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Jason Chew submits: Historically, the Big Pharma business model has been that of a fully integrated pharmaceutical company, complete with basic research and development, clinical trials, sales and marketing, focused on the development of blockbuster drugs. This model has recently been roundly criticized.A research article issued in January from Morgan Stanley (MS) titled "Pharmaceuticals: Exit Research and Create Value" created a stir when it called for Big Pharma to toss out all small molecule research. A group of MDs, PhDs, MBAs, and CFAs calculated that reinvesting internal research to in-licensing would result in a three-fold increase in returns. This process, they said, would even triple the number of new drugs reaching the market each year. Research and Development, Morgan Stanley said, should be replaced by Search and Development. The core competency of Big Phama should shift from in-house research to late stage development and commercialization.Complete Story »

The Pragmatic Capitalist submits: In these times of high debt and deleveraging it’s unusual to come across companies that aren’t in over their head. CNBC recently ran a piece listing some of the largest firms in the world who have immaculate balance sheets – NO DEBT. The list follows:Complete Story »

The Pragmatic Capitalist submits: In these times of high debt and deleveraging it’s unusual to come across companies that aren’t in over their head. CNBC recently ran a piece listing some of the largest firms in the world who have immaculate balance sheets – NO DEBT. The list follows:Complete Story »

Joe Kunkle submits:It is often said that you should never invest in a stock in hopes of a takeover, but I find that to be fundamentally wrong, as your rationale for picking a potential takeover target should use much of the same analysis being used by prospective buyers, whether it be publicly traded companies, private equity, or other interested buyers.I have always had a great eye for takeover targets, putting aside the daily market chatter and rumors that amount to nothing 99% of the time. Combining a very basic approach in fundamental analysis (valuation metrics such as forward P/E, price to cash, price to cash flow, and EV/EBITDA) along with the current trends in recent M&A deals can lead to great stocks, whether eventually acquired or not, that will outperform the broader market.Complete Story »

The Burrill Report submits: By Marie Daghlian Life sciences dealmaking and financing heated up during the second week of June. Spanish healthcare company Grifols (GIFLF.PK) signed an agreement to acquire Talecris Biotherapeutics (TLCR) for a combination of cash and newly-issued Grifols non-voting shares for an aggregate value of approximately $3.4 billion ($4 billion including net debt). Grifols is a leading global provider of plasma protein therapeutics while Talecris is a major provider of plasma products in the United States. The combination will create an international company with complementary geographic footprints and products, and increased manufacturing scale. Under the terms of their agreement, Grifols will acquire all of the common stock of Talecris for $19 in cash and 0.641 newly-issued non-voting Grifols' shares for each Talecris share, representing an implied price of $26.16 per Talecris share. That represents a premium of 53 percent to the average closing price of Talecris common stock over the last 30 days. The total implied offer value for Talecris is $3.4 billion (euro 2.8 billion) and the resulting transaction value, including net debt, is approximately $4 billion (euro 3.3 billion). The deal could mean a windfall for private equity firm Cerebrus as it moves to stem losses from its other investments. Cerebrus, along with Amersand Ventures, bought Talecris in 2004, turned the company profitable, and sold some of its shares in an IPO in October 2009. According to Reuters Breakingviews, Cerebrus could make as much as a twentyfold return on its investment. Forest Laboratories (FRX) entered into a license agreement with North Carolina-based TransTech Pharma for the development and commercialization of TransTech’s functionally liver-selective glucokinase activators, a novel class of glucose-lowering small molecules for the treatment of diabetes. Under the terms of their license agreement, Forest will pay TransTech Pharma an upfront fee of $50 million. TransTech Pharma is also eligible to receive up to $1.1 billion in upfront and milestone payments for the successful development and commercialization of the glucokinase activator compounds. The portfolio licensed by Forest consists of a lead compound, TTP399, which has completed phase 1 studies and other compounds in early stage and pre-clinical stages of development. The relatively large upfront payment for an early stage compound indicates a growing interest in new treatments for diabetes, a growing worldwide problem. GlaxoSmithKline (GSK) acquired Laboratorios Phoenix, a leading branded generics drugmaker in Argentina, a deal that extends GSK’s pharmaceutical portfolio in Latin America. Phoenix has a broad based portfolio covering the cardiology, gastroenterology, neuroscience, metabolic, urology and analgesic therapy areas. Besides the extensive pipeline, GSK gains development capability in Argentina. Norwegian biotech OptiNose turned to private equity instead of venture capitalists for its latest round of cash. Avista Capital Partners invested $48.5 million to advance OptiNose’s nasal drug delivery technology into late stage trials. The innovative technology enables administration of drugs deep in the nasal cavity, enabling the treatment of both local and systemic disease. In conjunction with the investment, OptiNose is reincorporating in the United States and moving its headquarters from Oslo, Norway to Yardley, Pennsylvania. Madison, Wisconsin-based Virent Energy Systems closed a $46.4 million third round of funding in which Shell and Cargill deepened their commitment to Virent’s breakthrough technology platform that converts plant sugars into sustainable advanced fuels for car, truck, train, and air transportation. This new round of funding will advance Virents efforts to scale its unique process, a patented catalytic biorefinery platform, to commercial production volumes. FINANCINGS FOR THE WEEK ENDING JUNE 11, 2010Complete Story »

