* Shares rise in cancer companies seen as takeover targets
* Oncogenex shares up 17.1 pct
* Poniard shares up 10.9 pct (Adds Medivation analyst comment, ASCO, updates shares)
By Bill Berkrot
NEW YORK, - Shares of Oncogenex Pharmaceuticals Inc and Poniard Pharmaceuticals Incjumped on Friday as investors bet they could become takeover targets a day after Johnson & Johnson said it would buy another small biotechnology company.
Healthcare conglomerate J&J announced late Thursday that it planned to acquire cancer drug developer Cougar Biotechnology Inc for about $930 million, setting off further speculation that large drugmakers were trolling for biotech bargains, especially in oncology.
Oncogenex, which is developing a promising prostate cancer treatment, saw its shares climb as much as 23 percent to a multiyear high. Shares of Poniard, which is developing a platinum base chemotherapy that appears to be less toxic than currently available similar treatments, rose as much as 18 percent early on Friday.
"That has a lot to do with Cougar," said Matthew Kaplan, an analyst with Toronto-based Dundee Securities Corp, adding that Oncogenex has recently released impressive data from a mid-stage study of its prostate cancer drug.
Shares of Cougar competitor Medivation Inc also saw a double-digit percentage gain Friday.
"We believe J&J's acquisition of Cougar will bring the spotlight on MDV3100, which will enter Phase III studies in hormone-refractory prostate cancer shortly," Wedbush analyst Kimberly Lee said of Medivation's experimental cancer drug.
Cash strapped biotechs are hoping to grab a share of the spotlight and the attention of potential partners when they unveil data next week in Orlando at the American Society of Clinical Oncology (ASCO) meeting, the year's most important cancer meeting.
Rodman & Renshaw analyst Simos Simeonidis expects that big pharmaceutical buyout activity in small- and mid-cap biotechs is far from over and mentioned both Poniard and Oncogenex as potential targets.
Given the modest 16 percent premium J&J has offered for Cougar, Simeonidis believes other suitors could emerge for that company as well.
"I think Poniard is on a lot of big pharma radar screens," Simeonidis said, adding that he is surprised that Oncogenex has been flying under the radar for so long.
He noted the impressive survival benefit seen in a Phase II prostate cancer trial from a summary of data released last week. Full data from the Oncogenex study will be presented at ASCO.
"The Oncogenex drug is ahead of Cougar," Simeonidis said. "Oncogenex has shown overall survival benefit. Cougar has only shown a PSA response, but no survival benefit."
He called the 10-month median overall survival benefit over standard chemotherapy seen in the Phase II Oncogenex study "a very significant difference."
Canaccord Adams analyst George Farmer said J&J's willingness to snap up Cougar ahead of Phase III data would likely spur investor interest in a lot of other small oncology companies.
Oncogenex shares were up $2.85, or 17.1 percent, to $19.50 in midday trade on Nasdaq after climbing as high as $20.46 earlier in the day. Poniard shares were up 40 cents, or 10.9 percent, to $4.07 after rising as high as $4.34 earlier, while Medivation shares were up $2.75, or 13 percent, to $23.92 also on Nasdaq.
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