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ERBITUX Gets Approved in Japan for Colorectal Cancer (IMCL, BMY)

ImClone Systems Incorporated (NASDAQ: IMCL) has just announced that ERBITUX(R) has received marketing authorization in Japan for use in treating patients with advanced or metastatic colorectal cancer (mCRC).

This approval will allow the use of ERBITUX to treat Japanese patients with epidermal growth factor receptor (EGFR)-positive, curatively unresectable (inoperable), advanced or recurrent CRC, and it will allow the use of ERBITUX plus irinotecan in second and further lines of mCRC.

With this approval, ERBITUX is the first ever EGFR-targeted monoclonal antibody to be submitted for and receive marketing authorization in Japan.

Bristol-Myers Squibb (NYSE: BMY) has been Imclone's commercialization partner.  We would also note that Merck KGAA (the German Merck, not U.S.) was also in the pact that was sent in for approval back in 2007.

Jon C. Ogg
July 16, 2008

Long-Term Risks To Statin Sales? (MRK, PFE, AZN)

We have run a full feature story over at BioHealthInvestor.com after reading a study that came off the Mayo Clinic site.  The study showed that a combination of fish oil and red rice yeast in combination along with a 12-week multidisciplinary lifestyle program generated much of the same results as a statin alone in lowering LDL Cholesterol.  Stocks we covered in this include Merck & Co. (NYSE: MRK), Pfizer Inc. (NYSE: PFE) and AstraZeneca plc (NYSE: AZN).  There are many others which could have been included, but this study went head to head with Merck's Zocor (off of exclusivity).

It is a huge stretch to believe that this will replace or eliminate traditional pharmaceutical treatments such as statins and other cholesterol treatments (same for triglycerides, blood pressure, and other issues).  But it does lend at least some credibility to the shot that down the road some treatments involving over the counter supplements and behavior modification combined could make a large dent in that pool of the millions of Americans who just pop pills written by the Doctor.

In that full feature story, we ran some alternative thoughts where this could also be applied in other treatment areas and we showed a break-down of just how large these sales are in 2007.

Jon C. Ogg
July 8, 2008

The Week's Top BioHealth Issues For Next Week (PFE, TEVA, CRA, IVGN, CMED, ANPI, ISRG, VVUS, CELG)

One key stock to watch next week is Pfizer Inc. (NYSE: PFE). While it has been in the land of the boring forever, watchers are looking to see if it will put in a rival bid over the $4.6 Billion Daiichi Sankyo bid from Japan for a majority stake in India's number one generic drug maker Ranbaxy.

Speaking of Generics, Teva Pharmaceutical Industries (NASDAQ: TEVA) was weak all week after Mylan Inc. (NYSE: MYL) has signed a pact with India’s NATCO Pharma Ltd. to produce a generic version of Teva’s multiple sclerosis treatment called Copaxone.  As this  was an old favorite buy in generic investor hearts you can imagine this will be covered frequently this next week since the stock is now 15% off of its highs and closer to a 52-week low.

We know that Invitrogen (NASDAQ: IVGN) is buying Applera's Applied Biosystems (NYSE: ABI) unit.  But what about Celera Group (NYSE: CRA)?  Traders may be looking for the "next merger candidate"and that might fit logically.

China Medical Technologies Inc. (NASDAQ: CMED) went up big on earnings news this last week and continued to rise even by the end of the week further than the initial reaction.  Technicians may have this one on a momentum screen now.

Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) may be of interest after it showed some positive stent data, and its launch of QUILL may all help the perceptions next week on this small molecule company.

It's always good to know what short sellers are targeting.  The last short selling report showed a huge drop off in the short interest compared to prior reports in large cap biotech stocks like Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), and others.  FULL SHORT INTEREST DETAILS HERE.

Intuitive Surgical Inc. (NASDAQ: ISRG) was defended by William Blair this last week and shares managed to rally during the week after that news was out.  After seeing a 3-month low traders may focus here next week as a short bottom fishing attempt.

Vivus Inc. (NASDAQ: VVUS) is hanging tough after a huge gap up in its QNEXA treatment for obesity and for diabetics.  Shares barely closed down on the week, rather impressive for a small cap with a history of not holding gains.  Traders will definitely be keeping their radar eyes on this one for opportunities to buy it up or short it.

Lastly, there was a lot of news on the rheumatoid arthritis front with many companies delivering solid data for drug studies in the debilitating area from companies such as Abbott Laboratories, Array, Eli Lilly, Incyte, J&J, Schering-Plough, and Roche.  Much of the news seems overlooked by the end of a summer week, so watch these for next week.  Solid Developments for Rheumatoid Arthritis (ABT, ARRY, LLY, INCY, JNJ, SGP, RHHBY)

Jon C. Ogg
June 14, 2008

Amgen, Finally Some Good News (AMGN, MRK)

Shares of Amgen Inc. (NASDAQ: AMGN) are seeing a small gain in after-hours trading. 

The troubled biotech giant announced that findings from its head-to-head, double-blind trial comparing the effects of denosumab in post-menopausal women with low bone mass transitioned from weekly alendronate (FOSAMAX(R)) versus continued alendronate therapy on bone mineral density (BMD). This study was a one-year non-pivotal Phase III study and it demonstrated superior results for the primary and all secondary endpoints.

The primary endpoint was in the total hip and it was listed as 80% greater in the group.  This was a twice-yearly subcutaneous injection in a double-blind group of 504 women who suffered from low BMD.

FOSAMAX is an osteoporosis drug from Merck & Co. (NYSE: MRK).

Jon C. Ogg
May 19, 2008

Jon Ogg produces and edits the "10 Stocks Under $10" newsletter and he does not own securities in the companies he covers.

Lowering the Barr (BRL)

Who thought generics could ever look so bad?  This morning, Barr Pharmaceuticals (NYSE: BRL) has posted very poor numbers.

The company posted $0.57 EPS, far under the First Call consensus of $0.79. Revenues rose 1.8% year over year to $608 million, while $684.1 million was the consensus estimate. To make matters worse, its mixed guidance for Fiscal 2008 was put at $2.75 to $3.05 EPS. This is under the $3.27 consensus estimate and down from previous range of $3.05-$3.35 EPS for the year.  The company did keep 2008 revenues in a range of $2.7 to $2.8 billion, and First Call had estimates of $2.78 Billion.

Barr noted that the reduction to its poor results was on U.S. generic revenue coming in lower than expected.  The company also noted that it does not expect this to be completely offset by the expected launch of its generic birth control pill in 2008.

Brand name drug sales are seeing issues almost weekly, the pressure is on to lower healthcare costs, and somehow generic sales are weak.  Is the economic weakness to the point that people decided they can't afford their co-pay rates?

Based on the crummy report, no one is giving the company the benefit of the doubt.  Shares are now at a new 52-week low this morning.  Shares are down more than 20% at $38.50 in early trading.  Its prior 52-week trading range was $45.33 to $58.38.

