Our screen process did not limit the scope to positive earnings, but we did use a minimum market valuation of $1 billion to avoid the smaller and even more speculative names in an already speculative sector.  The companies are all expected to rise 20% more and include the following stocks tied to biotech and the biohealth sectors: ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA); Dendreon Corporation (NASDAQ: DNDN); Gilead Sciences, Inc. (NASDAQ: GILD); Human Genome Sciences, Inc. (NASDAQ: HGSI); Illumina, Inc. (NASDAQ: ILMN); Incyte Corporation (NASDAQ: INCY); Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ); Life Technologies Corporation (NASDAQ: LIFE); and Theravance, Inc. (NASDAQ: THRX).

Unfortunately, some of these are biotech implosions where companies have run into problems. Others are pre-revenue and could be tomorrow’s drug giants in cancer and other indicated treatments.  Some may even be acquired.  We have included the current share price and recent price history, as well as based the implied upside upon the consensus price target objective from Thomson Reuters.  Recent fundamental data and color has been added on each if applicable.

There are also the ETF products via the iShares Nasdaq Biotechnology (NASDAQ: IBB) and the SPDR S&P Biotech (NYSE: XBI).  The iShares variation trades at $104.30 and its 52-week range is $83.96 to $110.02.  Gilead (and Pharmasset) would be the largest implied holding of the iShares ETF with almost 16% weighting combined.  The SPDR variation trades at $66.48 and its 52-week range is $47.01 to $75.17. The SPDR also only contains ARIAD (and Pharmasset) of the biotechs with the most implied upside below. 

ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) currently trades around $12.50, has a market cap of about $1.65 billion, and the Thomson Reuters consensus price target of $15.91 leaves an implied upside of about 27%.  Its 52-week trading range is $5.04 to $13.50 and 2011 has been a year where the company’s share price has come close to challenging the prior highs from 1999 to 2000. It is still pre-revenue for the most part and losses are expected to continue at least through 2012.  ARIAD is focused around oncology and its shares are up from a $10.42 per share offering of almost 25 million shares that raised nearly $250 million for the company.  This was one of the good secondary offerings that allows the company to raise development and commercialization funds without becoming dependent solely upon a single partner.

Dendreon Corporation (NASDAQ: DNDN) is another implosion story due to lower adoption rates of PROVENGE for prostate cancer, although some are hoping and expecting that the new reimbursement rates (and physician clarity) may help the company regain some of its lost footing.  At $7.58, the market cap is barely $1.1 billion and the $11.05 Thomson Reuters price target leaves an implied upside of over 45%.  To show just how bad this one has gone, the 52-week trading range is $6.46 to $43.96.

Also Read: Small Caps With 50% Upside in 2012

Gilead Sciences, Inc. (NASDAQ: GILD) recently traded at $39.88 and it is one of the biotech giants with a market cap of about $30 billion. THe 52-week trading range is $34.45 to $43.49 and the Thomson Reuters consensus price target of $48.86 leaves an implied upside of 22.5%. The last time Gilead was above $50.00 was in early 2009.  Gilead is somewhat surprising to see on the list considering its controversial $11 billion acquisition of Pharmasset when that target acquisition is not expected to generate sales for at least another year.  The company has new HIV medication that is helping to boost the value but the company is diversifying to include more target markets.

For all practical purposes, ARIAD is in the pre-revenue stage of operations.  As far as the full details of the funding, the capital raise will allow ARIAD to “continue treatment and follow-up of patients in the pivotal PACE trial of its investigational pan BCR-ABL inhibitor, ponatinib, in patients with chronic myeloid leukemia (CML) or Philadelphia-positive acute lymphoblastic leukemia (Ph+ALL) and, subject to further patient follow-up and data analysis in this trial, to file for marketing approval of ponatinib in the United States and Europe in the middle of 2012.”

An additional note on the funding is tha the money will allow ARIAD to continue its efforts for the commercialization of ponatinib in the United States and Europe.  The new funds should also allow for additional clinical trials of ponatinib, including a Phase 3 clinical trial in newly diagnosed CML patients, clinical trials of ponatinib in Japan, completion of the Phase I/II trial of its investigational dual inhibitor of anaplastic lymphoma kinase and epidermal growth factor receptor called AP26113.  Another potentiality is the funding (dependent upon the outcome of the trials) of a pivotal trial of AP26113 in patients with non-small cell lung cancer.

J.P. Morgan Securities, Cowen & Co., and Jefferies are the joint book-running managers; co-managers are listed as BMO Capital Markets, Leerink Swann, Oppenheimer & Co., and also Rodman & Renshaw.  These underwriters will be granted a 30-day option to purchase up to an additional 3.225 million shares as an overallotment option. 

