Acorda shoots up 32%; Isis lower after analyst day; Gilead off 3.5%, Myogen eases; Amgen better

By Ronda Fears

Memphis, Oct. 3 - In addition to tax loss selling in preparation for the end of the year, biotech equity traders said there was a fair amount of window dressing in the way of buying Tuesday.

While biotech stocks overall were weaker, there were some notable spikes, such as Acorda Therapeutics, Inc. One of the biggest losers of the day, however, was Gilead Sciences, Inc. in the wake of announcing a $2.5 billion buyout of Myogen, Inc.

"End-of-year tax selling by institutions takes place this time in October," said a sellside equity trader. "That said, there was some significant buying in spots."

In the large cap area, Merrill Lynch & Co.'s top biotech analyst Eric Ende said in a report Tuesday that he expects a mixed earnings slate for third quarter, naming Genentech, Inc., Gilead Sciences and Amgen, Inc. specifically. Genentech shares were modestly higher and Gilead suffered from accelerated selling on its merger news from Monday, but Amgen saw a nice bounce even amid the less-than-rosy Merrill comments.

"We believe total sales for Amgen are likely to be less than expected, particularly for Neulasta, while Aranesp, Neupogen and Enbrel are tracking in line to slightly light," Ende said in the report.

Amgen shares (Nasdaq: AMGN) gained $1.03 on the day, or 1.47%, to $71.33. Genentech shares (NYSE: DNA) edged up 14 cents, or 0.17%, to $83.86.

"The market feels there is more room for Amgen than Genentech," said the trader.

Acorda buyers stampede

In the vein of window dressing for fourth quarter, Hawthorne, N.Y.-based Acorda saw the biggest gain Tuesday, extending a series of eye-popping gains over the past six sessions after the company reported positive late-stage news on its multiple sclerosis drug Fampridine-SR.

"Everyone wants to get on this rocket," said a sellside trader. When asked if the already astronomical gains were a deterrent to getting involved now, he remarked, "Even with the three or fourfold move it's already made, it is going to go higher. There seems to be no doubt about that. The MS drug will be a blockbuster. The rocket is just loading passengers; it hasn't really taken off yet."

Acorda last week more than tripled in price on the Fampridine-SR news. Acorda shares (Nasdaq: ACOR) on Tuesday added $2.80, or 32.18%, to $11.50 and gained another 3% in the after-hours activity. Before the news, the stock was at $2.22.

The company reported last Monday that in a phase 3 trial, Fampridine-SR achieved its main goal, which was to improve walking speed in MS patients taking the drug compared with patients taking a placebo. The company said it will meet with the Food and Drug Administration as soon as possible to discuss the next steps for the Fampridine program.

Isis gains, retreats to end lower

Retreating from intraday gains, Isis Pharmaceuticals Inc. fell victim to volatility trading and ended the session in negative territory.

Carlsbad, Calif.-based Isis announced Tuesday that it has sold its first genetic identification systems and reached development milestones. The company said it received orders from an unnamed government agency for two Ibis T5000 Biosensor Systems, used to analyze human DNA.

Isis shares (Nasdaq: ISIS) traded in a band of $7.11 to $7.39 before settling the day off by 5 cents, or 0.69%, at $7.18.

But players were heartened by the news of the day, traders said.

"It's very optimistic, finally," said a trader. "It will take a long time for revenue to drop down to the bottom line, but it is a very good start."

The systems will be used for forensic applications. Isis plans to install the first system by the end of the year, with the second system installed in early 2007.

Financial details were not disclosed.

Isis held an analyst day Tuesday to highlight its Ibis division and introduce commercial plans for the Ibis T5000 biosensor system, along with officials from its Ibis partner, Bruker Daltonics, Inc.

Isis also announced Tuesday that it has completed the first phase of a grant from the National Institute of Allergy and Infectious Disease, a unit of the National Institutes of Health, and has been granted funding for a second and third phase, totaling about $2.5 million. The second and third phases include installing a T5000 at Johns Hopkins University Medical Center.

Additionally, Ibis said it received a federal contract worth up to $1.9 million to analyze up to 10,000 forensic DNA samples.

Exelixis buyers step in

Ahead of Exelixis, Inc.'s follow-on stock deal slated for Wednesday's business, traders said there were buyers stepping in "on the cheap."

One buyside trader said that while the stock was probably being propped up by the underwriters of the deal, it also was seeing some bona fide buying from players boosting their positions before the deal.

"It [the follow-on offering] isn't a big red flag. It's really all too typical," the trader said.

"In fact, I'm beginning to see a buying opportunity as it dips back toward the high $7s. I think I'd be a buyer at $7.80. It could get that low before the price is announced. Once the price is announced you might get a little dip but the damage will already have been done and a solid floor will be placed under the share price.

"I think the end of day today is the time to buy."

Exelixis shares (Nasdaq: EXEL) ended off by 23 cents, or 2.68%, at $8.34 after trading in a band of $8.23 to $8.54. Some 542,960 shares changed hands, up from the three-month running average volume of 410,061 shares.

BioCryst down on profit taking

BioCryst Pharmaceuticals Inc. remains a top pick going into fourth quarter, a sellside trader said, but the stock suffered from profit taking on Tuesday from news the day before on its flu vaccine Peramivir.

"It will run back up after some profit taking," the sellside trader said. "It's just normal profit taking after news. But smart money is getting back in. This is a hot one for the oncoming cold season."

BioCryst shares (Nasdaq: BCRX) settled the session off by 70 cents, or 6.04%, at $10.88.

On Monday, Birmingham, Ala.-based BioCryst reported positive results from human clinical studies of Peramivir, supporting the ongoing development of Peramivir as a treatment for seasonal and life-threatening influenza, including avian flu.

The company said it expects to enter phase 2 clinical testing in the coming flu season. In January, BioCryst received fast-track status from the Food and Drug Administration for the development of Peramivir shots.

Endo pained by warning

Endo Pharmaceuticals Holdings Inc. dropped more than 2% on Tuesday after announcing late the day before that a major customer is paring down inventory of its painkiller Lidoderm, even though the company said it was expected and won't hurt its long-term financial health or the Lidoderm product line.

Endo share (Nasdaq: ENDP) lost 76 cents on the day, or 2.29%, to close Tuesday at $32.37.

Late Monday, the Chadds Ford, Pa.-based company said it signed an inventory management agreement with a major customer, who began reducing inventory levels of Lidoderm in anticipation of making the agreement final. The action will result in net sales of the product falling below underlying demand during the third quarter.

Still, Endo said Lidoderm prescriptions are increasing more than 20% year over year and it estimates sales of the drug for 2006 will hit the high end of its forecast range of $530 million to $540 million, including the impact of the inventory accounting. For the quarter, the company said it expect Lidoderm sales of $145 million to $150 million.

Also, Endo reiterated sales for its newly launched painkiller Opana at $20 million to $30 million.

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