Some interesting comentary. We are all speculating.
By Tom Locke
Of DOW JONES NEWSWIRES
DENVER (Dow Jones)--Kos Pharmaceuticals Inc. (KOSP) shares were down 10%
Wednesday, the second day of a two-day drop since the Miami company announced
that it would be marketing its new Advicor cholesterol drug on its own, with
some help from a third-party contract sales organization.
After the announcement Tuesday morning, the stock fell Tuesday and Wednesday
because investors are worried that the company, which has been losing money,
will be hard-pressed financially to launch Advicor without a major partner,
said Ulysses Yannas, an analyst with Buckman Buckman & Reid.
S.G. Cowen Securities analyst Stephen Scala also said the stock drop might
have been due to anticipation from the Street that Kos would have a partner in
marketing the drug. He stressed that he was speculating that that was the
driving factor in the stock drop.
A spokeswoman for Kos declined to comment on the stock drop.
Kos also said in the announcement Tuesday that it had received final
approval from the Food and Drug Administration for marketing Advicor and that
it had reached an agreement with Bristol-Myers Squibb Co. (BMY) for a $45
million payment to Kos in connection with the termination of the co-promotion
arrangement for Advicor.
When Bristol-Myers bought Dupont Pharmaceuticals Co. in October, it
inherited the Advicor co-marketing arrangement that Kos had entered into with
Dupont Pharmaceuticals in May 2000. Yannas said that neither Bristol-Myers nor
Kos was comfortable with the inherited arrangement because Bristol-Myers has a
competing cholesterol drug.
Under the old deal, Dupont Pharmaceuticals was to provide 300 salespeople
Kos was comfortable with the inherited arrangement because Bristol-Myers has a
competing cholesterol drug.
Under the old deal, Dupont Pharmaceuticals was to provide 300 salespeople
and Kos was to provide 300 salespeople to market Advicor, Yannas said. Under
Kos's new plan, it will provide its own 300 salespeople and a contract sales
organization will devote 150 salespeople to Advicor, he said.
Yannas sees the Tuesday announcement as a positive partly because
Bristol-Myers will be paying Kos $45 million, he said, which is more than he
was expecting. Under the former deal, it was supposed to contribute $22
million by the end of the year.
Plus, with Bristol-Myers out of the picture, Kos will get 100% of the
proceeds from Advicor, he said. It's possible that the drug, which lowers
low-density, bad cholesterol and increases high-density, good cholesterol,
could reach sales of $1 billion a year in five years, Yannas said.
Yannas is confident Kos founder Michael Jaharis will prop up Kos financially
if necessary. Plus, the company has filed a shelf equity registration and he
believes it will launch a secondary equity offering at some point. |
