Earnings Results, FDA Speculation Boost Stocks

Second-quarter earnings were in the spotlight this week, with drug giant Pfizer Inc., and smaller developers Allergan Inc., Ariad Pharmaceuticals Inc. and Curis Inc. posting mixed results. Speculation also boosted shares of Jazz Pharmaceuticals Inc., as it awaits a U.S. Food and Drug Administration panel vote on its fibromyalgia drug later this month.

Pfizer (NYSE: PFE) trounced expectations, reporting net income of 31 cents a share, down from 34 cents a share in the year-earlier period. Excluding certain items, it earned 62 cents a share in the quarter, topping analysts’ projections of 52 cents a share. Second-quarter revenue jumped 58 percent to $17.33 billion. Pfizer also said it expects earnings for 2010 to come in at the high end of its previous forecast, predicted earnings of $2.10 to $2.20 a share. For 2012 -- the first full year after Pfizer’s blockbuster drug Lipitor loses market exclusivity — it expects to post earnings, excluding items, of $2.25 to $2.35 a share. Pfizer shares were at $16.20 in afternoon trading Friday.

Allergan Inc. (NYSE: AGN) shares rose after the company reported second-quarter earnings that topped estimates, but the drug and medical-device maker’s outlook for results in the third quarter and full year was shy of analysts’ expectations. Allergan said it expected third-quarter earnings of 75 cents to 77 cents, lower than Wall Street consensus expectations of 79 cents a share. The company said it anticipates revenue of $4.6 billion to $4.7 billion for the full year, with per-share earnings of $3.11 a share to $3.15 a share. The analysts’ consensus was for full-year earnings of $3.16 a share, on revenue of $4.8 billion. Its shares were at $63.79.

Ariad Pharmaceuticals (NASDAQ: ARIA) shares rose after the drug maker reported second-quarter earnings that topped analyst expectations, thanks to a restructured agreement with Merck & Co. Inc. (NYSE: MRK) for the development, manufacture and commercialization of its ridaforolimus cancer drug. Ariad posted second-quarter revenue of $175 million, including an upfront payment of $50 million from Merck. Ariad also logged deferred payments of $109.4 million that it also received from Merck. Exluding items, Ariad had earnings of $1.35 a share, compared with a net loss of 24 cents a share in the year-earlier period. Analysts had expected the company to post a loss of 2 cents a share. Ariad shares were trading at $3.35; Merck shares were at $34.74.

Curis Inc. (NASDAQ: CRIS) reported a second-quarter net loss of 3 cents a share on revenue of $99,000, compared with a loss of 7 cents a share on revenue of $63,000 in the year-earlier period. Curis is collaborating with Roche Holding AG’s Genetech Inc. and on its Hedgeway pathway inhibitor GDC-0449, a first-to-class product.

Chief Executive Dan Passeri said that while results from a Phase II clinical trial of its Hedgeway pathway inhibitor GDC-0449 did not meet its primary endpoint, he remains encouraged that Genentech is testing GDC-0449 in two additional tumor types. "We expect that results will be available from the Phase II advanced ovarian cancer trial in the very near term and that we will communicate the topline results within August,” he said. He added that Roche is expected to post results from its Phase II trial in advanced basal cell carcinoma during the first half of 2011, and that it plans to initiate a Phase II clinical trial in operable basal cell carcinoma patients during the second half of 2010. Curis shares were at $1.75.

Meanwhile, Sanofi-Aventis SA’s (NYSE: SNY) bid to buy Genzyme Corp. (NASDAQ: GENZ) moved ahead, with the French drug giant offering $69 a share, or about $18.4 billion, according to the Wall Street Journal. Media reports last week said Sanofi's board authorized it to offer up to $70 a share for the U.S. biotech company. Genzyme’s shares, which surged more than 20 percent when reports of the takeover deal broke, were at $70.19. Sanofi’s American depositary receipts were at $30.25.

Orexigen Therapeutics Inc. (NASDAQ: OREX) was cited by TheStreet.com as a stock that analysts expect to double. Street.com set an average price target of $12.75 per share, based on four analyst price targets of $14, $8, $12 and $13 dating to June. Eleven analysts cover Orexigen shares, with eight giving the stock a “buy” investment rating. Its shares were at $5.18.

Last week, the drug developer reported promising results from a late-stage clinical trial of its Contrave obesity drug. Orexigen said patients taking the drug for more than a year lost an average of 6.1 percent of their body weight, compared to those taking a placebo. The FDA is scheduled to review Contrave on Dec. 7. $12.75, based on four analyst price targets of $14, $8, $12 and $13 dating to June. Compared to the current share price for Orexigen, the average price target represents a 138% surge.

The investment rating on Orexigen rival Vivus Inc. (NASDAQ: VVUS) was downgraded by Brean Murray Carret to “sell” from “hold.” In July, an advisory panel to the FDA raised concerns about the safety of its weight-loss drug, Qnexa. Vivus shares were at $5.14.

In other market moving news:

Jazz Pharmaceuticals (NASDAQ: JAZZ) climbed as investors brace for an FDA advisory panel meeting on Aug. 20, where researchers will debate the approval of its JZP-6 drug to treat fibromyalgia. The drug JZP-6 is already approved by the FDA to treat narcolepsy under the brand name Xyrem. But as TheStreet.com reports JZP-6 is close chemically to gamma-hydroxybutyric acid, or GHB, the so-called date-rape drug. Since there’s a higher risk for abuse, JZP-6 is categorized as a "limited use" drug and it’s uncertain whether the panel will vote to approve the drug for fibromyalgia, which affects millions of sufferers. Jazz Pharmaceuticals shares were at $9.36.

Arena Pharmaceuticals Inc. (ARNA) shares slid after J.P. Morgan Chase & Co. cut its investment rating on the company to “neutral” from “overweight.” Investment analysts said that while they believe Arena's obesity drug Lorcaserin has a good shot at FDA approval, they aren’t comfortable with the stock’s near-term risk/reward. Shares were at $7.14.

Isis Pharmaceuticals Inc. (NASDAQ: ISIS) and Genzyme released late-stage trial data on their cholesterol drug mipomersen that failed to allay safety concerns. The data show mipomersen helped to lower so-called bad LDL cholesterol levels in 36 percent of patients with high cholesterol who didn’t respond to statin drugs, but the study also found 15 percent of patients experienced elevated liver enzyme levels, raising worries about the potential for liver damage. Isis shares were at $8.98.

Seattle Genetics Inc. (NASDAQ: SGEN) shares rose after the company said it has expanded its collaborative agreement with Genentech involving its antibody-drug conjugate (ADC). Genentech will now pay an upfront fee of $12 million for rights to utilize Seattle Genetics' ADC technology with additional antigens to be named by Genentech. Seattle Genetics will be eligible to receive more than $900 million in fees and milestones if all ADCs in the expanded portion of the collaboration are commercialized, as well as mid-single digit royalties on worldwide net sales of any resulting ADC products, Seattle Genetics said. Annual maintenance fees and research support payments for potential assistance may also be paid under the collaboration. Seattle Genetics shares were at $12.04.

Shares of Alexza Pharmaceuticals Inc. (NASDAQ: ALXA) plunged more than 16 percent after the maker of inhalable drugs said it hopes to raise $18 million through the sale of stock and warrants. Alexza agreed to sell 6.7 million units -- one share of company stock and a warrant to buy an additional half-share -- for $2.70 per unit. Its shares were at $2.45.

http://www.physiciansmoneydigest.net