Sector Snap: Morgan Stanley on biotech drugmakers

Morgan Stanley analyst says Gilead Sciences is his top pick among major biotech drugmakers

Associated Press

NEW YORK (AP) -- A Morgan Stanley analyst said Friday that he believes shares of biotech drugmakers Gilead Sciences, Biogen Idec and Celgene will do well in 2012 because all three companies are poised to report encouraging results for important drug candidates.

Analyst Marshall Urist began coverage of the sector with "Overweight" ratings on Gilead Sciences Inc., his top choice in the sector, as well as Biogen Idec Inc. and Celgene Corp. Later this year U.S. and European regulators will make decisions on whether to approve Gilead's "Quad" pill, an HIV and AIDS treatment that combines four different medications. The company is also running late-stage clinical trials of GS-7977, which is seen as a promising treatment for the hepatitis C virus.

In January the Foster City, Calif., company bought Pharmasset Inc., which developed the hepatitis drug, for $11.1 billion. The company is hoping to get marketing approval for GS-7977 in 2014.

Biogen Idec said its multiple sclerosis pill BG-12 met its goals in two late-stage clinical trials. The Weston, Mass., company plans to file for approval with the Food and Drug Administration in the first half of 2012. In the studies, BG-12 was more effective than the most-prescribed MS drug, Teva Pharmaceutical Industries Ltd.'s Copaxone. BG-12 may have an advantage over Copaxone because it is a pill and Copaxone is given by injection.

Urist said Celgene shares could trade higher if the European Medicines Agency approves its cancer drug Revlimid as a primary treatment for multiple myeloma, a cancer that affects plasma cells in bone marrow. The Summit, N.J., company will also report late-stage trial results for its cancer drug Abraxane and drug candidate apremilast.

The analyst kept a rating of "Equal weight" on shares of Amgen Inc., the largest biotechnology company. Urist said Amgen shares have done well since November, when the company announced a plan to buy back $5 billion in stock. In December Amgen raised its quarterly dividend, and Urist said the company does not have any major trial results due this year.

Shares of Gilead fell 4 cents to $53.69 in afternoon trading. Biogen stock shed 11 cents to $117.67 and shares of Celgene rose 2 cents to $72.02. Amgen shares picked up 33 cents to $67.17.

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