Biotechs get push from Roche-Genentech deal
cbs.marketwatch.com
By Stephanie O'Brien, CBS MarketWatch
Last Update: 1:40 PM ET Jun 3, 1999 NewsWatch
NEW YORK (CBS.MW) -- Biotechnology stocks rose Thursday afternoon after Switzerland's Roche AG said it would buy the rest of Genentech Corp. it didn't already own.
6/3/99 1:44:42 PM ET
Roche said it plans to buy the third of Genentech (GNE: news, msgs) it doesn't already own, then sell up to19 percent of its stock back to the public so the biotech company can retain some independence. See story.
"The merger creates a positive environment for the biotech sector," said Jonas Alsenas, an analyst at ING Barings. "It says that biotechs can be good investments for big pharmaceutical companies."
"Overall, it's a good thing for the biotech industry," Alsenas said.
Successful biotech companies have made good partners for larger firms, Alsenas said. They tend to be nimbler and more entrepreneurial, and their managements have considerable financial stakes invested in making sure a given project comes to fruition, the analyst also said.
The Amex biotechnology index ($BTK: news, msgs) rose 1.1 percent Thursday. (See the intra-day chart below.) The Nasdaq biotech index (IXBT: news, msgs), meanwhile, was unchanged.
Among the movers were Immune Response Corp. (IMNR: news, msgs) which rose 17/32, representing an 11 percent gain, to 5 9/16.
Alan Auerbach, an analyst at First Security Van Kasper raised his rating on the stock to "strong buy" from "buy" based on its valuation. The stock was under pressure recently, after the company was advised to abandon a Phase III clinical trial of Remune, its HIV drug. See press release.
"The resulting negative response to the setback has reduced the company's market capitalization to a level that we view as favorable from a risk/reward standpoint," Auerbach said in a note to clients. Auerbach said Immune Response plans to begin new clinical trials of Remune that will focus on another area of development. The company also has five other drugs in late-stage development.
As a result, Auerbach said he sees the stock's current level as a buying opportunity. Auerbach also set a 12-month price target of $11 a share.
Among the other botefchnology movers were Cephalon (CEPH: news, msgs), which rose 7/8 to 15 1/8; Cor Therapeutics, (CORR: news, msgs), which was up 7/16 to 14 3/4; and Centocor (CNTO: news, msgs), which rose 1/4 to 45 1/4.
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