Acorda shares close up 12%; Shire better, other ADHD names off on drug labeling; Pfizer slides

By Ronda Fears

Memphis, Feb. 10 - Acorda Therapeutics, Inc. indeed got its initial public offering off as market sources anticipated but at the low end of sweetened price talk, and the debut shares skyrocketed in the immediate aftermarket as players who previously turned a cold shoulder to the story took a big interest.

Amid what has become an extension of the tough row to hoe for biotech IPOs seen last year, Hawthorne, N.Y.-based Acorda sold 5.5 million shares at $6.00 each - the low end of revised price talk of $6 to $7, which had been cut from $11 to $13 per share Thursday before pricing.

"This [Acorda IPO] wasn't a boutique or even a mid-market shop, but Banc of America, so if they had to cut this that severely then you know it's tough," said a biotech banker at another top tier shop. He also noted a very small number of the IPO shares traded, "which tells you the deal was either well placed into a few solid hands, or a lot of it is sitting with the underwriters."

Banc of America - bookrunner on the Acorda IPO - did not comment on the deal, but a buyside source in Boston referred to it as, "ACOR - the under-priced IPO," and said he was a buyer of the stock when it freed to trade Friday but did not participate in the IPO.

"It's now [shortly after noon ET] at $7.30 and should have priced at $11 to $13," the fund manager remarked. "It's a commercial stage drug company that already has sales and FDA approval of its MS [multiple sclerosis] drug, so it's not a development high risk stage that most drug IPO's are. The upside to the original $11 to $13 range makes it almost 50% undervalued right out of the chute."

After opening at $6.17, the stock shot up by 20% by around noontime. There was a big pullback in the afternoon with Acorda shares (Nasdaq: ACOR) settling at $6.72 for a 12% gain on the day. Just 931,539 of the 5.5 million shares traded.

Acorda focuses on multiple sclerosis, spinal cord injury and other central nervous disorders. It has a marketed product, Zanaflex Capsules, approved for spasticity, and its lead product candidate, Fampridine-SR, is in a phase 3 clinical trial to improve walking ability in people with MS.

Proceeds are slated for general corporate purposes, except that $20 million to $25 million is expected to go toward completion of the current Fampridine-SR clinical trial and other research and development purposes.

Pfizer plunges on projections

Pfizer, Inc. on Friday forecast earnings for this year that are below current Wall Street projections and said its sales will be essentially flat, which sparked a sell-off in its stock but at the same time pumped up speculation about where it may be looking to add to its pipeline via acquisitions.

"Seems like the same old song to me - huge loss of sales yet no evidence of belt-tightening," said a sellside biotech stock trader at one of the bulge bracket firms in New York. "No one is that nervous about Pfizer. Everyone is just trying to figure out where they are looking and buy on the rumor. That, too, is the same song, second verse."

Pfizer shares (NYSE: PFE) lost 66 cents Friday, or 2.51%, to close at $25.68.

Pfizer chief executive Hank McKinnell said it was "a time of transformation for Pfizer and our industry. We are responding directly to the realities of our operating environment as we build value today while aggressively investing in the future."

Earlier in the week the biggest of the Big Pharmas said it would spin off its consumer health care unit, which markets Listerine, Rogaine and such things. The company has estimated free-standing value of the unit at $10 billion.

Pfizer projects 2006 earnings of about $2 per share, excluding special items. Pfizer reported adjusted profit of $2.02 per share in 2005 on sales of $51.3 billion. The company said 2006 sales would be comparable to 2005 with an unspecified growth in revenue in 2007. Earnings for 2007 are projected to rise in the high-single-digits.

Nektar up on data anticipation

Nektar Therapeutics, a partner with Pfizer on the inhaled insulin drug Exubera, was up sharply in an otherwise lackluster session for biotechs, in part due to Pfizer's forecast but also due to what traders described as a bearish tone going into the weekend.

Market sources said there maybe was some speculation in Nektar on Friday ahead of the BIO CEO and Investor Conference 2006 next week when analysts are looking for details about the marketing strategy for Exubera.

Nektar shares (Nasdaq: NKTR) added 47 cents, or 2.38%, to end at $20.23. The San Carlos, Calif.-based biotech also has a trio of convertible bonds that have been in play recently but none were seen Friday. A big sellside convertible shop closed out the 3.25% convertible bond due 2012 at 116.375 bid, 116.875 offered, the 3.5% due 2007 at 95.875 bid, 96.875 offered and the 5% due 2007 at 99.875 bid, 100.875 offered.

