The Facet Biotech Buyout Saga (FACT, BIIB, ABT, PDLI)
Facet Biotech Corporation (NASDAQ: FACT) is a buyout saga that seemed as though it would never end in 2009. The company is now finally being acquired, but not by Biogen Idec (NASDAQ: BIIB). Abbott Laboratories (NYSE: ABT) announced last night that it entered into a definitive agreement for $27.00 per share in a cash buyout. The deal is valued at $722 million, but that includes about $272 million in cash and equivalents.
The net cost will be about $450 million. In late-2009, Facet turned down a second unsolicited offer from Biogen Idec of $17.50 a share after having rejected a lower offer before that.
Facet has discovery and development partnerships with Biogen Idec for MS, and it also has partnerships with PDL BioPharma (NASDAQ: PDLI) and Roche.
Facet shares are up 66% at $26.96 this morning after last night’s deal. Its prior 52-week trading range was $5.86 to $18.35.
JON C. OGG
FDA Hits TNF Blockers (JNJ, ABT, AMGN)
The FDA has announced that it will make drug makers disclose added risks of lymphoma and other cancers on TNF Blockers in a Boxed Warning notice. This pertains to tumor necrosis factor drugs called TNF Blockers associated with the use of drugs for children and adolescents.
- Johnson & Johnson’s (NYSE: JNJ) makes Remicade;
- Abbott Labs (NYSE: ABT) makes Humira;
- Amgen (NYSE: AMGN) for Enbrel.
Cimzia, a Crohn’s Disease treatment made by UCB in Belgium, is also going to have the label.
Most of the drug labels did previously discuss a possible risk of cancer, but a new cancer-related warning will now be added to the warning box that is already on the drug packaging. These TNF blocker drugs treat Crohn’s disease, juvenile arthritis, rheumatoid arthritis, psoriatic arthritis, plaque psoriasis, and a form of arthritis that eventually fuses the spine. The drugs suppress the immune system by blocking the substance in the body that causes inflammation.
The FDA is working with these companies to define the higher risks of cancer in children and adolescents in this matter. It is unclear if this will have any adverse effect on the sales of these drugs. Unfortunately, those taking the drugs may need the drugs regardless of the Boxed Warning risks.
JON C. OGG
AUGUST 4, 2009
Using Stock Options in BioHealth Stock Screen (KG, ABT, WYE, PFE, GENZ, HGSI)
Whether it is mergers, earnings, or just plain vanilla hedging, it seems there is quite a bit of unusual activity in options trading. We have seen this in many key stocks in the BioHealth arena from drug to biotech shares.
King Pharmaceuticals, Inc. (NYSE: KG) has a couple of key events to watch for this week. King has earnings due on Thursday morning (Aug. 6). But there is also some unconfirmed buyout talk out there. We were doing our normal screens this morning, and Joe Kunkle of OptionsHawk.com pointed out to us some very unusual options activity in the stock. Kunkle noted some possible interest from Abbott Labs (NYSE: ABT) in the company. Oddly enough, as of almost Noon EST we now have almost doubled that activity in August Call Options at the $10.00 Strike Price. That volume now stands at 7,200 contracts versus a prior open interest of 2,789. We would note today that since it has just set earnings on such short notice that these could just as easily be option bets around the earnings since those options do not expire until August 21.
Also seen this morning was unusual options activity in Wyeth (NYSE: WYE). While this was large enough to flag a highly unusual options alert, it may have been nothing more than a close-out or reversal of a bet on the price in the Pfizer Inc. (NYSE: PFE) merger.
Over the weekend, we noted at 247wallst.com Genzyme Corporation (Nasdaq: GENZ) saw a huge amount of trading in the AUGUST $50.00 PUTS, where more than its entire open interest traded, and share were at risk of hitting 52-week lows. Those levels look to have been hit this morning when shares hit $49.62. They have since come back to $50.00. Interestingly enough, the options bets have dried up in Genzyme. This remains one of the most key biotech issues to watch for the weeks ahead after the FDA issues have taken out so much value measured in market cap. This is down 10% in just the last three sessions.
Human Genome Sciences, Inc. (NASDAQ: HGSI) is also showing some unusual options trading, although this is easy to explain. It has raised cash and has made a huge run higher. We do not consider this to be a fortune telling event that has promise of a repeat based only on options trading. But here is a snapshot of that volume as of 12:00 PM EST for the AUGUST-2009 CALLS:
Strike. Volume Op. Int.
