The PropThink Weekly Recap

  • PropThink’s first story of the week turned into a whopping 24% gainer by Friday’s close. We iterated our enthusiasm for Pharmacyclics (PCYC) on Monday, following which, the stock took off like a NASA rocket when Ibrutinib received Breakthrough Therapy Designation. It’s the first oncology company to receive the FDA’s new acceleration, a major milestone for PCYC and indication of Ibrutinib’s potential.

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  • Fresenius, a national dialysis provider, paused expansion of a pilot program for Affymax’s Omontys. AFFY plummeted at the open on Thursday, but regained its losses by the end of the week. We think the stock is dead money for now, but overall, the Fresenius update was inconclusive. We’re still hesitant after AFFY missed sales estimates last week (as we predicted, the stock continued its downward move). Investors should know more about the possible Fresenius deal within weeks.
  • This story has come home to roost. ResMed was a long-ago short for PropThink that never panned out. But now, with RMD trading at an excessive 19.4x earnings (peers around12x) and considerable macro forces at work, the stock is due for a major correction.
  • Mr. Deryugin, a long-time fan of Illumina, put together an assessment of the LIFE takeover chatter. His conclusion? An acquisition of Life Technologies may make a lot of sense for a few purported suitors, but the company also has solid stand-alone potential.
  • ACHN was a major win for PropThink late in the summer of 2012, climbing from $6 to $11 in just a few months. And although we’ve not covered it as closely, Achillion continues to advance its Hepatitis C pipeline. The number of acquisitions in the Hepatitis C space in recent years suggest that Achillion could become a target for large pharma.
  • Raptor Pharma is still an interest for PropThink following its recent downtrend. Procysbi’s potential approval should generate momentum ahead of Raptor’s April 30 PDUFA. Support at $4.80 didn’t hold up on Friday, suggesting further downside from here. A solid reversal is likely in the next two weeks, and we’re watching closely.