KOSP - Headed lower for a text of that green line on the weekly chart? Probably slightly below 37. Nearly zero debt.
Kos Falls on Merck Niaspan Threat Thursday December 15, 3:50 pm ET By Wallace Witkowski, AP Business Writer Kos Pharmaceuticals Shares Fall on Merck Niaspan Threat, Slowing Prescription Growth
NEW YORK (AP) -- Drug maker Merck & Co.'s new strategy, announced Thursday, to normalize cholesterol sets it on a course to overwhelm Kos Pharmaceuticals Inc., whose lead drug Niaspan raises levels of high density lipids, or "good" cholesterol.
Kos shares fell $18.14, or 26 percent, to $51.79 in afternoon trading at more than 27 times their average volume. Shares have risen from a 52-week low of $30.30 in March to a 52-week high of $78.40 in August.
In a presentation on how Merck plans to regain market leadership after the debacle of arthritis drug Vioxx and the pending loss of patent protection of cholesterol drug Zocor, the Whitehorse Station, N.J., company said it will lead an effort to develop a pair of combination products that raises "good" cholesterol while lowering "bad" cholesterol, and file an application with the Food and Drug Administration in 2007. One product would combine extended-release niacin with an anti-inflammatory drug and the other would combine these compounds with Zocor. Merck shares rose 50 cents to $29.70 on the New York Stock Exchange.
"This is a direct competitive threat and quite a serious one," said SG Cowen analyst Ian Sanderson in an interview. Sanderson speculated that Merck could have a competing product on the market by 2008. However, the analyst said Kos may have recourse to sue Merck over patents for extended-release niacin, the active ingredient in Niaspan, when the company goes to file with the FDA.
On Nov. 22, shares of Kos jumped 6 percent when analysts speculated that a Niaspan competitor from Pfizer Inc. would be delayed from release until 2009.
A slowing down in Niaspan sales for November also did not help Kos' share price.
In a research note, Natexis analyst Timothy Chiang said an analysis of trends showed Niaspan new prescriptions grew by 4.6 percent, and total prescriptions rose 8.8 percent in November, slowing down from a 7.6 percent growth in new prescriptions and a 10.3 percent growth in total prescriptions in October. New and total prescriptions have steadily fallen from last November's growth rates of 27.5 percent and 22.4 percent, respectively.
Niaspan accounted for $114.3 million of Kos' $205.1 million in third-quarter revenue.
Chiang maintained his fair value estimate of the stock of $68.90, pointing to a 24 percent ramp up in price over the past month and a doubling of the price in the year to date.
Sanderson reasoned that slowing sales could also point to a general slowing in the cholesterol drug market, as some patients may be holding out for discounts under the Medicare prescription drug benefits set to start on Jan. 1. He expects the cholesterol drug market will reaccelerate in 2006.
SGTL - Has it bottomed? SigmaTel, Inc. Earnings Conference Call (Q4 2005) Scheduled to start Tue, Jan 31, 2006, 4:30 pm Eastern
SigmaTel (nasdaq: SGTL - news - people ) designs analog and mixed-signal integrated circuits for a variety of consumer electronics, including the iPod Shuffle from Apple Computer (nasdaq: AAPL - news - people ). SigmaTel started 2005 well, guiding analysts’ estimates higher, but by midyear a reversal of fortunes led to weaker-than-expected results and downgrades. Further guidance reductions followed in October, pushing the stock below $13, 71% off its 2005 high. The company has no debt, plenty of cash and good cash flow.
NEW YORK (AP) -- SigmaTel Inc. shares plunged Wednesday after a Thomas Weisel Partners analyst said the chip maker's fourth-quarter results could fall near the low end of estimates. The company, whose sound processors are used in cell phones and media players, is facing weak manufacturer demand as a flash-memory shortage continues hurting the industry, analyst Jason Pflaum said in a report. He added that increased competition and pressure from Apple Computer Inc.'s popular iPod on its customers are weighing on SigmaTel's results.
Based on his updates with customers, suppliers and competitors, Pflaum said SigmaTel's quarterly revenue is likely headed for the lower end of its internal forecast for $81 million to $91 million.
Pflaum cut SigmaTel to "Peer Perform" from "Outperform," and slashed his earnings estimates, significantly lowering 2006 projections. SigmaTel shares sank $1.86, or 12 percent, to $13.82 on the Nasdaq.
While the company has shifted more of its products to the low-end value segment and could see strong growth next year, that corner of the market will be crowded with a number of new competitors, Pflaum also said.
He said SigmaTel is shipping modest volumes of its new 3600 chip, but probably will not gain broader penetration until mid- to late 2006. Significant adoption of its FM tuner product in 2006 is unlikely, the analyst added.
Pflaum now expects SigmaTel's fourth-quarter earnings at 14 cents per share on $81.5 million in revenue, compared with the company's forecast for income of 14 cents to 20 cents. Earlier, the analyst had pegged the company to earn a higher 17 cents per share for the quarter, with sales of $86.5 million.
For the year, Pflaum scaled back his estimate by 2 cents to $1.31 per share. For 2006, however, he cut his forecast by 15 cents to 70 cents per share.
Analysts surveyed by Thomson Financial currently predict quarterly earnings of 16 cents per share on $85.7 million in revenue. Profit in 2005 is seen at $1.32 per share and 90 cents per share in 2006.
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