Arena Hinges On New Obesity Results (ARNA)
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) will be holding a conference call and webcast Monday morning, March 30, 2009, at 8:30 AM EST. The topic is to be Arena’s top-line results from its BLOOM trial, the Behavioral modification and Lorcaserin for Overweight and Obesity Management). This is to be the first of two pivotal trials evaluating the safety and efficacy of lorcaserin for weight management. This is also the make-or-break event for the company according to Wall Street traders who have been gaming the stock.
This stock has been in “wait and see mode” pending the results. Shares closed up big on Friday as many are expecting positive results, although the outcome will be forthcoming shortly. Shares closed on Friday at $4.50, up $0.36 or 8.70%. Its 52-week trading range is $2.70 to $7.42 and its market cap is $338.7 million.
The call option betting in this one has been very active ahead of this result. In fact, it is possible that these results could lead to post-options trading of more than 5 million shares alone due solely to options being traded. This one trades only about 2 million shares per day.
As of last quarter it had just over $110 million in pure liquid cash and equivalents, and it carried $36.7 million in accounts payable and $71.2 million in direct long-term debt. Both of those items are before the recent $50 million raised.
Stay tuned, this could be one of the more active stocks Monday.
JON C. OGG
Those hosting the call are as follows:
Jack Lief, President and CEO,
Dominic P. Behan, Ph.D., Sr. VP and Chief Scientific Officer,
William R. Shanahan, M.D., VP and Chief Medical Officer,
Christen M. Anderson, M.D., Ph.D., VP, Clinical Development.
The conference call may be accessed by dialing 877.874.1565 for domestic callers and 719.325.4758 for international callers.
Crohn's Loses a Possible Treatment, For Now (OSIR, JNJ, ABT)
There is now a delay for hopes of a new treatment for the problematic Crohn’s Disease. Even with the treatments available today, this is a horrible disease that has much room for improvement. Osiris Therapeutics, Inc. (NASDAQ: OSIR) is seeing its stock getting pounded this morning. The company announced that it was ending enrollment at 210 patients in its Phase III trial evaluating its Prochymal for Crohn’s disease. The reason is that the company believes a design flaw exists in the trial resulting in significantly higher than expected placebo response rates.
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Is Allergan Next in the Takeover Line? (AGN, GSK)
Earlier this morning we caught a volume alert on Allergan Inc. (NYSE: AGN) over at Volume Spike Investor. It turns out that Allergan is being passed around as the next of the big takeovers in the medical and biohealth space. GlaxoSmithkline (NYSE: GSK) is the rumored suitor. Is it fair to make any Blue Horseshoe references?
The waves and waves of biotech and drug mergers is putting somewhere around $100 billion in new money for investors who want to own biotech stocks, drug stocks, and just about anything else tied to medicine. Allergan is a very different company. It has Botox, Lap-Band, breast implants, eyelash enhancements, and more.
So what would it be worth if a takeover comes about? The most simple method to generate a price range is using forward Price/Earnings multiples to make determinations, and then it boils down to what sort of earnings multiple you are willing to marry in the space. If you use a year forward P/E of 15 then you get a value of $40.50 for this year or if you use a forward P/E of 20 then you end up at $54.20 for this year. But if you use 2010 estimates from First Call for the year that an acquirer could say the deal could become accretive to earnings, then a forward P/E ratio of 15 would generate an implied forward price of $45.60 and a forward P/E ratio of 20 then you get an implied forward price of $60.80.
After today’s run-up, Allergan is worth more than $14.5 billion in market capitalization. It carries over $1.1 billion in cash and carries over $1.6 billion in direct long-term debt.
Because Allergan has much reliant upon beauty and elective surgeries or procedures, the company is a much more economically sensitive stock than many biohealth peers. In today’s environment of being extremely cautious it seems a stretch to say $60.00 is attainable. But if a recovery does come sooner rather than later, then there could be all sorts of upside to those earnings expectations as soon as more voluntary procedures start coming again.
Allergan’s 52-week trading range is $28.95 to $61.72. Stay tuned.
Jon C. Ogg
March 24, 2009 (12:00 PM EST)
Genetech Merger Price Looks Locked (DNA)
It wass doubtful that Genentech Inc. (NYSE: DNA) would be able to fetch more than the agreed-to buyout price of $95.00, but certain legal developments probably just took the last hopes and put them in the trash. We figured the chance for a higher price was low. But, as always, there are some who want more even after all parties have agreed on terms. FULL DETAILS are available at 24/7 Wall St.
JON C. OGG
Will Gilead's $20 Offer Win CV Therapeutic Holders Over? (GILD, CVTX)
Gilead Sciences, Inc. (Nasdaq: GILD) has made an offer to CV Therapeutics, Inc. (Nasdaq: CVTX) where Gilead will acquire CV Therapeutics for $20.00 per share in cash. CV Therapeutics’ Board of Directors has unanimously approved the deal and will recommend that stockholders tender their shares.
But where this gets interesting is that CV’s board had fought off a $16.00 buyout from Astellas earlier this year.