To make matters worse, the company broke its stock chart too.

Jon C. Ogg
May 8, 2008

WuXi PharaTech, Worth More on Secondary Cancellation (WX)

WuXi PharmaTech (Cayman) Inc. (NYSE: WX) announced today that it has decided to postpone its follow-on offering of American Depository Shares "due to current market conditions and share price."

Credit Suisse Securities and JP Morgan Securities were lead underwriters and joint book-runners for the offering that was originally filed April 4. Some of the shares that were being sold were for existing shareholders and some share sale proceeds were to be used for existing factory expansions and for general corporate purposes.

The Chinese and U.S.-based pharmaceutical, biotechnology, and medical device "outsourcing" company is trading up 2% at $19.10 in early morning trading and when the offering was first announced, WuXi was trading at about $23.50. WuXi has a 52-week range of $17.43 to $45.65.

You can join our open email distribution list to keep up with other developments in secondary offerings, IPO's, mergers, spin-offs, and other specialty financings.

Rachel Lopez
May 6, 2008

Bristol-Myers Squibb Files Open Shelf Registration (BMY)

Bristol-Myers Squibb (NYSE: BMY) has submitted an open shelf offering today for an undetermined amount. The offering includes a combination of debt securities, preferred stock, depositary shares, common stock, and warrants to be used for general corporate purposes in one or more offerings.

The company's market cap is huge at almost $44 Billion.  As of December 31, 2008 it also already has some $8.6 Billion in current liabilities, $4.38 Billion in long-term debt, and other items that give the company a total of $15.61 Billion in total liabilities. 

Bristol is down $0.09 in mid-day trading to $22.06. The 52-week range for the pharmaceutical company is $20.05 to $32.35.

Rachel Lopez
April 28, 2008

Bristol-Myers Plans Partial Spin-Off of Nutritional Unit in IPO (BMY)

Bristol-Myers Squibb Company (NYSE: BMY) came out with earnings at $0.35 EPS and reaffirmed 2008 guidance of $1.36 to $1.46 GAAP EPS and $1.60 to $1.70 non-GAAP EPS.  It also maintained a 2007 to 2010 CAGR of 15% for non-GAAP EPS.  While this looks like a miss on the surface with First Call at $0.41 EPS, we are most concerned with the company's plan to partially spin-off one of its operations.

Bristol-Myers Squibb announced that it currently plans to file "by year-end" to sell approximately 10% and no more than 20% of its Mead Johnson Nutritionals unit to the public through an IPO.  BMY will retain at least an 80% equity interest in Mead Johnson Nutritionals for the foreseeable future.

After "extensively considering strategic options," BMY management said that it believes this will allow Mead Johnson Nutritionals to implement its growth plans, increase shareholder value, and maintain its financial contribution to Bristol-Myers Squibb.  Obviously, the execution of the partial spin-off is subject to many factors and uncertainties including business and market conditions. 

In short, this is the new version of the tracking stock.  So we wanted to see how the unit did and wanted to see how it compares to the full company.  Worldwide Nutritional sales increased 16% (after a 5% favorable forex) to $703 million in Q1-2008.  For a comparison on how this relates to entire BMY, the whole company generated $5.2 Billion in total sales. 

U.S. Nutritional sales rose 5% to $288 million in Q1-2008, primarily due to increased sales of ENFAMIL. Its international nutritional sales rose 25% to $415 million (including 10% positive forex effect) in Q1-2008 due to growth in both infant formulas and children's nutritionals.

Bristol-Myers Squibb Co. has a $42 Billion market cap as of yesterday's close.

You can join our open email distribution list to hear about other IPO's, spin-offs, secondary offerings, restructurings, and other special situations.

Jon C. Ogg
April 24, 2008

Genentech to Set Biotech Tone For Earnings Season (DNA, OSIP, SGEN, ABT, BIIB)

Thursday after the close, we’ll get to see earnings out of Genentech (NASDAQ: DNA). The estimates from First Call are $0.82 EPS on $3.11 billion in revenues.  Next quarter estimates are $0.86 EPS on $3.24 billion in revenues. Estimates for fiscal Dec-2008 are $3.43 EPS on $13.06 billion in revenues.

Genentech is tied to many other drug and biotech companies because of partnerships, so as the number one biotech stock it has implications in many companies based upon the breakdown of its trends and its individual drug comments.  Below are some of its partners:

• OSI Pharmaceuticals (NASDAQ: OSIP) for Tarceva,
• Seattle Genetics (NASDAQ: SGEN),
• Abbott Laboratories (NYSE: ABT),
• Roche for Avastin 9and ownership),
• and Biogen-Idec (NASDAQ: BIIB) for Rituxan.

Analysts have an average price target north of $85.00.  Shares were down almost 1% at $79.00 late today before the market closed.  That price target used to be significantly higher before this on peaked out around $90.00 and fell to under $70.00 in Dec-2007 and Jan-2008.  Genentech's 52-week trading range is $65.35 to $83.41.

Genentech's annual meeting of stockholders will also be held on April 15, 2008, so there is another round of much of the same presentation data to see next week.  While the woes of one biotech may be mothers milk for another biotech company, Genentech can create at least somewhat of bias for traders going into an earnings season.  As traders are constantly looking for stocks and sectors with less and less economic sensitivity, that may be more true than in many years and quarters of the past.

Jon C. Ogg
April 7, 2008   

WuXi PharmaTech Secondary Filing Pressures Stock (WX)

WuXi PharmaTech (Cayman) Inc. (NYSE: WX) has filed for a secondary offering of ADR's in the US for 10,126,800 shares, or 11,645,820 if the overallotment option is used.  The underwriting managers are listed as Credit Suisse and JPMorgan.

WuXi PharmaTech is a Chinese outsourced medical development company for biotech, pharmaceuticals, and medical devices.  It does research and development with operations in China and in the U.S.  More specific services are as follows: laboratory services consisting of discovery chemistry, service biology, toxicology, pharmaceutical development, analytics, device testing, and other related contract R&D services.  It also provides manufacturing services that focus on advanced intermediates, active pharmaceutical ingredients, and biologics-based manufacturing, testing and related services.  The company acquired AppTec Laboratory Services, Inc., in January 2008, and had previously focused primarily on chemistry operations, providing services to more than 80 pharmaceutical and biotechnology customers.

Some shares are being sold by shareholders and some will be used for existing factory expansions and for general corporate purposes.

Facilities in China are as follows:

• primary China-based facilities include a 630,000 square-foot R&D center in Shanghai Waigaoqiao Free Trade Zone;
• a 220,000 square-foot process development and cGMP-quality manufacturing plant in Jinshan area of Shanghai;
• and a 130,000 square-foot R&D center in Tianjin, which is mainly focused on discovery chemistry services.

