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A Super Outlook For SuperGen


Biotechs have not fared well in this fickle market. SuperGen (SUPG), a small outfit focused on therapies for solid tumors, hematological malignancies, and other blood disorders, has slumped from 5.69 in March to 3.31 on Aug. 23. Yet some pros remain bullish. Elemer Piros of Rodman & Renshaw sees it at 24 in 12 months. Vinny Jindal of ThinkEquity Partners has a more modest target of 8. Behind their optimism: SuperGen's Food & Drug Administration-approved Dacogen drug for myelodysplastic syndrome, sold in the U.S. by MGI Pharma (MOGN). Jindal figures Dacogen sales will be $25 million this year, rising to $250 million in 2010, driving royalties from $6 million to SuperGen to $87 million in 2010. Piros forecasts higher sales, hitting $197 million in 2007 and $673 million in 2011. But before then, he expects MGI will buy SuperGen to avoid shelling out more royalties. SuperGen has already received $20 million from MGI and was sitting on a $50 million pile of cash in the second quarter. Piros expects SuperGen to be cash-flow positive from 2007's third quarter. Despite the gap between the analysts' forecasts, they agree on one thing: The stock will be higher in a year.

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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