Biotech Values

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JUNE 5, 2006 Anadys May Be A "Two-Or Three-Bagger"

Mara Der Hovanesian
INSIDE WALL STREET
Anadys May Be A "Two-Or Three-Bagger"

By Mara Der Hovanesian


Anadys Pharmaceuticals (ANDS ) (ANDS) is not a stock for people who like to sleep easy. It soared 43% in the past year, to a peak of 16.60 in March. Since then, it has slumped to 9.46 -- and is down 8.4% so far this year. Still, that's pretty respectable in a terrible year for biotechs. What's more, some analysts think Anadys' drubbing has been overdone, and they're betting on a rebound. By summer's end, they expect the San Diego company to report favorable results from early trials of an oral drug for chronic hepatitis C virus and perhaps other diseases such as hepatitis B. Anadys has a global partnership with Novartis (NVS ) for the Swiss giant to develop, manufacture, and sell the drug, which could make waves in the $3 billion hepatitis C market. "This is a very good company with very good science," says Eric Schmidt of Cowen. "If those data are as good as we hope, the stock might be a two- or three-bagger." Getting there is likely to be a nail-biter. Schmidt expects more losses like those in the first quarter, when the company bled $5.8 million (vs. $8.4 million for first quarter of 2005). Soham Pandya of Susquehanna Financial Group rates the stock a "buy." He argues that "earnings are not material" because Anadys will "incur operating losses as it funds R&D." It has a strong pipeline of new drugs, with about 45 issued patents and 92 pending worldwide.

http://www.businessweek.com/magazine/content/06_23/b3987121.htm?campaign_id=search