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
Top 2010 Established Biotech Stock Picks for Upside (MNKD, THRX, DNDN, INCY, ILMN, ALNY, GILD, SVNT, AMGN, ONXX, PDLI, OSIP, CELG)
BioHealthInvestor.com wanted to put together a list of key biotech and BioHealth-related stocks that had the most upside for 2010 according to consensus analyst price targets. This is of course no exact science for many reasons, but getting a lot of consensus price targets together is often a sign of at least where to start when looking for upward price targets in stocks. And we all know that BioHealth and biotech stocks often offer the upside of the century as these companies all hold a bit of your own personal lottery ticket in all of their share prices.
After taking a look at our normal universe of biotech and biohealth related stocks. it was obvious that MannKind Corp. (NASDAQ: MNKD) still has the most upside from the consensus price targets IF it is hit. Then in order of expected share price appreciation comes Theravance Inc. (NASDAQ: THRX), Dendreon Corp. (NASDAQ: DNDN), Incyte Corporation (NASDAQ: INCY), and then came Illumina Inc. (NASDAQ: ILMN), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), and Gilead Sciences Inc. (NASDAQ: GILD).
The stocks above all had upside of over 25%. The other stocks here are the ‘lower rung’ of upside expectations but are all still offering over 20% upside to the consensus analyst price targets (again IF they are hit). Of the 13 stocks with markets caps of $750 million (or almost $750 million) which we cover, these still had upside of over 20% except a few: Savient Pharmaceuticals, Inc. (NASDAQ: SVNT), Amgen Inc. (NASDAQ: AMGN), Onyx Pharmaceuticals Inc. (NASDAQ: ONXX), PDL BioPharma, Inc. (NASDAQ: PDLI), OSI Pharmaceuticals Inc. (NASDAQ: OSIP), and Celgene Corporation (NASDAQ: CELG).
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Value Stocks in Drugs & Biotech (AMGN, BIIB, CBST, CEPH, PDLI)
This weekend we ran screens of several drug and biotech companies in our quest for ‘cheap stocks’ in the BioHealth sector. The intent is not solely for buyout targets because we prefer to look at value stocks rather than just picking buyout hopefuls. The obvious issue that makes most of these cheap is because there have been problems or have been issues that made these look cheap on the surface. To look for sub-market valuations, we used Thomson Reuters estimates for 2009 and 2010 earnings. We then set a maximum target of 15-times earnings and screened out the companies that gave the ‘false positives’ as there were many.
Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Cephalon Inc. (NASDAQ: CEPH), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), and PDL BioPharma, Inc. (NASDAQ: PDLI) all made the cut. We initially wanted to look for market caps over $1 billion, but we set the bar at $500 million and tried to focus on companies with growth. We included valuation data, performance, and some color on each name. Some, but not all of these, are also in our upcoming biotech buyout targets for 2010.
Amgen Inc. (NASDAQ: AMGN) is one we have long noted during its waves of problems and as it was under future reimbursement pressure that may be more like an old fashioned drug company now as it has matured. The company’s market cap is $56 billion, which is actually now the largest market cap since Genentech is now Roche. Its stock trades at $55.48 and its 52-week trading range is $44.96 to $64.76. Because of the pressure and past issues, it trades at only about 11-times earnings for 2009 ($5.03 est.) and 2010 ($5.14 est.) both. It also trades at under 4-times 2009 and 2010 revenue expectations and it sits with an arsenal of almost $14 billion in cash and equivalents, yet has over $10.5 billion in long-term debt.
Biogen Idec Inc. (NASDAQ: BIIB) is no stranger to issues… another activist was just out this week calling for more action and the company has not been able to get out from under the TYSABRI PML despite the notion that this is a very low risk. At $46.38, its market cap is $13.4 billion and its 52-week trading range is $37.21 to $55.34. Biogen has over $3.1 billion in cash if you include its short-term and long-term investments and it carries just under $1.1 billion in long-term debt. Biogen also trades at 11.6-times the $3.99 EPS target for 2009 and only 10.5-times the $4.42 target for 2010; and Biogen trades at 3-times 2009 expected sales. The risk is here is of course the TYSABRI risks. You never know if they will have to pull it again. This is an opinion rather than a formal target, but TYSABRI is good enough in treatments of MS that it could quite literally have two or three times the number of patients using it if the PML risk can either be quantified better or could be mitigated. Another issue is that it is trying to acquire Facet Biotech Corporation (NASDAQ: FACT) as a diversification and added pipeline move.
