Bio-Pharma Movers For Monday, July 9
Shares of Amarin (AMRN) closed slightly down on Friday, at $15.12, down $0.16 (1.05%). Shares have been trading between $5.99 and $15.60 during the past 52 weeks, and are poised to trade higher as the company draws closer to an FDA approval decision for its prescription fish-oil AMR101 on July 26th, 2012, which I believe the FDA will approve.
AMR101 is an investigational ultra-pure omega-3 fatty acid in a capsule, comprising not less than 96% icosapent ethyl (ethyl-EPA) in a capsule. Amarin is developing AMR101 for the potential treatment of patients with very high triglyceride levels and high triglyceride levels, or hypertriglyceridemia. Triglycerides are fats in the blood. Amarin's cardiovascular strategy leverages our extensive knowledge and experience in lipid science and the potential therapeutic benefits of polyunsaturated fatty acids in cardiovascular disease.
We can expect to see volatility with the Amarin shares to continue, as shorts churn out their shares, but I still strongly feel that the share price should be approaching $18 as we near the July 26th approval date. The chart also looks very bullish on Amarin, as I remarked in a prior article.
As I correctly predicted on July 6th, shares of Antares Pharma (ATRS)closed Friday's trading session at $4.26, up $0.41 (10.65%), on what appeared to be short covers by warrant holders who had a good deal of their warrants expire this past Friday. It is possible we might be hearing some news on a partnership deal for Nestragel soon, so this might be another reason shares are rallying here. News of a strong partnership deal for the product would likely see the Antares shares rally even harder, possibly touching $7 a share, depending on the exact details of such a deal.
I strongly feel that if the stock price breaks over $4.50 a share on heavy volume, then the stock will be 'off to the races'. However, if shares fail to hold their current level, a move back to $4 a share will be likely. My year end target price opinion for Antares is between $7 and $12 a share. $12 seems a bit unlikely at this point, unless Antares is bought out, which is possible at the end of this year. Pfizer (PFE) would be the likely buyer of Antares, not Teva (TEVA) as many have speculated. Pfizer has several former employees working for Antares, notwithstanding a secretive partnership deal for an unknown drug which I believe is a fast melt tablet, or possibly an Advil gel, and not any new gel formulation, as Antares sold its gel division to Ferring in 2007. Under that agreement, Antares maintains its rights to Nestragel and an Advil gel they already formulated. Antares cannot formulate new gels as Ferring now owns the rights to engage in new gel formulations.
Regarding Teva, it seems to me the company simply does not have the cash on hand to engage a fair offer for Antares moving forward, which I believe would be around $1.5B, considering the market potential of the company's products. Granted, Teva can always take out a loan to engage in such an acquisition, but I do not see this as a likely scenario.
I also strongly feel the best result for Antares shareholders would be that the company is not bought out anytime soon, as it's my opinion the stock price could see a price of over $20 a share in 3 years, and $50 in 5 years, if not higher.
Obagi Medical devices (OMPI) is still on my buyout watch list, asacquisition talks continue to persist with this company.
It was revealed last week that Avon (AVP) filed a form 8k in regards to taking out a line of credit for up to $750 million dollars, with access to $500 million immediately. As referenced in the 8k, Santander Investment Securities Inc., and Goldman Sachs Bank USA are 2 creditors listed. This tells me this is simply not a loan to pay down company debt, but more likely a loan for Avon to acquire another company, because both banks frequently underwrite acquisitions.
The $500 million number would be closer in line to what Obagi would be acquired for - 19 to 23 share, or $350M to $450M, at least this is what I have been hearing.
Many people do not see Avon as a potential buyer of Obagi, but I do because Avon badly needs to reinvent itself. Revenues have been flat with the company, and its business model is stale. Obagi's skin products are hot right now, mainly through word of mouth. While many point out that Obagi's products are sold through dermatologists, this could easily change and be offered via "The Avon Lady" - word of mouth. Obviously I am speculating here, and until a deal is done, none of us really know for certain. However, I think it is a good bet that an offer for Obagi will be made public very soon, perhaps even this week.
By Scott Matusow
Source: Seekingalpha.com
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