First Albany Ups Supergen to Buy

First Albany upgraded Supergen (SUPG

) to buy.

Analyst Lucy Lu says she's upgrading from neutral as MGI Pharmaceuticals licensed the worldwide rights to Supergen's anti-cancer therapeutic Dacogen. She notes MGI will make a $40 million equity investment in Supergen and pay up to $45 million in regulatory milestones and royalties of 20% to 30% based on Dacogen sales.

Lu says MGI is the ideal partner for Dacogen; she cites its sales force and the successful commercialization of Aloxi, an oncology supportive care product. With MGI on board, Lu sees Dacogen becoming a more significant part of Supergen's valuation. She cut the $1.62 2004 loss estimate to a $1.57 loss, and trimmed the $1.03 2005 loss to a 78-cent loss.