Monday, September 13, 1999
A tidbit of news in the heated-up biotech market was enough
to shave more than half a billion dollars off Idec's market cap in a
matter of 45 minutes on Thursday.
After opening at $136.688, IDPH shares got as low as $106 intraday
after President and CEO William Rastetter told a crowd of investors at The Carson
Group-BioCentury NewsMakers in the Biotech Industry conference that about
$5 million of the $68 million in reported second quarter sales of Rituxan represented
inventory build-up in advance of a 5 percent price increase that was instituted
on Sept. 1.
Following the presentation, an analyst asked Rastetter whether
the company would beat an $80 million third quarter sales estimate for Rituxan.
The treatment for non-Hodgkin's lymphoma is currently the company's only marketed
Rastetter said that meeting the $80 million number would be
a stretch, and suggested that analysts reassess their model off of the "new"
"I told the crowd, 'I can't speculate for anybody's model,
and to the sales estimate of $80 million. But if your model is based of off
a $68 million base, you should reassess your model off of a $63 million base',
which was the real run rate," he told Ebb & Flow.
The consensus number is "more like low $70s to high $70s,"
according to COO Bill Rohn.
Bloomberg ran with a headline, "Idec CEO says $80 million estimate
too high", said Rohn, which prompted "all of the momentum players to jump off
the stock and then it just fed on itself."
The stock shed nearly $30 points over the 45-minute span and
then recovered to close the day at $123.781 on 5.1 million shares, down $12.906.
IDPH tumbled further on Friday, losing $18.344 (15 percent) to $105.438. On
the week, IDPH shed $27.062 (20 percent). Its market cap fell about $555 million
to $2.2 billion.
Marketing partner Genentech (DNA), which presented earlier
in the day, was off as much as $10 to $165 on Thursday before finishing at $171,
off $4, on 598,200 shares. DNA closed Friday at $168.25, down $3.75 on the week.
Rituxan's success has contributed to increasing "whisper" expectations
for the product. Launched in December 1997, the product posted first-year sales
of $152 million, which the company itself has characterized as the most successful
commercial launch of an anti-cancer drug.
Analysts' U.S. sales estimates for the drug this year are $260-$290
million. Rohn said the company is not giving specific sales guidance. "But $5
million in one quarter does not determine the year nor does it determine the
brand," he said.
Timing is everything
Cor Therapeutics (CORR) on Friday announced plans to
raise $100 million through a convertible subordinated note offering, continuing
the company's opportunistic approach to financing by selling into the strength
of its common stock. CORR is up $7.938 (54 percent) to $22.688 since June 30.
The stock was off $1.437 on the week to $22.688, but the market only nicked
$0.375 off the shares on Friday's announcement.