Agouron, Idec help San Diego index rebound<Picture><Picture: Today's News>
December 23, 1998
<Picture>SAN DIEGO -- On Monday, the Nasdaq index of biotech stocks soared to its highest level since it was established in late 1993. The index of San Diego biotechs also has rallied substantially -- but, unfortunately, it is a long way from an all-time record.
The reason is quality perception. The national index is paced by such well-known biotechs as Amgen, Immunex, Biogen and Centocor.
Indeed, it was Amgen's court victory over Johnson & Johnson -- giving Amgen exclusive rights to market a new version of a highly successful drug -- that sent Amgen and the Nasdaq index soaring.
San Diego Stock Report has an index of 17 local biotechs. Yesterday, it rose slightly less than 1 percent. It is up 66.5 percent from October of this year.
However, it remains down 39.2 percent from its October 1997 high. At its nadir last October, it was down 63.5 percent.
Yesterday, Dura dropped 3.66 percent to $11.50; it said its fourth-quarter earnings could fall 8 cents to 12 cents a share if closely held DJ Pharma cannot raise money to meet its obligation to buy Dura products.
Avanir (formerly Lidak) closed at $2.09, down 15 percent. The stock was halted because of pending news. This morning before the opening, the company is expected to announce whether its long-awaited Lidakol treatment for herpes has received Food & Drug Administration approval.
Immune Response dropped 7.73 percent to $11.19. The stock has dropped sharply two days in a row; on Monday, it reported results from a recently completed test for an arthritis treatment. The company considered the test successful.
Molecular Biosystems jumped 10 percent yesterday to $2.75, although there was no apparent news behind the move. Agouron rose 2.16 percent to $53.13 and Idec rose 1.08 percent to $46.81.
"Agouron and Idec are doing well -- they are the two with approved products selling well in the marketplace," said Bud Leedom, who publishes San Diego Stock Report.
The comeback in San Diego biotech stocks has been carried to a large extent by these two companies, Leedom said.
But biotechs with product disappointments, such as Amylin and Advanced Tissue, and those having trouble selling products, such as Molecular Biosystems, have just not been able to get investor interest.
"There is definitely a rally in biotechs, but investors should not mistake it for a rising tide that lifts all boats," Leedom said. "It is selective."
David N. Allen of Torrey Pines Securities also cites Agouron and Idec as the winners, and notes that many companies are far behind schedule in getting products to market.
"In some cases, time is running twice as long as investor expectations, so stock prices have to be relatively low because of the time essence of money, along with the perception of higher research and development risk," Allen said.
Some local stocks have a large national following. Meirav Chovav of Salomon Smith Barney just raised the firm's rating on Idec to a buy from an outperform. Earnings per share are expected to rise from this year's 72 cents to next year's 89 cents -- and to $1.25 in 2000.
"Sales of Rituxan, a drug used in monoclonal antibody lymphoma therapy, appear encouraging," Chovav said.
Fourth-quarter sales should hit $40 million.
"Adverse events associated with the drug are highly predictable and preventable and will not affect sales," Chovav said.
Jim McCamant, editor of Berkeley-based Medical Technology Stock Letter, said Agouron's HIV treatment, Viracept, is now No. 1 in the market, with a 36 percent share, overtaking Merck's entry.
The company has a number of promising things going in the cancer arena, too, McCamant said.
"Amylin has experienced its second difficult year in a row," McCamant said.
This year, the company lost a strategic alliance with Johnson & Johnson and got mixed results in a phase three drug trial.
McCamant would buy Amylin under $1.50, and investors can do just that: It closed yesterday at 47 cents, unchanged.
He also would buy Ligand under $16, and that is doable: Stock of the company, developing drugs in such areas as diabetes and lymphoma, closed yesterday at $10.75, up almost 3 percent.
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