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Value in Biotech: Do Low P/E Ratios Make For Cheap Stocks? (AMGN, BIB, CEPH, CBST, GENZ, PDLI)
Biotechnology has historically been a very tough segment for investors to find “value” in. Usually, the multiples of earnings and revenues are high and many of the emerging companies have no revenues or earnings and will not for years to come. Yet we recently found a study of biotech analysts, investors, and portfolio managers from BIO and Thomson Reuters which showed how many influential investors in the new tougher world of lower valuations are looking at traditional low-price/earnings ratios and other traditional investment valuation metrics in evaluating biotech stocks. So this week we ran a screen of some of the top 50 biotech stocks and wanted to review the following companies:
Amgen Inc. (NASDAQ: AMGN)
Biogen Idec Inc. (NASDAQ: BIIB)
Cephalon Inc. (NASDAQ: CEPH)
Cubist Pharmaceuticals Inc. (NASDAQ: CBST)
Genzyme Corporation (NASDAQ: GENZ)
PDL BioPharma, Inc. (NASDAQ: PDLI)
In each of these we reviewed the share prices and why these are trading where they are. We also gave detailed data from Thomson Reuters for 2009 and 2010 consensus earnings and revenue estimates, as well as what their forward P/E and Times-Revenues figures are. Also included are average analyst target prices and any recent calls. We also gave the caveats, issues, or suppositions behind each company and a layout of what lies ahead. We also had a market cap criteria, and while all of these companies are over $1 billion in market cap we were willing to look down as low as $400 million. These six companies also greatly exceeded our average daily volume minimum of 250,000 shares.
Lastly, these were reviewed alphabetically rather than by any order of preference because each company and each case is rather unique.
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Key Biotechs of Interest (DNDN, DNA, GENZ, PDLI)
Dendreon Corp. (NASDAQ: DNDN) has seen some unusual trading volume this morning when you consider that it has been putting in 52-week lows. There was a steady flow of buying this morning considering that it looked as though it was being forgotten about. The stock is up over 5% on pre-market trading. It was noted in TheStreet.com briefly but there is also talk about its FDA conversations that may be putting in a bid on the shares.
Genentech, Inc. (NYSE: DNA) is up over 1% at $82.60 and is trying to catch more of a bid this morning on the heels of yesterday’s meeting to woo shareholders away from tendering shares to Roche. Genentech is still trying to hold out for more money here. Genentech traded as high as $85.40 briefly on Monday.
Genzyme (NASDAQ: GENZ) is trading down almost 6% at $53.20 on an FDA delay action; FDA has said it needs additional data and conditions on the Lumizyme approval for the treatment of Pompe disease. The good news here is that the initial reaction had this stock down as much as 11% on the news last night.
PDL BioPharma, Inc. (Nasdaq: PDLI) was up 7% pre-market on very thin volume, but shares had been up 10% last night. The oncology and immunology biotech posted $0.26 EPS vs. $0.08 estimates; Revenues were $68.7 vs. $59.8 million estimates. It also plans to offer two $0.50 dividends to holders.
JON C. OGG
MARCH 3, 2009 (8:40 AM EST)
Top Med-Bio Analyst Calls (ARAY, ABI, MYL, PDLI)
It’s actually a fairly light morning in analyst calls, particularly in medical and biotech shares. Here are four of the calls that we have seen so far this morning:
- Accuray (NASDAQ: ARAY) Cut to Sell from Neutral at UBS.
- Applied Biosystems (NYSE: ABI) Cut to Neutral from Buy at UBS.
- Mylan Labs (NYSE: MYL) started as Buy at Caris.
- PDL Biopharma (NASDAQ: PDLI) Cut to Neutral from Outperform at Credit Suisse.
Jon Ogg
June 13, 2008
Top Med-Bio Analyst Calls (ARAY, ABI, MYL, PDLI)
It’s actually a fairly light morning in analyst calls, particularly in medical and biotech shares. Here are four of the calls that we have seen so far this morning:
- Accuray (NASDAQ: ARAY) Cut to Sell from Neutral at UBS.
- Applied Biosystems (NYSE: ABI) Cut to Neutral from Buy at UBS.
- Mylan Labs (NYSE: MYL) started as Buy at Caris.
- PDL Biopharma (NASDAQ: PDLI) Cut to Neutral from Outperform at Credit Suisse.
Jon Ogg
June 13, 2008
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