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Repligen May Hit "A Home Run"


Shares of Biotech Repligen (RGEN) popped 25%, to 3, on July 31 when a federal judge ruled that its lawsuit seeking royalties from ImClone Systems (IMCL) could proceed. The suit claims that ImClone is using Repligen's patented technology (licensed from Massachusetts Institute of Technology) to enhance production of ImClone's colon-cancer drug Erbitux. Eric Ende of Merrill Lynch (MER) in a report says ImClone could end up paying 1% to 2% of Erbitux sales, which Repligen estimates at $1 billion. But for Elemer Piros of Rodman & Renshaw, Repligen's allure is in its products already on the market, plus others in clinical trials, such as secretin for schizophrenia, and uridine, in Phase 2 trials, for bipolar depression. Repligen's Protein A, to boost antibodies, and SecreFlo, to diagnose pancreatitis and gastrinoma, a rare cancer, had sales of $12.5 million in the year ended Mar. 31, 2006. Stanley Medical Research, which funds work on schizophrenia and bipolar disorder, is conducting the studies. Piros rates the stock, now at 2.62, "outperform/speculative," with a 12-month target of 5. He sees 2007 sales of $14 million. Soros Fund Management and Vanguard Group are among the big investors. Private investor Ronald Chez of Ronald L. Chez Inc. which owns shares, predicts Repligen "will hit a home run" with its new products.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial


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