck in value.

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George Chadwick submits:

Much of this research on Human Genome Sciences Inc. (HGSI) was performed just prior to the company’s earnings release on March 2, 2010, in large part to help decide whether or not to continue to hold after an 80% gain (now a 90% gain) in one of our portfolios.

It is interesting to note that the language used in HGSI’s earnings report very closely matched what was unearthed during the research (see below). This should exemplify the usefulness of doing the research!

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EP Vantage submits:

The only surprise following news that Roche (RHHBY.PK) and Biogen Idec (BIIB) have suspended phase III trials of ocrelizumab in rheumatoid arthritis (RA) and lupus was the limited impact it had on the shares of either company. Also known as RG1594, the anti-CD20 monoclonal antibody was forecast to ring up blockbuster sales at its peak, but it now faces the prospect of being a relatively small contributor to both companies’ income in the immediate future.

As ocrelizumab is a follow-on to the blockbuster Rituxan, which itself is forecast to be eclipsed by Humira this year as the best-selling RA drug worldwide if all indications are counted, one might have expected investors to react negatively to the news. However, Roche shares fell less than 0.1% yesterday and Biogen Idec shares climbed nearly 1%.

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Derek Lowe submits:

Nature Biotechnology weighs in on the GlaxoSmithKline (GSK)/Sirtris (SIRT) controversy. They have a lot of good information, and I’m not just saying that because someone there has clearly read over the comments that have showed up to my posts on the subject. The short form:

The controversy over Sirtris drugs reached a tipping point in January with a publication by Pfizer (PFE) researchers led by Kay Ahn showing that resveratrol activates SIRT1 only when linked to a fluorophore. Although Ahn declined to be interviewed by Nature Biotechnology, a statement issued by Pfizer says the group’s findings “call into question the mechanism of action of resveratrol and other reported activators of the SIRT1 enzyme.”

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Zacks.com submits:

In a positive development, Cell Therapeutics (CTIC) announced that the US Food and Drug Administration ((FDA)) has completed its inspection of the company’s manufacturing facility in Italy and found it to be compliant with all the required norms. The facility manufactures Cell Therapeutics’ Pixuvri (pixantrone), which is currently under FDA review.

Cell Therapeutics is seeking FDA approval of pixantrone for the treatment of relapsed or refractory aggressive non-Hodgkin’s Lymphoma ((NHL)) in patients who have not responded to other treatment options. A final decision on the drug should be taken by April 23.

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