The Zacks Analyst Blog Highlights:Elan, Biogen Idec, Cytokinetics, QLT and Medtronic
CHICAGO, April 4, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Elan Corporation plc (NYSE: ELN), Biogen Idec (Nasdaq: BIIB), Cytokinetics Inc. (Nasdaq: CYTK), QLT Inc. (Nasdaq: QLTI) and Medtronic, Inc. (NYSE: MDT).
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Here are highlights from Wednesday's Analyst Blog:
Elan Sells Off Tysabri Stake
Elan Corporation plc (NYSE: ELN) recently closed its Tysabri (natalizumab) collaboration transaction with Biogen Idec (Nasdaq: BIIB). As a result, Biogen gained full strategic, commercial and operational control over the multiple sclerosis drug.
The transaction was initially announced in Feb 2013. As per the terms of the transaction Biogen made an upfront payment of $3.25 billion to Elan. Elan stated that it will invest a portion of the amount in different business assets. The company intends to refinance its outstanding debt through a share repurchase program by utilizing $1 billion of the upfront proceeds.
Elan is also eligible to receive a royalty payment of 12% on worldwide net sales of Tysabri (for all indications) for the first year. After the first year, Elan will receive a royalty of 18% on up to $2 billion of global net sales of Tysabri and 25% thereafter. Tysabri sales came in at $1.6 billion in 2012.
We note that last month encouraging data was announced on Tysabri. Data showed that Tysabri treatment resulted in lower rate of first relapse compared to other multiple sclerosis drugs.
We believe that the loss of Tysabri is huge setback at to Elan, since the product was its primary source of revenue. We expect Elan to actively pursue in-licensing deals or acquisitions to boost its product portfolio.
Elan, a biotechnology company, currently carries a Zacks Rank #5 (Strong Sell). Currently, well-placed biotech stocks include Cytokinetics Inc. (Nasdaq: CYTK) and QLT Inc. (Nasdaq: QLTI). Both the stocks carry a Zacks Rank #1 (Strong Buy). Biogen also carries a Zacks Rank #1 (Strong Buy).
FDA Clears Affinity, Boosting Medtronic
The recent US Food and Drug Administration ("FDA") 510(k) clearance for Affinity Fusion oxygenation system has enhanced the structural heart business of medical devices major Medtronic, Inc. (NYSE: MDT). The company also announced the first US clinical use of this new oxygenation system. Notably, last September, the company gained CE Mark for this system in Europe.
According to Medtronic, this new system, which combines several advanced features, oxygenates and removes carbon dioxide from blood during several open-heart surgical procedures. The company claims that these new features potentially reduce the risk of stroke, preventing the entry of air bubbles in blood during the surgery procedure. According to the company, this system can be helpful for hospitals, which are focusing on implementation of patient blood management programs and other initiatives.
With a number of heart patients undergoing cardiac surgery annually, Medtronic remains hopeful about the greater adoption of this oxygenation system among physicians and hospitals. The company encouragingly noted that, this year, there would be about 1 million cases of cardiopulmonary bypass worldwide. The process has already included the collaboration between the company and more than 500 perfusionists globally.
Medtronic's consistent expansion of its portfolio via approvals in the domestic and international market is encouraging. With the FDA approval for Affinity Fusion oxygenation system, the company extended its structural heart portfolio. Medtronic's focus on the structural heart business is likely to deliver positive results, as substantial adoption of newer products should leverage the top line.
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