Healthcare Takeover Talk Continues

Don't look for any of the merger and acquisition talk that has been hovering over the healthcare sector lately to go away. Sanofi-Aventis' (SNY) Chief Executive Officer Chris Viehbacher said in an interview late Tuesday that his company will continue “shopping” for acquisitions to build its vaccine, biotechnology, and nonprescription medicine businesses, as well as expand in emerging markets. “There will be more shopping on the horizon,” Viehbacher said, declining to identify targets to Bloomberg. Purchases must add to the company’s growth, Viehbacher said. According to reports, the company finds vaccines quite attractive because the market will double during the next five years.

Speaking of vaccines, forget what we said after Novavax, Inc. (NVAX) closed up 16% after the week's first session. The company, whose vaccines leverage its virus-like particle (VLP) platform technology, looked like it was attempting to rebound after a recent two week skid may have just been taking a breather. While it still looks like a solid long term play, shares have been sliding downward slowly since they announced that they were going to raise capital on September 16. Shares gave up half of their Monday gains and closed at $4.12 -0.29 (-6.58%).

It could be that investors playing the pandemic investment sector have opted to move from one cutting edge flu technology to another. Shares of Cel-Sci (CVM) have continued rising steadily as small-cap investors are are looking more closely at this company whose H1N1 treatment differentiates them from the usual vaccine and antiviral stock plays. Still, don't look for any representatives from Cel-Sci to seek face time in the media any time soon. CNBC may be spending part of their broadcast day "Tracking the Flu" on Wednesday, but unless there is a last minute change, we're told that Cel-Sci's reps won't be commenting or appearing during the coverage. Multiple reports have company staff and vendors "being stretched to the limits twenty four hours a day" as they rush to continue their work on the Swine Flu treatment's new human trials- recently fast tracked by the FDA. The secrecy that has shrouded the new cold-fill lab facility (scheduled to officially go on-line in the coming days) and their work on this novel treatment option for those already infected with the H1N1 virus continues at the company headquarters near Washington D.C.

ISTA Pharmaceuticals, Inc. (ISTA), who won unanimous support for the approval of their Bepreve drug for the treatment of itchy eyes from the FDA closed as one of the sector's biggest gainers, up to $4.53 +0.28 (6.59%) after a nice write-up in the Motley Fool. The company has more approvals coming down the pipeline and it's investors are feeling very bullish. ISTA is the fourth largest branded ophthalmic pharmaceutical business in the U.S. ISTA’s four marketed products plus its product candidates include therapies for inflammation, ocular pain, glaucoma, allergy, and dry eye.

Allied Healthcare International Inc. (AHCI) 2.87+0.16 (5.90%) has continued thier very quiet yet steady climb that began in early February. Yesterday's close gave them a new 52 week high. Try talking to other investors on forums and chat rooms about the company- if you can find them. Allied is a provider of flexible, or temporary, healthcare staffing to the healthcare industry in the United Kingdom. The Company provides personal or basic care and nursing services in the home, in nursing and care homes and in hospitals. The aging population and other factors may continue to propel them upward. Under a recently announced contract, Allied has the opportunity to deliver up to one thousand four-hundred hours of home care services a week (72,800 hours a year) as one of six providers within Redbridge, a borough of London with a population of 250,000.

The biggest loser in the sector, and they've been called worse, is Sequenom, Inc. (SQNM). Shares lost 39% of their value to close at $ 3.46 -2.23. The diagnostics firm fired a slew of key execs after an investigation revealed mishandled test data. After the market closed on Monday, Sequenom said an investigation by a committee of independent directors revealed that the company "failed to provide adequate protocols and controls" of results for its prenatal Down syndrome blood test. Shares have lost 80% of their value over all during the last year.