"We finally turned the corner today. Every time we've popped in the past, I've been skeptical," said a sellside biotech stock trader. "Just feel like this time things are different."

Nektar is presenting at the BIO conference Wednesday at 2 p.m. ET. The conference runs Wednesday and Thursday in New York.

A buyside market source said a sellside analyst recently suggested that The Street estimates for Exubera sales are too low.

"Based on the significant market need, growing diabetes prevalence, and data which show strong patient preference for Exubera, they believe internal expectations could be closer to $5 billion - twice their forecasts," the buysider said. "They believe estimates remain too low and are more likely to come up than fall."

Shire shares slump, rebound

Shire Pharmaceuticals Group plc shares stumbled on the Food and Drug Administration committee decision to require more stringent labeling of attention deficit hyperactivity drugs related to cardiovascular risks, but the stock rebounded as Shire encouraged more study on the situation.

London-based Shire makes the popular ADHD drug Adderall XR, rivaled by Swiss drugmaker Novartis AG's Ritalin.

Shire shares have exploded over the last couple of months, propelled by ongoing discussions with Barr Laboratories and a recent deal with Impax Laboratories, Inc. to delay competition in Adderall XR from generics.

On Friday Shire said it wanted further study to determine if there were possible adverse effects from its drug for treating ADHD after the FDA panel's recommendation.

"Most importantly, the benefits of treatment should not be overlooked," Shire said in a news release. "As several participants pointed out, ADHD is a serious condition and if left untreated the disorder can result in serious consequences. Stimulant medicines such as amphetamines and methylphenidate are highly effective in treating patients with ADHD and have been used for over 50 years. We have confidence in Shire's ADHD medicines - they have been prescribed over 50 million times and more than 1 million patients have taken Adderall XR since its introduction in 2001."

The market seemed to like Shire's response, with Shire shares in the United St ates (Nasdaq: SHPGY) gaining 47 cents on the day, or 1.02%, to $46.53.

Novartis shares in the United States (NYSE: NVS) dropped 32 cents, or 0.59%, to $54.08; Novartis did not make any comments via a press release about the FDA event.

Analysts downplay ADHD flap

Despite the FDA concern about ADHD drugs, analysts were not extremely concerned about the latest wave of seemingly restrictive regulations.

Merrill Lynch & Co. analyst David Munno noted in a report Friday that historical data indicates that prior negative headlines and elevated warnings did not significantly affect use of ADHD drugs or Adderall XR, specifically. On a three-month moving average basis, he said, Adderall XR scripts grew 13% year over year after the FDA added the original label warning for sudden death in patients with cardiovascular abnormalities.

In the 10 months since Adderall XR was removed from the market in Canada, he added, Adderall XR sales have grown another 5%.

"Patients and physicians are well aware of the risks of amphetamine use, so we do not expect any elevated warnings or headlines to significantly affect use," Munno said in a report.

Jefferies & Co. analyst Robin Campbell upgraded the firm's price target for Shire shares to $42.40, or 800p, but maintained a hold recommendation, saying Shire still faces the looming challenge of generic Adderall XR.

"A settlement with one company does not change the landscape. The key deal has not been cut. Forecasts look priced for perfection in support of its ADHD franchise - reality could be less than perfect.

Jefferies' Campbell noted, however, that the new price target assumes Adderall XR generics in 2007. An earlier launch for generics, details of a financial settlement with Barr Laboratories, and delayed approval for NRP104 are some of the key potential risks for Shire.

Shire is scheduled to report fourth-quarter and 2005 results on Feb. 23

New River, Barr, Impax weaker

New River Pharma describes NRP104 as an intended alternative to current amphetamine-based ADHD drugs. New River shares (Nasdaq: NRPH) sank Friday by $1.45, or 4.51%, to $30.62.

Generic drugmakers wanting to get in on the ADHD scene also were softer Friday on the FDA development, namely Barr Laboratories, Inc., and Impax Laboratories, Inc. Shire is still in negotiations with Barr involving a generic form of Adderall and settled with Impax on that same issue last month.

Barr Labs shares (Nasdaq: BRL) lost $2.22 on Friday, or 3.24%, to $66.37.

Impax Labs shares (Pink Sheets: IPXL) dropped 15 cents, or 1.38%, to $10.70.

Merrill's Munno said that because New River's NRP104 appears to have a better overall safety profile, he does not expect the FDA guidance to affect the approval timelines for NRP104. He reiterated a buy recommendation on the stock.

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