The AppTec acquisition gave a U.S. presence and know-how in biologics, including three FDA-registered, U.S.-based facilities as follows:

• a 63,000 square-foot R&D and manufacturing facility in St. Paul, Minnesota;
• a 46,000 square-foot testing facility in Atlanta, Georgia;
• and a 75,000 square-foot R&D, testing and manufacturing facility in Philadelphia, Pennsylvania.

Its net revenues and income increases follows:

• 2005 showed $33.8 million revenues and $6.1 million net income;
• 2006 showed $69.9 million revenues and $8.9 million net income;
• 2007 showed $135.2 million revenues and $33.9 million net income;
• unaudited post-AppTec acquisition results would show revenues of $205.5 million and net income $34.7 million.

WuXi Pharmaceuticals stock is trading down 5% today at $22.30 in early afternoon trading.  Its 52-week trading range is $18.27 to $45.65, and the current market cap is listed as $1.37 Billion.  As of last look on the NYSE short interest, we show the March 2008 short interest listed as just over 2.7 million shares.

To hear about other secondary offerings, IPO's, special financings, and other special situations you can join or open email distribution list.

Jon C. Ogg
April 4, 2008

Medarex Says Forget Pfizer, Its Own Melanoma Study Continues (MEDX, PFE, BMY)

Medarex, Inc. (NASDAQ: MEDX) wants to clarify a few issues regarding the study halt from Pfizer (NYSE: PFE) this week on advanced melanoma.  The company says that there are key differences between Pfizer's discontinuing its Phase 3 clinical trial of front-line treatment of tremelimumab compared to chemotherapy in patients with advanced melanoma.

Pfizer's tremelimumab and Medarex's ipilimumab do have a similar mechanism and have been considered by some as similar molecules, and it is natural to attempt to draw parallels between the two molecules.

But Medarex wants to clarify some issues.  The two antibodies are different molecules, and results from one antibody program may not be indicative of the same results from another program.  While it previously reported that results from the Phase 2 study did not meet the primary endpoint, the three studies in its Phase 2 program were suggestive of ipilimumab's potential for clinical anti-tumor activity and are under discussion with regulatory agencies.  Medarex's ongoing ipilimumab Phase 3 program for front-line treatment of advanced melanoma is different in design from the Pfizer trial, and it is too early to draw any clinical conclusions from the Pfizer announcement and a recent review of its ongoing Phase 3 trial by the Data Monitoring Committee indicated that the Medarex trial should continue.

Lastly, Medarex noted that Bristol-Myers Squibb Company (NYSE: BMY) is its partner for ipilimumab and its studies are continuing to move forward; and prior guidance is unchanged and regulatory discussions are pending.

Medarex shares were up about 2% shortly after it issued this clarification statement.  Unfortunately shares are back to down marginally by 0.25% at $7.61 right before the open.  As we have noted, this is the largest potential candidate it has right now.  But this company also has many partnerships and an extensive pipeline of potential drug candidates, and it continues to win milestones on other studies and candidates.

Jon C. Ogg
April 3, 2008

Medarex Tanks On Pfizer Study Halt (PFE, MEDX)

Medarex Inc. (NASDAQ: MEDX) Saw shares plummet in pre-market trading.  Pfizer Inc. (NYSE: PFE) has ended a Phase III clinical trial of tremelimumab in patients with advanced melanoma after a review of interim data showed that the drug was not better than standard chemotherapy.  Unfortunately, Medarex was the beneficiary of CP-675,206 (tremelimumab), and it would have received a large stream of royalties had this worked.

While this is obviously bad news, this probably should have been expected after its prior disclosures.  The company had previously disclosed that results and hopes seen in early trials had not come to fruition in larger and broader study groups.  It's too bad, too.  Metastatic melanoma (skin cancer that spread to other parts of your body) is currently a death sentence. 

Shares are down 16% in pre-market activity this morning to $7.80.  Its 52-week trading range is $7.70 to $18.23.

Obviously there are concerns over any biotech when a molecule fails to generate results.  But we would note that Medarex has a significant candidate pipeline and has many active partnerships with other major drug and biopharma players.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Merck & Schering-Plough Face Cholesterol Firing Squad (MRK, SGP)

Usually drug companies look forward to presenting data on their drugs and medical treatments.  The the American College of Cardiology meeting was this weekend, and the findings and recommendations are worse than bad. 

Shares of Schering-Plough Corp (NYSE: SGP) and Merck & Co (NYSE: MRK) are being hit sharply this morning.  Doctors at this prominent medical meeting recommended that patients try older cholesterol drugs before trying these companies' newer medicines.

Vytorin and Zetia generate roughly $5 Billion in annual sales and many have questioned the overall results of these for several months.  Doctors are now recommending older statins in high doses, followed by other treatments before putting clients on these drugs.  So these will be garnered to a last line of defense drug group, which will effectively kill the sales if doctors on the local level follow this recommendation.

So far, we have seen Schering-Plough downgraded at both Lehman Brothers and at Goldman Sachs.  Lowering cholesterol doesn't seem to matter if the arterial plaque still builds up.

Schering-Plough shares had been hit by almost 30% since the questions had started coming out about the efficacy of the drugs.  That was before the drop today.  Shares of Schering-Plough Corp (NYSE: SGP) are down 22% pre-market at $15.08 and shares of Merck & Co (NYSE: MRK) are down 10% at $39.70 in pre-market trading this Monday. 

Jon C. Ogg
March 31, 2008

Pfizer Sets Its 2008 Path For Analysts (PFE)

Pfizer Inc. (NYSE: PFE) has given some of its basic data points for its analyst meeting today.  For starters, the company has reaffirmed its guidance for 2008 that it previously offered.  That guidance is listed as a reported EPS of $1.78 to $1.93, adjusted diluted EPS of $2.35 to $2.45, $47 to $49 Billion in revenues, a cost decrease of $1.5 to $2 Billion, and free cash flows of $17 to $18 Billion.

We recently gave our own targets on this and others in the Dogs of the Dow, and also noted this one as a replacement to Merck for the first half of the year in a sub-sector of our "go to defensive stocks" that we assigned in the value stock sector.

The drug giant noted that it has 16 phase III programs today and that it plans to have some 24 to 28 trials in its Phase III pipeline by the end of 2009.  The pipeline covers targets from cancer to pain to diabetes and it also plans 15 to 20 regulatory submissions between 2010 and 2012.

It has also given three key compound targets that are expected to move from Phase II to Phase III:

• CP-751871, an IGF-1R inhibitor to treat gastrointestinal, genitourinary, lung and breast cancer;
• CP-690550, its JAK-3 inhibitor to treat rheumatoid arthritis, transplant rejection, psoriasis, Crohn’s disease, and asthma;
• PF-734200, its DPP-IV inhibitor for the treatment of diabetes.

