Monday, January 22, 2001
Investors playing the Transkaryotic-Amgen roulette wheel found their chips stuck on the table Friday, when U.S. District Court Judge William Young issued his final ruling in the EPO litigation between TKTX and AMGN after the market closed. Young ruled that TKTX and partner Hoechst Marion Roussel (now Aventis) literally infringed two of five AMGN patents in the dispute (see Cover Story). Now that the ball has stopped rolling, the chips will be cleaned off the table unless today's conference call by TKTX raises optimism about an appeal.
TKTX closed Friday down $1 to $34 on 146,000 shares, but was up $1.875 on the week before trading was halted shortly before the close. AMGN, which was up only $0.25 to $60 in regular trading on the week, shot up $12.375 (21 percent) to $72.375 in after-hours trading on Friday.
The first crop of earnings are in, and the good news is that each of the three companies - Biogen (BGEN), Genentech (DNA) and Idec (IDPH) - met or beat their fourth quarter and fiscal year EPS estimates.
The bad news is that DNA lost $8.1 billion in valuation after announcing in a conference call on Friday morning that its earnings growth would come in at 20-25 percent this year compared to 28 percent in 2000. DNA slid $7.688 (13 percent) to $53 on 9.3 million shares on Friday, and was down $15.50 (23 percent) on the week. Spokesperson Sabrina Johnson said DNA remains on track with its goal of providing 25 percent average annual EPS growth over the five years starting in 1999, pointing out that the company has delivered 31 percent average annual growth over the last two years. On the expense side, DNA plans to expand its bio-oncology sales force this year, and is planning to launch its Xolair anti-IgE antibody to treat asthma and allergies, which was developed with Tanox (TNOX).
On the upside, BGEN gained $996.5 million in market cap (13 percent) on the week as it beat by a penny its fourth quarter and yearly estimates and announced more Avonex data (see Milestone Watch, below). IDPH, which also did not disappoint with its preliminary numbers, received a more modest uptick (see "Early Bird Earnings").