Anthony, this news is probably more significant than the analysts' upgrade. It talks about a huge market lilly never want to give up after Prozac.
Da bull
By Brenon Daly, CBS MarketWatch Last Update: 12:36 PM ET Sep 23, 1998
NewsWatch
PARAMUS, N.J. (CBS.MW) -- Shares of Synaptic Pharmaceuticals added 16 percent Tuesday after the company said Eli Lilly is moving ahead with the testing of a depression drug based on Synaptic research.
In a filing with the Securities and Exchange Commission, Synaptic (SNAP) said the drug has entered Phase I testing. That typically means a retail product is several years away.
The filing also will allow the Paramus, N.J., company to trumpet
the advance during the company's presentation Thursday morning at a Bear Stearns conference on health care.
"The reason they filed the 8-K is so they can talk openly about it
and not be accused of selective disclosure," said Bear Stearns analyst Ethan Lovell. Shares added 2 3/16 to 15 13/16 on volume that was nearly three times heavier than average.
Demand for Synaptic Oct. 15 calls (SQS=JC) was also very strong, reported Matt Glantz, an options trader for Apex in Philadelphia. Those contracts added 1 1/4 to 2 on Tuesday.
Under its arrangement with Eli Lilly (LLY), Synaptic supplies
research to the Indianapolis pharmaceutical maker, which then develops the drugs themselves. The collaboration on the depression drug is "several months ahead of expectations,"
according to Hambrecht & Quist analyst Rich van den Broek.
Synaptic also has collaborated with the drug giants Merck (MRK)
and Switzerland-based Novartis. The product is key to Eli Lilly because its patent on the blockbuster anti-depressant drug
Prozac may expire as soon as 2001.
"This is [Lilly's] first novel approach to protecting their franchise," van den Broek said.
And the market is worth defending. According to Robert Toth, a biotech analyst at Vector
Securities in Chicago, spending on the top four anti-depression drugs in 1997 hit $6 billion.
The bullish Toth said the drug under development appears extremely promising because it doesn't create any notable cardiovascular side effects, and it reportedly lasts two and half times longer than the longest-lasting current product.
In addition to the anti-depression drug, Synaptic is collaborating with Lilly on a drug to be used against migraines. That drug is set to enter Phase III testing shortly. |