Pfizer said that it added 7 clinical candidates, which includes 4 biologics, during 2007 in prioritized disease areas, and it currently has 26 biologics which span 8 therapeutic targets.  The company's efforts in pain medicines have a total opportunity of roughly a $45 billion market that is still untreated.

Pfizer also confirmed that it is establishing a new group to focus solely on oncology in its Worldwide Pharmaceutical Group.  It also outlined its Asian pharmaceutical market opportunity, which was listed as $47 Billion and it wants to take its current 4% market share up to 6% there by 2012.

Pfizer's comments should be coming out most of the morning and later today.  In early pre-market trading shares are up 1% at $22.50, and its 52-week trading range is $21.56 to $27.73.

Jon C. Ogg
March 5, 2008

S&P Index Change for West Pharmaceutical Services (WST, UNH, SIE)

We do not cover every single index change, but we do cover the ones where it looks like it will impact individual stocks.  Standard & Poor's made an index change announcement this evening and noted that it was adding  West Pharmaceutical Services Inc. (NYSE: WST) to the S&P SmallCap 600.  The change will take place after the close of trading on Thursday, February 28, 2008. 

The reason for the change is because Sierra Health Services Inc. (NYSE: SIE) was removed from the S&P SmallCap 600 after today's close of trading due to its completed acquisition by UnitedHealth Group Inc. (NYSE: UNH).

We at 247WallSt.com prefer index additions such as this one.  The reason we prefer "new member adds" like this is because fund managers and investment managers that track the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600 Index do not yet own shares of the stock.  When these get upgraded from one index to another it often creates close to a net-zero effect or at least a more muted effect. 

West Pharma shares closed down 0.3% at $41.70 today, but shares are up 1.7% at $42.40 for its limited after-hours trading and the "bid/ask indications" are both higher than that now.  Its 52-week trading range is $35.20 to $54.83.  Shares are up over 10% since it released earnings last week. 

Jon C. Ogg
February 26, 2008

Teva's Lofty Goals Seem Attainable (TEVA)

Teva Pharmaceutical (NASDAQ: TEVA - News) has some pretty loft goals for itself at its Investor Day presentation.  If you trust the company's history and its pipeline of candidates under trials and under pending FDA review, these goals are attainable.

Teva has presented the results of its strategic review and identified its growth and long term goals of doubling the size of its business by 2012, and generating revenues of $20 billion and net income margins exceeding 20%.

What is both interesting and intriguing about Teva is that while it has its Copaxone for MS, it has become essentially the largest clearing house for generics out there.  Regardless of who wins the US presidential election, all indications point to generic drugs winning in a world where Big Pharma drug companies, and even some biotechs, have been under fire for pricing.

Teva's current market cap is just over $37 Billion. Teva had already given 2008 and 2009 guidance that is in-line with today's growth, and it also recently bumped up its dividend.  At the time, Teva said expected net sales for 2008 to be roughly $10.75 billion with earnings between $2.60 to $2.75 on non-GAAP EPS. For 2009, it had also reiterated guidance of greater than $3.00 EPS.

Teva shares are up almost 1% this morning at $48.35 and the 52-week trading range is $34.52 to $50.00.  Analysts have an average price target of just under $52.00 on the stock.

Jon C. Ogg
February 21, 2008

Teva Beats & Grows, Shares Off (TEVA)

Teva Pharmaceuticals (NASDAQ: TEVA) posted earnings at $0.69 EPS on revenues of $2.58 Billion; First Call had consensus at $0.66 EPS on $2.48 Billion in revenues.

There are some big numbers ahead for Teva if it sees approvals on its generics: Teva had 160 applications awaiting final FDA approval, and the brand names for the generic drugs had annual U.S. sales of some $101 Billion; it also noted that it was first-to-file on what would be some $40 Billion in annual U.S. brand drug sales.

Gross profit margin reached 52.3 percent in Q4-2007. As of December 31, 2007, Teva's cash and equivalents were listed as $3.3 billion and shareholders equity reached $13.7 billion.  Teva also raised its dividend by about 12% to roughly $0.124 after currency conversions.

Its total shares outstanding were listed as 834 million shares, and it sees some 837 million shares being the "going forward" share count.

Jon C. Ogg
February 12, 2008

A Junk Bond Depression?

The default rate on junk bonds in 2007 was well under 1%. Junk guru and finance professor Edward Altman says that number will move well above 4.6% this year. According to The Wall Street Journal "already in January, Mr. Altman estimated defaults hit $3.2 billion, about 60% of the total for all of 2007." That means the level of defaults could move well above 5%, if things stay bad.

Junk bonds, or "high-yield" as Mr. Mike Milken liked to call them, touch a much broader spectrum of the economy than most investors would guess. Not only are high-yield bond funds popular with investors, institutions also own baskets of this debt. It is not terribly unlke baskets of mortgages, credit card, or auto loans.

Companies financed by junk bonds employ a lot of people. Quebecor (NYSE: IQW) which recently defaulted on some of its bonds, employees several thousand people. Sirva (NYSE:SIR) has 4,600 workers. It has had trouble making debt payments. Junk debt helped finance big newspaper chains including McClatchy (NYSE: MNI) and Journal Register (NYSE: JRC)

To make the point, companies financed by junk bonds employ hundreds of thousand of people and have suppliers who employ hundreds of thousand more.

A rising junk bond default rate is an early indication that empoyment numbers may begin to head in a bad direction.

Douglas A. McIntyre

Schering-Plough Relief on Partner Earnings (SGP)

Schering-Plough Corp. (NYSE: SGP) is probably breathing a sigh of relief this morning after Merck's earnings as it is partners with the drug giant on Vytorin and Zetia for cholesterol treatments.

The combined Vytorin & Zetia franchise was noted as having some $5.2 Billion in 2007 annual sales, with some $1.5 Billion being reported in the fourth quarter alone.

Merck did disclose some 50 lawsuits over these sales and noted that it is complying and cooperating with investigations.  But the good news is that the company's guidance wasn't sharply changed.

Schering-Plough has a large portion of its profits that come directly as a result of its Merck partnership.  It is still too early to get a solid read on Schering-Plough shares and obviously the situation can change based on Merck comments in their earnings conference call. 

So far shares are indicated up marginally for Schering-Plough at $19.20 after a $19.11 close yesterday.  Its 52-week trading range is $17.45 to $33.81, and shares were north of $26.00 at the start of 2008.

Jon C. Ogg
January 30, 2008

Merck's Guidance A Relief (MRK)

Merck & Co. (NYSE: MRK) has just posted earnings that may be a relief to many who were worried about recent Vytorin woes affecting 2008 numbers.  The company posted EPS of $0.80 for Q4 and consensus estimates out of First Call were $0.74.  Merck is also guiding its fiscal 2008 of $3.28 to $3.38 EPS, and estimates are $3.36, yet after items it sees a revised 2008 EPS range of $3.80 to $4.00.