The Burrill Report submits: The U.S. Food and Drug Administration sent a warning letter to Pfizer (PFE) about overdosing of at least 13 children in a clinical trial of its antipsychotic drug Geodon, Reuters reported. The FDA told Pfizer that it failed to ensure proper monitoring of the trial in which several children given overdoses experienced tremors, restless legs and other complications. The company is seeking to market the drug to children with bipolar disorder. While the study in question ended in 2007, the FDA is concerned Pfizer has not done enough to ensure the problem does not happen again. In its letter, the FDA said the company did not properly monitor the study and "as a result of inadequate monitoring, widespread overdosing of study subjects at multiple study sites was neither detected nor corrected in a timely manner.” Pfizer said it is committed to addressing the concerns. It says that many items cited in the letter occurred as long as four years ago. Pfizer has instituted several new measures designed to improve monitoring and execution of clinical trials, it said. Phenomix said Forest Laboratories (FRX), which was collaborating with the San Diego-based biopharmaceutical in the development of the experimental diabetes drug dutogliptin, said it was ending its development and commercialization agreement because of “business reasons.” The decision by Forest comes in the wake of positive top-line results from a six-month late-stage trial comparing dutogliptin 400mg and 200mg once daily as monotherapy versus placebo for the treatment of patients with type 2 diabetes mellitus. The deal announced in October 2008 included an upfront payment to Phenomix of $75 million and milestone payments that could have pushed the total to $340 million. Complete Story »

Zacks.com submits:
The US Food and Drug Administration's [FDA] Pulmonary-Allergy Drugs Advisory Committee will be meeting on Apr 7 to review the efficacy and safety of Forest Labs' (FRX) Daxas (roflumilast), which is currently under review for the treatment of chronic obstructive pulmonary disease [COPD].Documents released by the FDA indicate that there could be some concerns regarding the efficacy of the drug. The FDA noted that while Daxas achieved statistical significance in the clinical studies, the improvements were modest.Complete Story »

Forest Labs (FRX) is among the stock picks in this weekend's Barron's. Staff writer Jay Palmer does an excellent job laying out the bull case for FRX shares in Forest Lab's Prescription for Success. An unappreciated pipeline plus a huge cash horde add up to a winning combination. He isn't the first to think so.Forest Labs has been a Lonely Value favorite for exactly these reasons. My first Forest post (See the Forest for its Cash) appeared in June of 2009. At the time, the company had $3 billion in cash and securities (zero debt) against a $7.4 billion market value. Fully 40% of Forest's market value was in cash and marketable securities. In addition, FRX was churning out over $1 billion a year in free cash flow. It still does.Complete Story »

Forest Laboratories, Inc. (FRX)
F3Q10 Earnings Call
January 19, 2010 10:00 am ETComplete Story »

Equitymaster submits: After a weak opening, strong buying activity in the index heavyweights propelled the indices to stay well above the dotted line throughout the day. Although profit booking was witnessed at higher levels, the indices managed to hold on to their gains and close well into the positive. While the BSE Sensex closed higher by around 87 points (up 0.5%), the NSE Nifty gained around 23 points (up 0.4%). Midcap and smallcap stocks also registered gains of 0.6% each. While banking and auto stocks led the pack of gainers, healthcare and metals stocks were at the receiving end. As regards global markets, Asian indices closed mixed today while European indices have also opened on a mixed note. The rupee was trading at Rs 45.66 to the dollar at the time of writing. Complete Story »