Following what would be a second landmark decision by the FDA with regard to the weightloss pill being developed by Vivus, Inc. (NASDAQ:VVUS), drug companies have been a hot topic as of late. That being said I wanted to find several less riskier pharmaceutical plays.
After developing a screen, I found three pharmaceutical companies that actually carry very minimal total debttototal cash ratios. That ratio is simply formulated by taking the company's debt and dividing by the total cash. I consider any ratio under "1" very healthy, under "2" satisfactory, under "3" cautionary, and anything over "3" a warning sign.
Symbol 
Price 
Mkt Cap 
Total Debt 
Total Cash 
Ratio 
CBST 
39.01 
2.47 B 
462.07 M 
0.585 

54.16 
11.43 B 
400.00 M 
0.408 

0.71 
29.23 M 
24.48 M 
0.556 
Cubist Pharmaceuticals, which trades in a 52week range of $28.82/share (52week low) and $44.95/share (52week high), has a market cap of $2.47 billion, was given a rating of a "1," based on the statistical calculations of my formula.
Cubist currently has $790.16 million in total cash on its books (it should be noted that the company currently has $191.01 million in operating cash flow, and $102.66 million in free cash flow) and only has $462.07 million in total debt. That equates to a total debt to total cash ratio of 0.585, which in my opinion, is a very positive catalyst moving forward.
Trading at a 5.27% discount to its 200day moving average, Cubist recently filed a lawsuit against Hospira, Inc. (NYSE:HSP), noting the infringement of a patent with regard to the company's drug Cubicin.
Vertex Pharmaceuticals, which trades in a 52week range of $26.50/share (52week low) and $66.10/share (52week high), has a market cap of $11.43 billion, was given a rating of a "1," based on the statistical calculations of my formula.
Vertex currently has $980.87 million in total cash on its books (it should be noted that the company currently has $333.28 million in operating cash flow, and $41.24 million in free cash flow) and only has $400.00 million in total debt. That equates to a total debt to total cash ratio of 0.408, which in my opinion, is a very positive catalyst moving forward.
Trading at a 21.14% premium to its 200day moving average, Vertex was recently reiterated as a Buy by the Street.com.
Anthera Pharmaceuticals, which trades in a 52week range of $0.60/share (52week low) and $8.42/share (52week high), has a market cap of $29.23 million, was given a rating of a "1," based on the statistical calculations of my formula.
Anthera currently has $44.03 million in total cash on its books (it should be noted that the company currently has $86.50 million in operating cash flow, and $52.68 million in free cash flow) and only has $24.48 million in total debt. That equates to a total debt to total cash ratio of 0.556, which in my opinion, is a very positive catalyst moving forward.
Trading at an 82.12% premium to its 200day moving average, Anthera was recently downgraded to Neutral at Ascendiant Capital Markets.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.