Merck shares closed at $48.00 yesterday, down from recent 52-week highs north of $60 earlier in January before the Vytorin woes came out.  Its shares are indicated up 1% pre-market. 

As estimates had been coming down in recent days, this guidance for 2008 may be a relief to many that worried the latest issues would sharply bring down earnings projections.

Jon C. Ogg
January 30, 2008

Pfizer's Guidance Holding Up Better Than Skeptics Would Guess (PFE)

Pfizer Inc. (NYSE: PFE) has posted earnings that are lower than last year's results, but were actually above analyst expectations from First Call.  The drug giant posted $0.52 EPS versus $0.47 estimates on $13.1 Billion in revenues versus $12.2 Billion estimates.  It is also guiding 2008 EPS to a range of $2.35 to $2.45 versus a $2.34 consensus estimate.  Pfizer is targeting fiscal 2008 revenues to be between $47 Billion to $49 Billion, while estimates are $47.1 Billion.

As far as the first quarter, there are some exclusivities that won't be there and the company noted: "First-quarter 2008 revenues may not be comparable to the first-quarter 2007 revenues as a result of the loss of U.S. exclusivity of Norvasc, Camptosar (February 2008) and Zyrtec (January 2008).....Collectively, these products contributed U.S. revenues of about $1.1 billion in the first-quarter 2007 and $2.7 billion in the full-year 2007. We have considered these factors in our full-year 2008 guidance."

If that revenue number looks much higher than expectations it is partially because of currency, as the strong foreign currencies compared to a weak dollar added roughly 5%.  Part of the reason for the drop in net earnings was a result of its consumer products unit sale. We have noted that Pfizer is a turnaround that hasn't yet turned around, and that may be starting to change.

Its fiscal earnings per share for 2007 was $1.20 after items. Based on a $22.23 close yesterday, Pfizer now has a trailing P/E of 18.5 (after items) and a forward 2008 P/E ratio of 9.26.  If you look at our comments and targets on the 2008 Dogs of the Dow this new guidance plays into the possibility that Pfizer could end up being one of the surprise sleepers this year.

If you want to know how the restructuring is going, the company trimmed 11,000 jobs last year, closed six manufacturing sites, closed two R&D sites, and is still targeting a $1.5 to $2.0 Billion adjusted cost reduction for 2008 compared to 2006 before the restructuring was implemented.  The company repurchased $10 Billion in stock during 2007 and has another $5 Billion authorized for repurchases.

Jon C. Ogg
January 23, 2008

Cramer's Drug Research/CRO Stocks (CVD, PRXL)

On tonight's MAD MONEY on CNBC, Jim Cramer came out with a positive tease early on in the contract research organization sector (CRO's) as it pertains to drugs, biotech, and medical research.  He thinks this sector is recession proof and is set to continue growing whether the market rises or falls.  For growth and cost cutting this sector is mandatory for an ailing drug and pharma sector.  His picks tonight were:

• His pick that does both early and late stage: Covance (NYSE: CVD) is Cramer's best pick of the group and is 50/50 in early and late stages and a high customer diversification.  They can save customers the most by outsourcing, and the balance sheet is immaculate with new factories/offices opening.
• Paraxel (NASDAQ:PRXL) is another he likes in the CRO sector.

This sector has seen some incredible performance over the last 12 to 18 months, yet only Quest has a $10 Billion market cap.  The multiples have gotten higher of late, but that is the price for being defensive now.  He isn't at all convinced that today is the start of a market trend and he thinks the market will roll over again, so he wants to look at safety names besides tonight's key oversold and overlooked tech stock picks he gave tonight.

Jon C. Ogg
January 14, 2008

Becton Dickinson Finds A Friend In Staph Diagnostics (BDX)

Becton, Dickinson & Co. (NYSE: BDX) is seeing shares hitting new all-time highs as it has received clearance from the U.S. FDA for the BD GeneOhm(TM) StaphSR assay.

This is BD Diagnostic's new assay that is the first test available to rapidly and simultaneously identify two deadly healthcare-associated infections:

• Staphylococcus aureus (SA) and
• methicillin-resistant Staphylococcus aureus (MRSA)

This test has a mere two-hour result time that tests abd identifies patients with positive blood cultures.  If this goes as it should, physicians can implement treatment much faster for patients with bloodstream infections and significantly reducing healthcare costs.  Current tests take more than a day to get results and many patients die annually from untreated staph or from drug-resistant staph strains.

An October 2007 report in Journal of the American Medical Association (on the U.S. extent of MRSA— methicillin-resistant Staphylococcus aureus) stated that MRSA deaths in 2005 were an estimated 19,000, exceeding that of HIV/AIDS.  This is getting worse rather than better.  The widespread count of staph infections is actually increasing and until recently has been frequently misdiagnosed.  Most infections of this sort are still thought to be from hospital settings although after seeing this firsthand staph is becoming a common problem everywhere. 

To show you an example of how valuable this is, Becton Dickinson shares are up more than 4% at $87.30 today, an all-time high.  As far as how this translates into money BDX has a $21.5 Billion market cap after today's gains. 

Jon C. Ogg
January 2, 2008

10 Turnarounds That Haven't Turned Around: Pfizer (PFE, MRK, BMY, JNJ)

Early this week we are running a list of stocks that have been in a turnaround plan, yet the stocks and the businesses haven't turned around.  Could these be the stocks to watch for 2008?

Pfizer (NYSE:PFE) is perhaps the most troubled Big Pharma.  It has been in a turnaround that just hasn't turned.  Many expect the pressure to stay into 2008 as well.  This has patents expiring sooner rather than later, competitors still taking market share in some of its historical key winning blockbuster drugs, and a lack of any serious drug pipeline.  Hey, that is Pfizer.  Its CEO is still fairly new but hasn't ever made a dent here.  This is VERY hard to turn because its market cap is $157 Billion so the law of large numbers is a hitch.   

Pfizer sold off its consumer products unit for some $16 Billion to J&J (NYSE:JNJ) to be a pure drug company.  That hasn't managed to help and may have in fact been the wrong play since its drug growth seems limited.  Maybe that consumer products company was one of the more steady businesses after all.  Pfizer is going to need to do not one big biotech deal, but may need two or three key deals so that it can transform and show some more promise ahead.  Analysts aren't looking for anything in 2008, so any upside might be the difference.

Troubled drug companies can overcome adversity, even when things are mounting against them.  We wouldn't even be surprised if the company issues more pink slips and cost cutting measures.  Merck (NYSE:MRK) was thought to be in the same boat a few years ago and it has come screaming back with a vengeance.  Even Bristol-Myers Squibb (NYSE:BMY) managed to get off of its low-$20's base.  Yet Pfizer is just stuck in the low-$20's to mid-$20s and it's been a pig for over 3-years now.  If the company can find a few deals with promise for growth into 2009 and beyond, investors may start to take cash out of Merck and direct it the way of Pfizer.

