Here's more on the initial 7 1/2 point jump:
Guilford Pharma Hits 52-Wk
High On Amgen Licensing Pact
By LOUIS HAU
Dow Jones Newswires
NEW YORK -- Shares of Guilford Pharmaceuticals Inc.
(GLFD) hit a 52-week high Thursday after the company
licensed to Amgen Inc. (AMGN) the world-wide rights to
a group of compounds that hold promise in promoting
nerve regeneration and repair.
The compounds, a class of neurotrophic agents known as
FKBP-neuroimmunophilin ligands, eventually could be
used to treat degenerative disorders of the nervous system
such as Alzheimer's disease and Parkinson's disease.
Oppenheimer & Co. analyst Matthew Geller said the deal
will represent the most exciting part of Amgen's research
pipeline.
"This is a blockbuster deal from the size and the potential
of the product," he said.
Guilford's Nasdaq-listed shares jumped to a 52-week high
of 32 3/4, surpassing the previous high of 30 1/4 set
March 5, before settling back somewhat at 30, up 4 3/4.
More than 1.4 million shares have changed hands,
compared with average daily volume of 125,300 shares.
Amgen's shares rose 1 1/4, or 2.4%, to 53 5/8 on Nasdaq
volume of 1.6 million shares. Average daily volume is 4.3
million shares.
"On the face of it, it looks like a spectacular deal from
Guilford's point of view," said Hambrecht & Quist Inc.
analyst Alex Zisson.
He said that Amgen represents what could be considered
an ideal partner in such a venture because the Thousand
Oaks, Calif., biotechnology company is flush with cash,
doesn't have much else in its product pipeline and is
experiencing slowing product sales.
As a result, Amgen has a big incentive to "spend quickly
and aggressively to move these products as quickly as
possible in as many indications as possible," Zisson said.
Looking at the deal from Amgen's perspective, Rodman &
Renshaw Inc. analyst James Keeney was less enthusiastic.
"It gives (Amgen) favorable publicity, but it really doesn't
solve their near-term problem, which is boosting sales and
earnings growth," he said. "Licensing deals for far-out
new-product possibilities just doesn't do it."
Amgen revealed in a filing with the Securities and
Exchange Commission last week that it was no longer
comfortable with Wall Street earnings expectations
because of an expected slowdown in sales of its Epogen
and Neupogen drugs during the rest of 1997.
Oppenheimer's Geller described the Amgen-Guilford pact
as "the biggest licensing deal in biotech history by $100
million or more."
Under the terms of the agreement, Amgen will pay
Guilford $35 million upon the completion of the deal in the
form of $15 million in cash, $15 million for the purchase of
Guilford equity and a $5 million purchase of 700,000
warrants exercisable at 150% of the purchase price.
Amgen will also pay $13.5 million over three years to
support research in Guilford's neuroimmunophilin program.
The agreement includes provisions for milestone payments
for up to 10 indications. In addition to Alzheimer's disease
and Parkinson's disease, the indications also include
stroke, traumatic injuries to the brain and spinal cord,
multiple schlerosis, peripheral neuropathies and three
non-neurological applications.
Guilford would receive milestone payments for each
indication. The payments would total $392 million if the
licensed compounds are successfully developed for all 10
indications.
Guilford will also receive royalties on product sales. The
royalty rate hasn't yet been disclosed.
Rodman & Renshaw's Keeney said that the new Guilford
pact could overshadow Amgen's partnership with
Regeneron Pharmaceuticals Inc. (REGN) to develop
neurotrophic agents to treat neurodegenerative diseases.
The Amgen-Regeneron partnership suffered a major
setback in January when the two companies announced
the failure of a large clinical trial testing the effectiveness of
brain-derived neurotrophic factor, or BDNF, in the
treatment of Lou Gehrig's disease.
Although Amgen and Regeneron have continued their
cooperative efforts in BDNF and other areas, the latter's
shares have yet to recover from the blow absorbed from
January's disappointing news.
Guilford's neuroimmunophilin ligands haven't yet been
tested in humans. The company is expected to obtain data
soon from its research with monkeys and should be in
human clinical trials within a year, according to
Oppenheimer's Geller. He expects the first products from
Guilford's neuroimmunophilin program to start hitting the
market within five years.
Amgen Chairman and Chief Executive Gordon Binder told
Dow Jones that if Guilford meets all of the developmental
milestones in the pact "or even half of them, this would be
by far the largest licensing agreement we've ever had."
Binder said the Guilford partnership won't take precedent
over Amgen's work with Regeneron.
He explained that the two research programs are
addressing different needs and that products developed
with Regeneron would be out on the market long before
anything resulting from the Guilford pact.
Guilford's neuroimmunophilin ligands are administered
orally, unlike the other neurotrophic agents that Amgen is
involved in developing, which are mostly injectables, he
said.
Binder declined to disclose the royalty rate that Amgen
and Guilford have agreed to, saying only that it was "based
on sales volume and other factors." |
