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SuperGen Is Looking Healthier


Biotechs are gaining traction this year as fund managers discover many with viable products that are still underpriced. One is SuperGen (SUPG) (SUPG), whose drugs target solid tumors, blood disorders, and hematological malignancies. Now trading at 4.78, SuperGen has inked a pact with Johnson & Johnson (JNJ) to market its Food & Drug Administration-approved drug Dacogen--for myelodysplastic blood disorder syndrome--outside North America. To start, J&J plans to focus on Europe and Japan. In the U.S., Dacogen is marketed by MGI Pharma (MOGN), which owns 9% of SuperGen. Dacogen's U.S. 2006 sales totaled $36 million, beating even the company's estimate of $25 million. For 2007, Dacogen sales will hit $120 million, figures Elemer Piros of Rodman & Renshaw, who rates the stock a buy, with a 12-month target of 24. SuperGen's own estimate is a more modest $100 million. Its royalties from MGI will grow as sales expand, so Piros expects MGI to buy SuperGen at some point. Vinny Jindal of ThinkEquity Partners also rates SuperGen a buy, but with a much lower 12-month target of 8. He expects to see an uptick in Dacogen sales in the first quarter.

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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