Sign up for our own open email distribution list covering buyouts, spin-offs, unusual options activity, special situation previews, merger-arb spreads, and more.

Jon C. Ogg
December 17, 2007

JOn Ogg can be reached at jonogg@247wallst.com; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

Abbott (ABT) Stent Slowdown, Bad For Johnson & Johnson (JNJ) And Boston Scientific (BSX)

Abbott Labs (ABT) which just launched a new stent product, Xience V, has laid off 1,200 people because of slowness in the stent market. Stranger than fiction. According to MarketWatch, Abbott says it expects to "take a 25-30% market share in 2008." But, of course, it looks like they miscalculated by employing all of those people in the first place.

No matter how wrong-headed that Abbott seems, it is bad news for the two incumbents in the stent business, Johnson & Johnson (JNJ) and Boston Scientific (BSX). BSX is already struggling with falling operating income and a tremendous debt load.

Douglas A. McIntyre

Medarex Spreads Its Wings (MEDX, BMY)

Medarex, Inc. (Nasdaq: MEDX) this morning has announced the allowance of two separate investigational new drug applications filed with the FDA for MDX-1342:
one for the treatment of chronic lymphocytic leukemia (CLL);
and the other for rheumatoid arthritis.

MDX-1342 is a fully human antibody that targets CD19, a molecule specifically expressed on normal B-cells and malignant B-cells in diseases such as CLL, acute lymphoblastic leukemia, follicular non-Hodgkins lymphoma, diffuse large B-cell lymphoma and mantle cell lymphoma.

The IND for the treatment of CLL is for a Phase I clinical trial for cancer that is expected to enroll up to 52 patients with relapsed or refractory CLL.

The IND for the treatment of rheumatoid arthritis is for a Phase I clinical trial that is
expected to enroll up to 90 patients with rheumatoid arthritis.

As a reminder, the clock is ticking on the review of Medarex and Bristol-Myers Squibb (NYSE: BMY).  There are nearly 1 million option contracts listed in the open interest for the various put and call strike prices in the JANUARY 2008 expiration due to its expected and soon to be released data for its melanoma treatment safety and efficacy.

• Medarex Stock Options Activity Resembles Dendreon's Trading;
• Evaluating Medarex & Bristol-Myers Huge Options Open Interest;
• Medarex and partner Ono announced allowance of Investigational New Drug Application for fully human anti-PD1 antibody.

We have reviewed and screened Medarex options pricing for our Special Situation Investing Newsletter and you can also get similar options screening from time to time via our open email distribution list.

Jon C. Ogg
December 4, 2007

Does Big Tobacco Actually Love Pfizer's Anti-Smoking 'Chantix' Pill? (MO, RAI, PFE)

Pfizer (NYSE:PFE) is seeing additional pressure this afternoon.  Apparently the FDA said it is looking into reports that Pfizer has sent out an "early communications notice" to doctors warning them to monitor patients using the popular "stop smoking" pill called Chantix with the note that it might trigger erratic behavior or possibly suicidal thoughts in some users.  The FDA has also noted that Chantix users should also be cautious when driving or operating autos and machinery, as the drug has reportedly caused some incidents of drowsiness. 

If you know an ex-smoker, you'd swear up and down that some of them were suicidal when they tried to quit before this drug ever came out.  This may be after that musician in Dallas was shot to death following him having an 'altercation' with his girlfriend before he ran out and pounding on a door in the middle of the night, so in all honesty this one might have been seen ahead.  Here is the official communication:

• "FDA informed healthcare professionals of reports of suicidal thoughts and aggressive and erratic behavior in patient who have taken Chantix, a smoking cessation product. There are also reports of patients experiencing drowsiness that affected their ability to drive or operate machinery. FDA is currently reviewing these cases, along with other recent reports. A preliminary assessment reveals that many of the cases reflect new-onset of depressed mood, suicidal ideation, and changes in emotion and behavior within days to weeks of initiating Chantix treatment. The role of Chantix in these cases is not clear because smoking cessation, with or without treatment, is associated with nicotine withdrawal symptoms and has also been associated with the exacerbation of underlying psychiatric illness. However, not all patients described in the cases had preexisting psychiatric illness and not all had discontinued smoking."

There is always a silver lining somewhere for someone.  If you are Altria (NYSE:MO) or Reynolds American (NYSE:RAI), then you probably just got a little more pep in your step.  Imagine a doctor saying, "I'd rather see you keep smoking and die one breath at a time rather than get suicidal."  Did that really happen that ANY physician said that?  Probably not.  But that is how a trader might view this.

Altria (NYSE:MO) is currently under review for the 24/7 Wall St. Special Situation Investing Newsletter.

Jon C. Ogg
November 20, 2007

Glaxo (GSK) CEO Has A Senior Moment

GlaxoSmithKline's (GSK) diabetes drug Avandia has such frightening side effects that the FDA will probably make it carry a "black box" label. Studies have found that the treatment can increase risk of heart attack.

Concerns about the side effect drove sales of the drug down 48% in the US during the September quarter.

Glaxo CEO Jean-Pierre Garnier told Reuters that sales might return if the "black box" warning is not too severe. "Absolutely. It all depends on what the language is," he said.

So, the FDA will have to tone down the part about heart attacks.

Douglas A. McIntyre

Glaxo Avandia Sales Appear To Be Vanishing (GSK)

GlaxoSmithKline's (NYSE:GSK) Avandia sales might not just weak after the reports of cardiovascular risks were reported.  If this research is accurate, the sales might be on the path to vanishing.  We have not conducted our own research into this and since we are finance geeks we probably won't do much more digging.  But this is a near-disaster for a blockbuster drug (more than $1 Billion in annual sales) if the figures are accurate.

New research from TNS Healthcare’s DiabetesDynamics USA™ shows that from July through September of 2007 nearly 70% of changes in Avandia prescribing were the result of withdrawals—physicians switching patients to another therapy. In addition, the rate of withdrawals is accelerating, with as many withdrawals in third quarter ’07 alone as in the first and second quarters combined.

According to the data:  “Avandia prescribing has always been dynamic, with our research showing that, during the first half of 2007, 20% of physician consultations resulted in some kind of therapy change,” says Philip O’Hagan, International Client Services Director for TNS Healthcare. “From January through June, 84% of those prescribing changes were positive—physicians starting new patients on Avandia, adding it to existing regimens or switching patients to Avandia from other therapies. From July forward, however, we see a dramatic turnaround, with the majority of Avandia changes now coming from doctors taking patients off the drug.” 

DiabetesDynamics reveals that one of the main reasons physicians are switching patients from Avandia is reports that the drug is linked with increased cardiovascular risks. During the first half of 2007, there were no cases of switching due to cardiac problems, though there were the first rumblings that publicity about side effects was beginning to have an effect. During the third quarter of the year, however, there was a massive change, with cardiac problems now the reason for 20% of Avandia withdrawals.

