Warner Lambert Waiting For Vindication From The FDA Advisory Panel
Mar 09, 1999
Rezulin, Warner Lambert's FDA approved drug for type 2
diabetics, will be reviewed by an FDA advisory committee on
March 26, 1999. There had been concern that Rezulin has led
to patient deaths. It has been the company's and the FDA's
position that the product has been more helpful than harmful to
patients. The smart money is saying that the product will remain
on the market, and that this process will likely bring vindication
to Warner Lambert. Everen Securities analyst, Jeffrey Kraws
recently commented that "there will be no bad news coming
from the FDA Advisory board and the product will not be
taken off the market as some have speculated." Eli Lilly
(NYSE:LLY - news) was forced to endure similar scrutiny
several years back when it was taking flak on the side effects of
Prozac.
Jack Howarth, a company spokesman, commented to us that
both the pharmaceutical and confectionery business are "on
track" with FY 1999 plans. The company is expected to close
on its Agouron Pharmaceuticals (NASDAQ:AGPH - news)
acquisition within the next few weeks. Agouron markets the
leading HIV protease inhibitor, Viracept. It is expected that
Agouron's research capabilities will compliment Warner
Lambert's efforts, and that the acquisition will likely be accretive to the company in late 1999. It is important to note though, that additional details concerning the acquisition and its integration into Warner Lambert's operations will be needed to determine the full benefit that the company will receive from consummating this acquisition. We expect a greater clarification by management once
the first quarter results are released in late April.
Consensus estimates have the company earning $1.93 per share for the year ending December 1999 and $2.37 per share in FY 2000. In the March quarter, the company is expected to earn $0.44 per share (pre-charge). The company will likely have to write-off some goodwill and other expenses related to the transaction. We remain encouraged by the company's efforts to enhance shareholder value and believe that the stock will begin to advance once the Advisory Panel process is behind us.
Analyst: Glenn S. Curtis
Updated on March 8, 1999 with WLA trading at $70.50 Recommended 11/16/98 at $73.63
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