$12.50.. 1,356 8,560
$14.00.. 1,775 2,259
$15.00.. 2,864 11,418
$16.00.. 2,623 2,096
$17.50.. 4,119 6,843
Stay tuned, we are just about to release our next round of potential merger candidates in Biotech and Drug shares…..
JON C. OGG
AUGUST 4, 2009
Using Stock Options in BioHealth Stock Screen (KG, ABT, WYE, PFE, GENZ, HGSI)
Whether it is mergers, earnings, or just plain vanilla hedging, it seems there is quite a bit of unusual activity in options trading. We have seen this in many key stocks in the BioHealth arena from drug to biotech shares.
King Pharmaceuticals, Inc. (NYSE: KG) has a couple of key events to watch for this week. King has earnings due on Thursday morning (Aug. 6). But there is also some unconfirmed buyout talk out there. We were doing our normal screens this morning, and Joe Kunkle of OptionsHawk.com pointed out to us some very unusual options activity in the stock. Kunkle noted some possible interest from Abbott Labs (NYSE: ABT) in the company. Oddly enough, as of almost Noon EST we now have almost doubled that activity in August Call Options at the $10.00 Strike Price. That volume now stands at 7,200 contracts versus a prior open interest of 2,789. We would note today that since it has just set earnings on such short notice that these could just as easily be option bets around the earnings since those options do not expire until August 21.
Also seen this morning was unusual options activity in Wyeth (NYSE: WYE). While this was large enough to flag a highly unusual options alert, it may have been nothing more than a close-out or reversal of a bet on the price in the Pfizer Inc. (NYSE: PFE) merger.
Over the weekend, we noted at 247wallst.com Genzyme Corporation (Nasdaq: GENZ) saw a huge amount of trading in the AUGUST $50.00 PUTS, where more than its entire open interest traded, and share were at risk of hitting 52-week lows. Those levels look to have been hit this morning when shares hit $49.62. They have since come back to $50.00. Interestingly enough, the options bets have dried up in Genzyme. This remains one of the most key biotech issues to watch for the weeks ahead after the FDA issues have taken out so much value measured in market cap. This is down 10% in just the last three sessions.
Human Genome Sciences, Inc. (NASDAQ: HGSI) is also showing some unusual options trading, although this is easy to explain. It has raised cash and has made a huge run higher. We do not consider this to be a fortune telling event that has promise of a repeat based only on options trading. But here is a snapshot of that volume as of 12:00 PM EST for the AUGUST-2009 CALLS:
Strike. Volume Op. Int.
$12.50.. 1,356 8,560
$14.00.. 1,775 2,259
$15.00.. 2,864 11,418
$16.00.. 2,623 2,096
$17.50.. 4,119 6,843
Stay tuned, we are just about to release our next round of potential merger candidates in Biotech and Drug shares…..
JON C. OGG
AUGUST 4, 2009
Angiotech gets a second wave of positive FDA news (ANPI, JNJ, ABT, MDT)
Angiotech Pharmaceuticals (Nasdaq: ANPI) on Thursday got the FDA’s OK to market a next-generation drug-coated stent with partner Boston Scientific (NYSE: BSX), a deal that might help it prop up its declining stent business.
The new Taxus stent is designed for long lesions — situations that typically required the use of multiple stents previously, or in some cases old-fashioned angioplasty. The company says it is a more efficient treatment option for the estimated 8 to 10% of patients with long lesions, and plans to launch the product next month.
The new announcement may help Angiotech deal with brutal stent competition. The company’s royalty revenue from stents fell 40 percent in the first quarter to $17.1 million.
The new longer stent might be of particular use as the company seeks to take market share from Johnson & Johnson (NYSE: JNJ), Abbott Laboratories Inc. (NYSE: ABT) and Medtronic (NYSE: MDT).
The Angiotech stent announcement comes on the heels of an FDA approval last month for the company’s implantable device to prevent pulmonary embolism. It’s a string of good news for a company that earlier this year said might be forced to seek alternate funding or a potential reorganization or debt restructuring due to continued stent market declines.