If this is even remotely accurate, it sure sounds like Glaxosmithkline is feeling some heat. As per Glaxo's site it says that the Avandia group of products £1,645 million (or $2.3 Billion in dollar terms using today's currency exchange rates).

Join the 24/7 Wall St. open email distribution list for analysis of special situations such as buyouts, reorganizations, spin-offs, recapitalizations, speculation and other special news not posted on the public web site.

Glaxo shares in teh U.S. are trading up almost 0.5% at $50.87, although its 52-week trading range is $48.30 to $59.98.

Jon C. Ogg
November 6, 2007

A Little Trouble For Bristol-Myers (BMY) Plavix

Plavix from Bristol-Myers (BMY) is the medical drug-thinner of choice. According to CNN Money, sales of the drug "totaled $3.4 billion in sales during the first nine months" 

Now Eli Lilly (LLY) has a horse in the race. The Associated Press reports that "a new blood thinner proved better than Plavix, one of the world's top-selling drugs, at preventing heart problems after procedures to open clogged arteries." The news services added people given the experimental drug, prasugrel, were nearly 20 percent less likely to suffer one of the problems in a combined measure -- heart attack, stroke or heart-related death -- than those given Plavix, a drug that millions of Americans take to prevent blood clots that cause these events.

Lilly could use a little help. Its shares are flat this year, while Bristol-Myers is up over 10%.

The problems with these new drugs and treatments is always the same. They solve one problem, but cause another. Patients taking prasugrel are more likely to die from bleeding.

Oh, well.

Douglas A. McIntyre

Evaluating Medarex & Bristol-Myers Huge Options Open Interest (MEDX, BMY, DNDN)

We were screening options activity today and something came up that where bets had significantly grown from our prior coverage.  Earlier this year we covered some strange biotech options activity after noting a "Dendreon-esque" amount of longer-term options trading in Medarex (NASDAQ:MEDX) with a huge open interest that has now gotten even larger.  The company has a partnership in melanoma treatment development with Bristol-Myers Squibb (NYSE:BMY).

In 2005 Bristol-Myers Squibb paid Medarex roughly $50 million in cash and it can receive various milestone payments of nearly $500 million more dependent upon the success of tests and on the ultimate success of Medarex's antibody.  Last June Bristol-Myers and Medarex reported to oncology experts that the drug shrank tumors in 13% of 356 melanoma patients. 

Bristol-Myers and Medarex are expected to finish key trials this fall, although a formal date has been elusive and we are leery of solid dates in this field.  These response rates for overall melanoma seem quite low compared to other benchmarks or endpoints, but from all the poking around that has been done the verdict from the investment community seems to be that the results don't have to be anywhere close to a majority.  Minimal improvement may ultimately yield approval.  Analysts are mixed with price targets and opinions all over the place and the most recent research reports have been somewhat cautious on the company.

What is interesting is that Medarex may have a lot of potential upside that riding on this, but it will not fail at all as a company on this event alone if this trial fails to tickle investors.  As of its last report the company had over $400 million in cash and short-term investments plus another $312.9 million in long-term investments.  Its market cap is roughly $1.8 Billion.  The company has a huge pipeline with many other partners which you can see on its site.  This is an old figure but the short interest as of September was listed as more than 34 million shares.

But the open interest in the options trading is massive.  Back in APRIL we noted the huge open interest in its options for the JAN-2008 contracts:
JAN $12.50   CALL 60,061 contracts    JAN $7.50 PUTS   19,683 contracts
JAN $15.00   CALL 39,065 contracts    JAN $10.00 PUTS   14.869 contracts
JAN $17.50   CALL 84,943 contracts    JAN $12.50 PUTS   42,187 contracts
JAN $20.00   CALL 9,376 contracts    JAN $15.00 PUTS   19,122 contracts
But now look at the open interest in the same Medarex options contracts for JAN-2008 TODAY:
JAN $12.50   CALL 109,379 contracts    JAN $7.50 PUTS    28,015 contracts
JAN $15.00   CALL 118,995 contracts    JAN $10.00 PUTS   40,392 contracts
JAN $17.50   CALL 251,272 contracts    JAN $12.50 PUTS   114,109 contracts
JAN $20.00   CALL 43,056 contracts      JAN $15.00 PUTS   174,056 contracts
Bristol-Myers Squibb (BMY) has THE LARGEST single open interest for a single contract of all other stock option contracts on the exchange:
JAN08 $32.50 CALLS 223,666 contracts in the open interest.
JAN08 $32.50 CALLS 526,003 contracts in the open interest (Largest)

There wasn't any major spike in stock trading from it presenting at the Natixis Bleichroeder's Hidden Gems Conference this last Monday.  In early November it will be at the JPMorgan Ninth SMid Cap Conference.  It looks like there is more bias to the call options, but after the FDA actions of late we won't really speculate on what the chances of success are.  We noted some Bristol-Myers speculation some time back about takeover speculation, and that may have contributed to the high open interest.

Jon C. Ogg
October 12, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.

If you feel you have anything to contribute feel free to send an email in with relevant data or opinions. All comments are welcome, even the bad ones.

Mixed Short Interest in Drug & Medical Stocks (June 2007)

As you will see, the short interest changes in medical and drug stocks of the active NYSE-listed names was a bit of a mixed bag.  GlaxoSmithkline (GSK) saw the lagest increase, but its short interest is not representative of its real size or activity because it is an ADR and less active here compared to U.K. trade volume.  We ranked hese in terms of percentages with the largest increase in short interest first.

STOCK (Ticker)                JUNE07      MAY07     Change
GlaxoSmithkline (GSK)     7.74M         4.15M       +86%
Boston Scientific (BSX)   32.07M       24.06M       +33.3%
Wyeth (WYE)                          3.3M       10.37M       +28.3%
Labcorp (LH)                       4.11M         3.21M       +28%
Bristol-Myers (BMY)          26.95M       23.85M      +13%
Schering-Plough (SGP)   16.79M      15.27M       +9.9%
Medtronic (MDT)                16.11M      15.19M        +6%
Pfizer (PFE)                        54.48M       52.12M       +4.5%
Quest Diagnost. (DGX)    18.00M       17.54M       +2.6%
Merck (MRK)                       22.82M       22.55M       +1.2%
Eli Lilly (LLY)                       13.77M       14.07M        -2.1%
J&J (JNJ)                             15.37M      16.16M        -4.9%
Zimmer Holdings (ZMH)     3.89M         4.13M        -5.8%
St. Jude MEdical (STJ)        6.53M         7.13M         -8.4%
Genentech (DNA)                 6.87M         8.16M        -15.9%
Abbott Labs (ABT)              11.74M       16.39M        -28.3%

Jon C. Ogg
June 24, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

New Threat for GlaxoSmithKline: Avandia Spammers (GSK)

GlaxoSmithKline (GSK-NYSE) has been under significant pressure of late because of the New England Journal of Medicine showing greatly increased risks of a heart attack for diabetes patients that have taken AVANDIA.  The news slowed AVANDIA sales down to a crawl after the published reports showed greatly increased risks of heart attack and death.  This wasn't exactly a small drug either, because this was one of the more popular pharmaceuticals used to treat Type II diabetes. 