ARIAD shares are actually up 3.45% at $10.78 and the 52-week trading range is $4.45 to $13.50.  Usually shares fall on secondary offerings hurt stocks, but this one had already been discounted.  This $10.42 price is down from as high as $11.75 just as recently as last week.  Before the effects of the offering, ARIAD’s market capitalization is $1.4 billion.

If ARIAD shares remain higher like this, it is almost certain that the overallotment will be exercised by the underwriters.  If so, then the gross proceeds before underwriting fees will be more than $257 million in new capital raised.  As of September 30, 2011, the company had a mere $86.3 million in cash on the books and its total liabilities were $73.9 million.

JON C. OGG

It appears as though Wall Street favors Gilead Sciences, Inc. (NASDAQ: GILD) in the large cap biotech stocks over its peers with more than 18% implied upside.  Other smaller mid-cap biotechs with a high degree of expected upside were Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) of 32%, ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) of 50%, and Incyte Corporation (NASDAQ: INCY) of over 60%.

Here is the full report on expected upside on these and more than a dozen other large-cap and mid-cap biotech stocks.

Human Genome Sciences, Inc. (NASDAQ: HGSI) is up again, a day after buyout rumors have circulated for nearly a 100% premium.  We would caution that analysts still have close to the same price target on their own as the reported buyout price target.

Dendreon Corporation (NASDAQ: DNDN) is also still trying to get past its implosion after disappointing Provenge sales.  It has even gone as far as cutting its headcount.  Analysts still see big upside of well above 40% but the entire analyst bias is now very cautious.

Incyte Corporation (NASDAQ: INCY) had a very rough July to August period and that analyst upside may be phantom upside that has not yet adjusted for the price drops of the recent past.  We have an early December decision date from the FDA for its myelofibrosis treatment.

As far as how these all compares to the key ETFs, the following should be considered:

iShares Nasdaq Biotechnology (NASDAQ: IBB) up 0.5% at $96.50 and the 52-week range is $83.96 to $110.02. Total assets under management are approximately $1.26 billion.

SPDR S&P Biotech (NYSE: XBI) up 0.5% at $63.79 and the 52-week range is $54.71 to $75.86. Total assets under management are approximately $500 million.

Biotech HOLDRs (NYSE: BBH) are up 0.2% on extremely thin volume and the 52-week range is $88.01 to $114.92.  Total assets under management are approximately $240 million.

JON C. OGG

Amgen Inc. (NASDAQ: AMGN) Started as Outperform at BMO.
Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) Started as Outperform at BMO.
Biogen Idec Inc. (NASDAQ: BIIB) Started as Underperform at BMO.
Celgene Corporation (NASDAQ: CELG) Started as Outperform at BMO.
China Life Insurance (NYSE: LFC) Started as Underperform as Bear of the Day at Zacks.
Cisco Systems, Inc. (NASDAQ: CSCO) Raised to Buy at Auriga.
Darden Restaurants, Inc. (NYSE: DRI) Raised to Outperform at Wells Fargo.
Fusion-io Inc. (NYSE: FIO) Started as Sell at Merriman.
Global Payments Inc. (NYSE: GPN) Started as Buy at Citigroup.
Humana Inc. (NYSE: HUM) named value stock of the day at Zacks.
Lennar Corporation (NYSE: LEN) Started as Outperform at FBR.
Motorola Solutions, Inc. (NYSE: MSI) Raised to Outperform as Bull of the Day at Zacks.
The Talbots Inc. (NYSE: TLB) Raised to Neutral at Piper Jaffray.
Travelzoo Inc. (NASDAQ: TZOO) Cut to Market Perform at Morgan Keegan.

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JON C. OGG

Apple Inc. (NASDAQ: AAPL) is down 4.6% on heavy trading to $332.28, relative to a 52-week range of $190.25-$328.48. CEO Steve Jobs announced he would be returning to medical leave this weekend.

Ariad Pharmaceuticals (NASDAQ: ARIA) is up more than 33% to $7.00, relative toa 52-week range of $2.06-$5.58. The company recently reported that its treatment for metastatic soft tissue and bone sarcomas was progressing well.

Datalink Corporation (NASDAQ: DTLK) Recently upped fourth quarter guidance. Shares are up 43.7% to $6.50, relative to a 52-week range of $2.39-$5.00.

Sterling Bancshares, Inc. (NASDAQ: SBIB) is up nearly 20% to $9.20, relative to a 52-week range of $4.34-$7.86. It was recently announced that the company would be acquired by Comerica, Inc. (NYSE: CMA).