And shares are not trading at $20.00 or less for a spread to the deal closing. The stock is actually around $20.50, meaning there is hope of a higher price from Astellas or from Gilead. FULL SUMMARY form 24/7 Wall St.
JON C. OGG
Pfizer Wins With Sutent In Pancreatic Cancer (PFE)
Pfizer Inc. (NYSE: PFE) is trading up 7% in pre-market trading this morning on a very important announcement. The drug giant is stopping its Phase III clinical trial of Sutent early because it has shown such a significant benefit in patients with advanced pancreatic islet cell tumors.
An independent data monitoring committee has recommended halting the trial after concluding that Sutent demonstrated greater progression-free survival compared to placebo; and patients in the study are now able to switch from the placebo to the drug. FULL SUMMARY at 24/7 Wall St.
JON C. OGG
Obama Rocks Up Stem Cell Stocks (ASTM, CYTX, GERN, NBS, OSIR, STEM, KOOL)
There are major gap-ups this morning in stem cell stocks after Friday evening’s news that President Obama is signing an executive order which will lift the Bush ban on funding of embryonic stem cell funding. This is supposed to be signed today, although what is interesting here is that this is not really new news other than the timing and the formality. Many of these stem cell stocks will trade more on a “vote of confidence” rather than over what this means as far as “new news” is concerned.
The following prices are as of 8:19 AM EST.
Aastrom Biosciences, Inc. (NASDAQ: ASTM) +87% at $0.62
Cytori Therapeutics, Inc. (NASDAQ: CYTX) +38% at $3.20
Geron Corporation (NASDAQ: GERN) +29% at $4.99
Neostem, Inc. (AMEX: NBS)
Osiris Therapeutics, Inc. (NASDAQ: OSIR) NOT TRADED…. in pact with Genzyme, but for adult stem cells.
StemCells Inc. (NASDAQ: STEM) +55% at $2.15
Thermogenesis Corp. (NASDAQ: KOOL) +41% at $0.57
JON C. OGG
Obama Rocks Up Stem Cell Stocks (ASTM, CYTX, GERN, NBS, OSIR, STEM, KOOL)
There are major gap-ups this morning in stem cell stocks after Friday evening’s news that President Obama is signing an executive order which will lift the Bush ban on funding of embryonic stem cell funding. This is supposed to be signed today, although what is interesting here is that this is not really new news other than the timing and the formality. Many of these stem cell stocks will trade more on a “vote of confidence” rather than over what this means as far as “new news” is concerned.
The following prices are as of 8:19 AM EST.
Aastrom Biosciences, Inc. (NASDAQ: ASTM) +87% at $0.62
Cytori Therapeutics, Inc. (NASDAQ: CYTX) +38% at $3.20
Geron Corporation (NASDAQ: GERN) +29% at $4.99
Neostem, Inc. (AMEX: NBS)
Osiris Therapeutics, Inc. (NASDAQ: OSIR) NOT TRADED…. in pact with Genzyme, but for adult stem cells.
StemCells Inc. (NASDAQ: STEM) +55% at $2.15
Thermogenesis Corp. (NASDAQ: KOOL) +41% at $0.57
JON C. OGG
Genetech Re-Bid Puts Biotech ETF Weightings At Risk (DNA, BBH, BHH, AMGN, GILD)
There is a hidden twist in the increased merger tender offer price for Genentech Inc. (NYSE: DNA). That twist comes into play in the oldest ETF in the biotech sector. The Biotech HOLDRS (AMEX: BBH) has about 15 biotech stocks in it. This ETF, unlike others, may have a significant change in the components if the Genentech merger goes through.
If you go confirm the data at HOLDRS.COM, you will see that Genentech represents about 48% of the entire current weighting of this ETF. That is about to significantly change if this merger goes through. What is interesting is that HOLDRs DO NOT RECONSTITUTE. We think they can reconstitute upon a vote, but by and large these were created to hold baskets of stocks that can actually be collected in the form of the underlying shares and there is a “let it ride” history there. If you do not believe it, then look up the weightings of Biotech HOLDRS (AMEX: BHH) on the HOLDRS.COM site.
Shareholders also receive annual reports and proxy materials of each company which is inside the ETF. Holders of HOLDRS can also ONLY buy these in 100 share blocks. There are no odd lots and there are no normal lots plus odd lots.
The weighting of this will make the Biotech HOLDRs be called the “Genentech ETF” today. The next two largest constituents are Amgen Inc. (NASDAQ: AMGN) with a 18.4% weighting and Gilead Sciences Inc. (NASDAQ: GILD) with a 17.3% weighting. If Genentech’s buyout occurs, this particular ETF is going to see a monster change in its weightings.
JON C. OGG
Genentech Gets Higher Bid, Is More Still Needed? (DNA)
It appears that Roche has finally capitulated in its tender offer to win the acquisition of Genentech Inc. (NYSE: DNA). The $86.50 controversial offer is now a $93.00 offer. As of March 5, 2009, Roche said that only about 500,000 shares have been tendered in favor of the offer. Many still feel that Genentech is worth over $100 per share. We’ll see if this secures it.
Genentech shares are now trading up 10% at $89.90 on the news. FULL STORY at 24/7 Wall St.
Jon C. Ogg
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