Late last year, Angiotech was seeking strategic options. At the time, it was not clear that the debt-saddled firm would survive. The stock has since climbed more than 10-fold to more than $1.80 a share . — Mike Tarsala
Angiotech gets a second wave of positive FDA news (ANPI, JNJ, ABT, MDT)
Angiotech Pharmaceuticals (Nasdaq: ANPI) on Thursday got the FDA’s OK to market a next-generation drug-coated stent with partner Boston Scientific (NYSE: BSX), a deal that might help it prop up its declining stent business.
The new Taxus stent is designed for long lesions — situations that typically required the use of multiple stents previously, or in some cases old-fashioned angioplasty. The company says it is a more efficient treatment option for the estimated 8 to 10% of patients with long lesions, and plans to launch the product next month.
The new announcement may help Angiotech deal with brutal stent competition. The company’s royalty revenue from stents fell 40 percent in the first quarter to $17.1 million.
The new longer stent might be of particular use as the company seeks to take market share from Johnson & Johnson (NYSE: JNJ), Abbott Laboratories Inc. (NYSE: ABT) and Medtronic (NYSE: MDT).
The Angiotech stent announcement comes on the heels of an FDA approval last month for the company’s implantable device to prevent pulmonary embolism. It’s a string of good news for a company that earlier this year said might be forced to seek alternate funding or a potential reorganization or debt restructuring due to continued stent market declines.
Late last year, Angiotech was seeking strategic options. At the time, it was not clear that the debt-saddled firm would survive. The stock has since climbed more than 10-fold to more than $1.80 a share . — Mike Tarsala
Abbott Labs rubs academia the wrong way — again (ABT)
All of a sudden, Abbott Laboratories (NYSE: ABT) appears to be making powerful academic enemies.
The Des Moines Register reports this morning that Abbott Laboratories (NYSE: ABT) is being sued by the University of Iowa for allegedly using a professor’s DNA cloning technique without permission.
According to the suit, Abbott allegedly used the technique to manufacture blockbuster drugs including Humira for rheumatoid arthritis and Crohn’s disease. Humira accounts for about 15% of Abbott’s total revenue, and did $4.5 bln globally in 2008. The drug costs nearly $20,000 a year.
The suit follows allegations earlier this week that Humira was made using technology developed by New York University. That NYU technology is licensed to Johnson & Johnson’s (NYSE: JNJ) Centocor unit. As a result, JNJ in a U.S. cout said it believes it’s entitled to a $2.1 billion share of Humira revenue. – Mike Tarsala
Large drug stocks gain on volume (MRK)
Large drug stocks are testing four-month highs in early trading this morning, and are among the strongest stock groups.
Most of the big names in the group including Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), Eli Lilly & Co. (NYSE: LLY) and Abbott Laboratories (NYSE: ABT) all are trading higher in the early going.
One of the stocks to watch could be Merck & Co. (NYSE: MRK), which has lagged its peers’ relative strength in recent sessions. It has further to go to challenge its June highs, vs. most of its peers.
While Merck has not enjoyed very strong analyst sentiment even compared to its large drug stock peers, it stands out based on relative valuation, trading at about 8 times forward 12-month earnings expectations, vs. more than 10 times for peers such as JNJ and ABT.
It may benefit most from the positive group sentiment.
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.
Read more
Stents Set Up For A Comeback (ABT, BSX, MDT, JNJ, SRDX, ANPI)
Abbott Laboratories (NYSE: ABT) announced after the close today, in a decision we have been waiting on for what feels like forever, that the FDA has approved for the company to begin marketing its XIENCE drug-eluting coronary stent systems.
Boston Scientific (NYSE: BSX) will get to sell basically the same exact stent under a different name. Boston Scientific also has the old Taxus stent. Angiotech (NASDAQ: ANPI) is also Boston’s Taxus stent coating partner for its molecule.
As far as the others, this will get to compete with the Medtronic Inc. (NYSE: MDT) Endeavor stent system as well as Johnson & Johnson (NYSE: JNJ) Cypher stent. Medtronic won the first Stent system approval in February after a 4-year hiatus. SurModics Inc. (NASDAQ: SRDX) is the molecule partner over at J&J for the drug-eluting coatings for teh Cypher stent.
This is being viewed as a key win for Abbott Labs with shares up 1.6% at $55.10 in after-hours trading. The good news is that the dark clouds surrounding stents and drug-eluting stents is starting to lift. The bad news on the topic is that this is now a highly competitive sub-sector in coronary medical technology.
Jon Ogg
July 2, 2008