Many companies were screened out because performance has faltered or because of limited history.  Read the full lists below at BioHealthInvestor.com:

• Outlook 2011: ARIA, CHTP, CYCC, ENMD, EXAS, EXEL, FOLD, IDIX
• Outlook 2011, Part II: AMRN, ILMN, INHX, JAZZ, NBIX, NPSP, THRX, VPHM

Stocks covered above in detail at BioHealthInvestor.com are ARIAD Pharmaceuticals Inc. (NASDAQ: ARIA), Chelsea Therapeutics International Ltd. (NASDAQ: CHTP), Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC), EntreMed Inc. (NASDAQ: ENMD), Exact Sciences Corporation (NASDAQ: EXAS), Exelixis, Inc. (NASDAQ: EXEL), Amicus Therapeutics, Inc. (NASDAQ: FOLD), Idenix Pharmaceuticals Inc. (NASDAQ: IDIX), Amarin Corporation plc (NASDAQ: AMRN), Illumina Inc. (NASDAQ: ILMN), Inhibitex Inc. (NASDAQ: INHX), Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Neurocrine Biosciences Inc. (NASDAQ: NBIX), NPS Pharmaceuticals, Inc. (NASDAQ: NPSP), Theravance Inc. (NASDAQ: THRX), and ViroPharma Inc. (NASDAQ: VPHM).

You can also see the same sort of search from 2009 for the 2010 outlook that was done at BioHealthInvestor.com.

JON C. OGG

We have provided color on the news, links if appropriate, and background data on price and volume trends.

AP Pharma Inc. (NASDAQ: APPA) is up 21.8% at $1.90 on over 4.6 million shares.  This is close to 10-time normal volume and the high of $2.05 today compares to a 52-week moving average of $0.38 to $2.16.  This is ahead of today’s pending FDA nod on its drug candidate APF530 for chemotherapy-induced nausea and vomiting.

Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) was cut to Hold from Buy at Argus Research and shares are down almost 8% at $3.36 today.  The new market cap is now only $366 million.

Medivation, Inc. (NASDAQ: MDVN) is down again on concerns that Dimebon’s partnership is toast after its lack of efficacy in the fight against Alzheimer’s.  Pfizer Inc. (NYSE: PFE) has so far maintained that it is too early to call it dead.  Shares are down 4.6% at $12.06 in mid-afternoon trading.

OSI Pharmaceuticals Inc. (NASDAQ: OSIP) is believed to be getting a higher price than its $52 tender from Astellas.  We noted earlier this week that it seems unlikely that this one can remain independent.  Shares rose over 1% and hit a new 52-week high of $58.97 today.

Somaxon Pharmaceuticals, Inc. (NASDAQ: SOMX) is surging today after the FDA approved its application for Silenor as the first sleep aid for insomnia and sleep disorder without all the nasty sleep action disorders that are present in other sleep aid drugs.  Mid-afternoon trading has shares up almost 65% at $6.48 on over 22 million shares and almost 10-times normal trading volume.

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is running up today after the news that it won the bid to acquire German generic drug maker Ratiopharm GmbH for close to $5 billion.  You have to love when the acquiring company rallies.  Shares are up 3.8% at $62.22 in mid-afternoon.

JON C. OGG

This is unfortunately not even the entire list.  We have compiled the data on the specifics of each and shown how each offering compares to the size of each company.

Main Street Capital Corporation (NASDAQ: MAIN) sold 2,500,000 shares of common stock at $14.75 per share to raise approximately $34.8 million.  It intends to use approximately $12 million to repay outstanding debt borrowed under its $30 million investment credit facility to fund Main Street Capital II, LP capital commitments.  It intends to use the remaining net proceeds to make investments in lower middle-market companies in accordance with its investment objective and strategies, pay operating expenses and other cash obligations and for general corporate purposes. The underwriters were Morgan Keegan, BB&T Capital Markets, Scott & Stringfellow, Janney Montgomery Scott, Ladenburg Thalmann & Co. , and Madison Williams.  Main Street’s market cap is approximately $160 million before any effects, if any, of this offering.

Orient-Express Hotels Ltd. (NYSE: OEH) sold 12,000,000 Class A common shares at a price of $10.00 per share.  Net proceeds from this offering are expected to be approximately $114 million and will be used to pay the cash portion of the purchase price of two hotel properties located in Taormina, Sicily.  The remaining cash is for general corporate purposes.  The deal is brought by Deutsche Bank and Barclays Capital as joint book-running managers for the offering.  The market cap here is approximately $772 million before teh effects of the offering.

