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MGI Pharma Upgraded by Merrill Lynch
Monday May 9, 4:06 pm ET
MGI Pharma Upgraded by Merrill Lynch on Hopeful Data for Dacogen Treatment for MDS


NEW YORK (AP) -- MGI Pharma Inc. has a more than 70 percent chance of receiving Food and Drug Administration approval in September for its Dacogen treatment for myelodysplastic syndrome based on recently released data, Merrill Lynch said Monday in a report upgrading the biopharmaceutical company's stock.
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The investment firm upgraded MGI to a "Buy" from "Neutral" in a research note with a price target of $32.

Myelodysplastic syndrome, or MDS, covers a group of diseases where the bone marrow produces too few red blood cells, white blood cells and often platelets, resulting in low blood cell concentrations and raising the risk of leukemia. About 32,000 new cases of MDS are diagnosed in the United States each year. The FDA is slated to make a decision on MGI's Dacogen application by Sept. 1.

Dacogen would compete with Pharmion Corp.'s Vidaza, which was launched in July. Pharmion reported first-quarter Vidaza sales of $27.5 million out of $51.7 million in total sales.

Merrill Lynch analyst Eric J. Ende said in a research note that 22 percent of patients responded to Dacogen in clinical trials, but a more stringent analysis of data yielded a 17 percent response rate, similar to Vidaza's clinical studies used for approval.

However, Ende said that Dacogen could gain an advantage over Vidaza in the long term as researchers try to identify the most optimal dose of the drug. In other Dacogen clinical trials, researchers have achieved response rates of up to 43 percent using alternative dosing regimens, with some physicians reporting that response rates could be approaching 80 percent for some regimens.

"These data support the idea that Dacogen dosing regimens can be improved over the registration trial protocol and may provide enhanced efficacy over currently available treatments including Vidaza," Ende said in a note to investors.

Merrill Lynch raised its earnings per share estimates to $1.50 from $1.43 for 2006 and to $1.31 from $1.27 for 2007, projecting that Dacogen will take 50 percent of the market two years after launch. Earnings estimates are based on raising estimated Dacogen revenue to $7 million from $5 million in 2005, to $56 million from $50 million in 2006, and to $125 million from $101 million in 2007.

Analysts surveyed by Thomson Financial expect earnings per share of 77 cents for 2005, $1.27 for 2006, and $1.60 for 2007.

In afternoon trading on the Nasdaq, MGI Pharma shares rose 96 cents, or 4.2 percent, to $23.90 and Pharmion shares fell 35 cents, or 1.5 percent, to $23.20.





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