People:
Wake up and smell the roses! This stock will be one hell of a ride! The weak and pregnant -- get out of the race now!
NEW YORK, March 14 (Reuter) - Shares of Agouron Pharmaceuticals Inc, which rose sharply in erratic activity on Friday after getting
regulatory approval on an HIV drug sooner than expected, were seen remaining choppy in the near term.
Robert LeBoyer, an analyst at Brown Brothers Harriman expected the stock to be "fairly volatile in the next couple of days."
The stock has been fitful since December as investors speculated on a timetable for the Food and Drug Administration approval of
Agouron's HIV drug.
Earlier Friday, Agouron said the FDA cleared it to market its HIV protease inhibitor VIRACEPT in the U.S., two to three weeks ahead of
some Wall Street expectations.
LeBoyer cited several factors for the expected volatility: The relatively small float of about 14 million shares outstanding, a "fairly
substantial" short-selling position, and the departure of PaineWebber analyst Doug Lind, who left the firm Wednesday for Morgan
Stanley.
Lind was not available, but his office said he initiated the stock as a strong buy.
LeBoyer said individual investors in PaineWebber's large retail network may sell the stock without any analyst guidance.
Shares opened Friday up 20-1/2 to 96-1/4 on Friday, then settled back and ended up 4-3/4 at the close to 80-1/2. The stock was selling
at around $50 in December. Investors ran up the stock in anticipation of the FDA approval.
VIRACEPT is the first HIV protease inhibitor to be cleared for marketing simultaneously in an adult formulation and in a pediatric
formulation and was given approval under the provisions of the FDA's accelerated approval process.
Agouron said it will be widely available at pharmacies throughout the U.S. next week.
Analysts said the FDA approval would be a boon.
"It's extremely positive on the initial launch," said Jay Silverman, an analyst at Robertson, Stephens. "I do think they have a very
competitive product, an experienced sales force, and a nice lead time over the next, nearest meaningful competitor," Vertex
Pharmaceuticals Inc , with Glaxo Wellcome Plc GLXO.L .
"It's extremely significant," agreed LeBoyer. "It's the product that been driving (the stock) since the $30 level."
Silverman expected the new drug to generate $30 million in revenues by the end of the fiscal year in June and $165 million for fiscal
1998, ending in June. Silverman rated the stock a buy.
LeBoyer estimated revenues for the fourth quarter of $16 million and $150 million for fiscal 1998 from VIRACEPT.
LeBoyer was estimating a loss of $3 per share for 1997 and a profit of $0.30 for 1998. He has kept the long-term outperform rating.
LeBoyer said that when shares topped $100 last month, the stock was getting a little ahead of itself, based on the timetable for FDA
approval.
LeBoyer has a 12-month price target of $110.
"This (decision) was pretty much valued into the stock's price," said Ken Pounds at Nutmeg Securities. "There probably isn't going to be
any more positives to focus attention on the stock for a while." |