El Paso Pipeline Partners, L.P. (NYSE: EPB) has filed to sell some 8,000,000 common units in a public secondary offering and it intends to use the net proceeds for general partnership purposes.  This includes potential future acquisitions and growth capital expenditures. The partnership may apply some or all of the net proceeds to reduce its outstanding borrowings under its revolving credit facility.  Citigroup, BofA Merrill Lynch, Barclays Capital, UBS Investment Bank, and Wells Fargo Securities will be the joint book-running managers; co-managers are listed as Goldman Sachs, J.P. Morgan, and Morgan Stanley.  This will raise close to $200 million and the market cap is about $3.2 billion before considering the effects of this offering.

EntreMed, Inc. (NASDAQ: ENMD)  has completed a registered direct offering of $2.5 million in common stock, although this is probably too small to spend much time on.  It sold 3,125,000 shares at $0.80 per share, approximately a 7% discount.  Wharton Capital Markets was the sole placement agent in the offering.

This morning came an SEC filing from Teekay Corporation (NYSE: TK) covering the sale of up to $300 million in senior notes.  The joint book-runners are listed as J.P. Morgan, Citi, and Deutsche Bank; Co-managers are BNP PARIBAS, DnB NOR Markets, ING Wholesale, and Scotia Capital.  The company intend to use approximately $190 million of the net offering proceeds to repurchase Senior Notes due July 2011, subject to the tender; and the remaining net proceeds to repay a portion of debt.  Its market cap is $1.9 billion.

Earlier this week came an SEC filing from The NASDAQ OMX Group, Inc. (NASDAQ: NDAQ) covering the sale of an unspecified amount in Debt Securities, Preferred Stock, Common Stock, Warrants, Depositary Shares, Purchase Contracts and Units.  This was its automatic shelf registration, which does not mean any sale is imminent.

This week also came a filing from Netlist Inc. (NASDAQ: NLST) covering the potential sale of up to $30 million in a mixed securities shelf covering the sale of any combination of Common Stock, Preferred Stock, Warrants, Depositary Shares, and/or Units.  Netlist is the one that has been all over the place of late and this market cap today is around $100 million without considering any effect of potential dilution.  The use of proceeds is for capital expenditures, working capital, and other general corporate purposes.

Also earlier this week came a filing from ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) covering the sale of up to $125 million in  Common Stock, Preferred Stock, Debt Securities, Warrants, Rights, Purchase Contracts, and Units in a mixed securities registration.  The market cap here without considering any dilutive effect is now $257 million.  The use of funds is for general corporate purposes: R&D and clinical trials, product manufacturing, intellectual property protection and enforcement, working capital, repayment or refinancing of debt, capital expenditures, and to fund possible acquisitions.

You are invited to join our free daily email distribution list to hear about ongoing secondary offerings and initial public offerings, day trader and options trader alerts, analyst upgrades and downgrades, stock and market rumors, Buffett and guru investor news, M&A, and more.

JON C. OGG
January 13, 2010

Ariad Pharmaceuticals (NASDAQ: ARIA) is up 10% as traders hope the analyst upgrade may hint at it being the next hot low price biotech stock.

East West Bancorp Inc. (NASDAQ: EWBC) is soaring by 27% on it winning in an FDIC-led bank takeover.

General Electric Co. (NYSE: GE) is up again by almost 3% this morning on a likely NBC Universal valuation of close to $30 billion.

McDonald’s Corp. (NYSE: MCD) is up almost 1% on same store sales, but U.S. same store sales remain more of a concern than some of its other growth.

Abercrombie & Fitch Co. (NYSE: ANF) is up 5% on an analyst upgrade.

You can join our open email distribution list to get updates on top analyst upgrades and downgrades, top day trader alerts, IPO’s, secondary offerings, Warren Buffett and other guru activity, M&A and more.

Jon C. Ogg
November 9, 2009

Adobe Systems (NASDAQ: ADBE) Raised to Buy at Goldman Sachs.
Ariad Pharmaceuticals (NASDAQ: ARIA) Raised to Overweight at JP Morgan.
Blackstone Group (NYSE: BX) Raised to Outperform at KBW.
Charles River Labs (CRL) Cut to Equal Weight at Barclays.
Gap Inc. (GPS) Cut to Equal Weight at Barclays.
Red Hat (NYSE: RHT) Cut to Neutral at Goldman Sachs.
Capstead Mortgage (NYSE: CMO) Raised to Outperform at KBW.
RadioShack (NYSE: RSH) Raised to Outperform at Credit Suisse.
Veeco Instruments Inc. (NASDAQ: VECO) Started as Overweight at Piper Jaffray.
VeriSign (NASDAQ: VRSN) Cut to Sell at Goldman Sachs.

You can join our open email distribution list to get updates on top analyst upgrades and downgrades, top day trader alerts, IPO’s, secondary offerings, Warren Buffett and other guru activity, M&A and more.

Jon C. Ogg
November 9, 2009