Inside Wall Street
CEPHALON'S BIG-NAME FANS
Cephalon (CEPH) President and CEO Frank Baldino complains that the company is getting no respect on the Street--even though it's the "brain specialist" among biotechs. The stock has stayed at 6 to 8 this year, closing at 67/8 on Apr. 5.
But things may perk up quick, says a Boston money manager who has started buying. He says that one of Cephalon's six strategic partners--which include Schering-Plough, Bristol-Myers Squibb, and SmithKline Beecham--will make a bid before long. "These research partners hold Cephalon in high esteem," says one fund manager. In Cephalon's pipeline are therapies for neurological disorders such as Alzheimer's disease, narcolepsy, and stroke.
Cephalon expects results soon from just-completed clinical tests on Myotrophin, a potential treatment for Lou Gehrig's disease. Cephalon is developing the drug in conjunction with Chiron. Chiron has acquired a 4.4% stake in Cephalon. Some investors are excited about another Cephalon drug currently marketed in France: Modafinil, for treating narcolepsy, a sleep disorder. They think increasing European sales of Modafinil alone could make Cephalon profitable.
SmithKline's research tie-in with Cephalon is in calpain inhibitors--to deal with the neurological consequences of strokes. With Schering-Plough, Cephalon is developing a treatment for Alzheimer's. And Bristol-Myers is co-promoting a nasal spray for migraines. What does Baldino think of speculation that one of his strategic partners may bid for Cephalon? "Our partners know us well and know our value, so I wouldn't be surprised if some of them were interested," he says.BY GENE G. MARCIAL