If things were bad enough for GlaxoSmithKline (GSK), they just got worse.  I went out for about an hour or so on an appointment and upon my return there were two separate emails regarding "AVANDIA LAWSUIT INFO" and after opening one to see if there was already a series of class action suits getting traction.  I was a bit suspicious since I have never had anything to do with AVANDIA nor with anything related to it.  Sure enough, these are both ".net" URL's where the ".com" version of the site is a domain squatter and the home page is merely an "unsubscribe" page (and if you don't know who is spamming you, you actually let them know that you are a real email address if you submit a "remove' email).

Whether this ends being a real attempt for a law firm to drum up AVANDIA cases or not is yet to be known.  The truth is that a class action suit has already been filed on behalf of shareholders, but this is an entirely different matter because the spam emails today are for 'those who took AVANDIA."  AVANDIA has already been ordered to carry a "black box" warning on its packaging by the FDA.

Even if this never comes to a real case against the company, it is yet one more bit of negative PR.

Jon C. Ogg
June 13, 2007

Cramer's Picks & Pans in Pharmaceuticals

Stock Tickers: MRK, PFE, JNJ, GSK, SGP, LLY, WYE, NVS, NVO

On tonight's MAD MONEY on CNBC, Jim Cramer said he keeps getting asked about Big Pharma drug stocks.  He'd rather focus on farms, but Cramer said he doesn't like Big Pharma.  He's reviewing names he wants to sell, keep, or buy.

Drug companies have lost their growth and haven't produced any blockbusters.  Most big drug companies face an earnings gap down the road that will have earnings pressure from patent expiration.  The biotech companies are the only ones making new big drugs.  He also hates that the Democrats have Big Pharma under attack because of prices.

Here are his two avoid stocks in drugs: Pfizer (PFE) and J&J (JNJ).  Pfizer (PFE) is one you should avoid because they have many patent expirations coming up. Lipitor and NORVASC are already under generic pressure.  The one worse than Pfizer is Johnson & Johnson (JNJ).  They have patent expirations on major drugs and thinks Warren Buffett was wrong investing in it. He expects J&J to lose money for holders.  He didn't give these as his two 'avoid stocks' but Cramer was cautious on Merck (MRK) and GlaxoSmithkline (GSK).  Merck's GARDISIL is good, but not good enough to make him like the stock.  GlaxoSmithkline (GSK) showed how at-risk it was after AVANDIA crushed the stock because of heart attack side effects.

Cramer did say that if you must own a big drug company, he does have a couple less bad ones.  Two names he doesn't mind are Eli Lilly (LLY) and Schering-Plough (SGP).  Eli Lilly (LLY) is one that has setbacks on patent expirations and negative developments, but it has a blockbuster in its pipeline and he can live with you owning this one.  One that he thinks you can buy is Schering-Plough (SGP) despite its patents expiring and somewhat limited pipeline.

While he is still negative on the whole sector, he has a couple of picks that he says are actual buys that he blesses: his second favorite is Wyeth (WYE) because it is mostly immune from generics right now even though it has some problems.  Novartis (NVS) is his favorite pick with little exposure to generics in the near future.  He would push Roche (RHBBY) except it is only a pink shot.

If you care for any personal favorites outside of what Jimbo thinks, my own personal favorite drug pick as a "defensive stock" that you can almost always own is Novo Nordisk (NVO).  Novo Nordisk the ultimate diabetes play, and should do well as long as America stays fat and as long as the rest of the world keeps adding pounds.  It is thinly traded here in the US because it is really based in Denmark, so because of the currency floating you need to look at the ticker "NVO" on the Copenhagen Stock Exchange to get the true chart read. 

Jon C. Ogg
June 12, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Short Selling Up in Drug & Medical Stocks

Some sectors showed mixed results in the short selling, but the Big Pharma and medical instruments and related companies saw an increased activity in short selling in May versus April.  Below is the actual posting from April to May:

STOCK (Ticker)                        MAY07    APR07    Change
Pfizer (PFE)                               52.12M    50.28M    3.6%
Merck (MRK)                             22.55M    18.68M    20.6%
Johnson & Johnson (JNJ)    16.16M    14.47M    11.7%
Abbott Labs (ABT)                   16.39M    14.90M    10%
Wyeth (WYE)                            10.37M    9.61M       7.9%
Eli Lilly (LLY)                            14.07M    10.95M    28.5%
Bristol-Myers (BMY)                23.85M    18.75M    27.2%
Schering-Plough (SGP)        15.27M    14.09M      8.3%
Medtronic (MDT)                      15.19M    13.81M     9.9%
Boston Scientific (BSX)          24.06M    21.65M     11.1%
St. Jude MEdical (STJ)             7.13M    5.85M        21.8%
Quest Diagnost. (DGX)          17.54M    16.57M     11.1%

lower short interest.....

GlaxoSmithkline (GSK)            5.15M    4.66M    -11%
Genentech (DNA)                      8.16M    8.76M    -6.8%
Zimmer Holdings (ZMH)          4.13M    5.00M    -17%
Labcorp (LH)                              3.21M    3.34M    -3.9%

Jon C. Ogg
May 22, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

The Value of Psoriasis Treatments (CGPI)

This morning there was a micro-cap biotech that focuses primarily on dermatological issues, made what could be an interesting acquisition for the treatment of Psoriasis.  CollaGenex Pharmaceuticals, Inc. (CGPI-NASDAQ) and QuatRx Pharmaceuticals Company today announced a licensing agreement under which CollaGenex will develop and commercialize becocalcidiol.

This is a patented Vitamin D analogue developed by QuatRx that is currently in Phase II clinical trials for the topical treatment of mild to moderate psoriasis.  So it is not without risks because this is merely in Phase II studies.  The company claims that unlike all other Vitamin D-based treatments for psoriasis, becocalcidiol does not appear to induce hypercalcemia, a 'significant dose-limiting toxicity.'

It also states that according to the National Institutes of Health, approximately 7.5 million Americans have psoriasis, a non-contagious, chronic skin disease characterized by itching and red, scaly patches of skin.  Here is the real issue though that was not brought out in this press release: Psoriasis is still a largely untreated skin disease that appears in numerous stages and numerous degrees of severity.  It isn't just that, though.  Psoriasis isn't just largely untreated, it is one of the most obvious blockbuster opportunities for drug and ointment companies to go after right now.  There is no cure and no one that has claimed to be clos