Here is a look at some of the Healthcare sector's other winners and losers for Tuesday, Sept 29, 2009:

Gainers (% price change)	Last Trade	Change	Mkt Cap
Young Innovations, Inc.	YDNT	26.41	+1.76 (7.14%)	208.72M
ISTA Pharmaceuticals, Inc	ISTA	4.53	+0.28 (6.59%)	150.48M
Allied Healthcare Intl	AHCI	2.87	+0.16 (5.90%)	129.11M
Bovie Medical Corporation	BVX	8.14	+0.42 (5.44%)	138.61M
Amylin Pharmaceuticals	AMLN	13.72	+0.59 (4.49%)	1.94B
Losers (% price change)
Sequenom, Inc.	SQNM	3.46	-2.23 (-39.19%)	211.61M
Sucampo Pharmaceuticals	SCMP	5.52	-0.48 (-8.00%)	230.98M
I-Flow Corporation	IFLO	11.34	-0.80 (-6.59%)	277.30M
Novavax, Inc.	NVAX	4.12	-0.29 (-6.58%)	374.15M
DURECT Corporation	DRRX	2.64	-0.18 (-6.38%)	217.01M
Most Actives (dollar volume)
Wyeth	WYE	48.65	+0.56 (1.16%)	64.95B
Pfizer Inc.	PFE	16.77	+0.20 (1.21%)	113.18B
Abbott Laboratories	ABT	49.10	+0.52 (1.07%)	75.90B
Johnson & Johnson	JNJ	60.93	-0.34 (-0.55%)	167.91B
Merck & Co., Inc.	MRK	31.85	-0.18 (-0.56%)	67.17B

Disclosure: Long NVAX, CVM.

Comments

[User 485393:]

good article

Sep 30 08:42 AM

[scrxd again:]

Mr. Garza:

Do you have any hint that Sanofi, with a vaccine lab in nearby Swiftwater, PA, has its eye on Hemispherx (New Brunswick, Philidelphia), as per Mr. Viehbacher's recent comments on acquisition/partnering?
Thanks for the good reporting. Always enjoy.

Sep 30 08:51 AM

[jay brebner:]

CVM needs to come clean with investors rather than allowing the rumor mill to rally the stock. They need to say whether the antigen being presented was discovered by them (and therefore patentable) or whether they are using other published research on the conserved influenza epitope. All the secrecy and inuendo fromt the CEO makes me believe the latter. And if true they will have no credibility long term. If it is the epitope discovered by Crucell and Scripps then J and J will clean their clock in court.

Sep 30 09:01 AM

[dreamdivers:]

LOL, Mr. Garza is probably embarrassed by his prior pumping of Hemispherx, with little or no due diligence and absolutely no follow up to boot.

Sep 30 10:28 AM

[M. E. Garza:]

Funny you should ask. We have a scheduled call with HEB next week. We haven't had any news updates, because there hasn't been any news to report, but after their recent presentation this past week, there may be some things to ask Dr. Carter about. We'll see if we can get him.

On the one hand, proponents of HEB say the FDA's long delay are a sign that the drug will be approved since a complete response letter would have already been issued. That is a valid point.

On the other hand, there have been disturbing rumors that the company has been slow to respond to some questions from the agency and that this is the reason why this has dragged on. Those are only rumors, but I tell it like I see it and i have not been able to substantiate them.

I am not ashamed of REPORTING what we have reported in the past about this or any other company.

We don't delete stories or hide them- like other biotech "reporters" who constantly bash stocks do when things go the opposite way- which is sadly most of the time.

Good luck to all of you. Regardless of your position on the stock.

Oct 01 01:56 PM

[ebworthen:]

I would steer clear of any healthcare investment in this political climate.

Barring a conservative recapture of Congress, Executive orders or emergency legislation could dictate pricing, coverage, and profit limits.

In a true crisis; mandated care and pricing could wipe out many of these companies.

Just a word of caution, not an opinion of what should be done one way or the other.

Remember what happened in the past year to the GM Bondholder, the WaMu shareholders, and the taxpayer.

Oct 01 08:22 PM

[rennert:]

Yes, I was badly hurt with WAMU, be careful with these health care stocks. Plant your own food. Get plenty of canned food also. Hunker down and keep your loved ones save. There was a guy on TV who suggested some day Americans mite be tired of being treated like the Village Idiots while the Elite lives like the King of France. He suggested be prepared and buy a farm out in wide open land. I do not know if that would really work for me since I never killed a chicken before I mite starve than anyway.

Oct 01 09:10 PM

[F N:]

Mr. Garza,

Can you shed some light on NVAX and CVM.
I was under the impression that NVAX had already priced and issued their secondaries. In your article, you said "since they announced that they were going to raise capital on September 16", please clarify.

Regarding CVM, how are their test going? Did affected people respond well to the vaccine?

Thank you for your time.

Oct 07 11:24 AM