Are You People on Drugs?

SmartMoney.com ^ | March 21, 2002 | Lawrence Carrel

[StriperSniper]

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Protein Design Labs Inc. (PDLI)

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Share price as of Wednesday's close: $15.02
Share price now: $18.30
Change: 21.8%
Volume: 17.5 million shares, daily average 3.4 million shares
Last time this high: Feb. 15, 2002
52-week high: $45.47
52-week low: $13.75
Forward P/E before announcement: n/a
Forward P/E after announcement: n/a

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IF YOU THOUGHT Kent State's upset over Alabama in this year's NCAA tournament was wacky, wait until you hear this tale of March madness.

Shares of Protein Design Labs (PDLI) jumped 21.8% on Thursday, one day after the company announced that its maintenance therapy for psoriasis wasn't much better than a placebo. Protein Design said Phase II tests of its Zenapax treatment for patients with moderate-to-severe psoriasis following a treatment of cyclosporine failed to prolong the time before the psoriasis recurred — the trial's main goal. While patients with moderate psoriasis saw minor improvement, the Fremont, Calif.-based maker of antibodies said the "regimen was statistically significantly less effective than the placebo."

Normally, this kind of development would send a biotech's stock price clunking off the side of the rim like an errant three-pointer. On Wednesday, for example, Bristol-Myers Squibb (BMY) and ViroPharma (VPHM) plunged after releasing negative news on their experimental drugs.

But they didn't have Ian Somaiya in their corner. Early Thursday morning, the Morgan Stanley analyst wrote in a research report that the Zenapax "trial's failure creates an attractive entry point." How's that? Somaiya said the "failure removes a dark cloud which has lingered over the stock for the past month." He had expected the trial to fail and gave the stock a Neutral rating on March 11. And before Thursday's pop, Protein Design's stock was trading at about half its price at the beginning of the year. Somaiya upgraded the stock to Overweight — similar to a Strong Buy — from Underweight, and gave it a $25 price target. "With bad news behind us, we expect a strong calendar of news flow [in its six remaining clinical programs] to support share price appreciation," he wrote.

And he wasn't alone. Early Thursday, Matt Geller of CIBC World Markets reiterated his Strong Buy rating, while David Bouchey of C.E. Unterberg, Towbin called Wednesday's news a buying opportunity. But keep in mind that Morgan Stanley and C.E. Unterberg both make a market in Protein Design's shares and Morgan co-managed a public offering of its stock.

If that doesn't give you pause, consider that Zenapax is Protein Design's third clinical failure in the last four months.

Quote:
"Morgan had anticipated bad news, so for them it's the glass half-full," says William Tanner, an analyst at SG Cowen Securities. "But the half-empty glass is, this drug failed in trial and they have other failures in the past." Tanner doesn't own the stock, but Cowen has a banking relationship with Protein Design.

[StriperSniper]

Here is some insanity from the world of Wall Street.

"With bad news behind us, we expect a strong calendar of news flow [in its six remaining clinical programs] to support share price appreciation," he wrote.

Start up the B.S. machine, full steaming ahead! ;-)

[hole_n_one]

Yes

[Texaggie79]

NCAA 2002 FReeper March Madness Continues

[hole_n_one]

LOL!

[sharktrager]

Actually, if the market had truly already expected the failure, this makes sense.

Buy on the rumor, sell on the fact in reverse.

[StriperSniper]

Yes

Good for You!
(Did you bring enough for the WHOLE class?);-)

[hole_n_one]

Did you bring enough for the WHOLE class?

That depends.........

Do you want UCLA or Missouri?

[StriperSniper]

I would say Seton Hall, but they are not a choice here. Now since your profile has you out in Cali, I'll say UCLA.
(Unless you grew up nextdoor to Rush)

[hole_n_one]

Now since your profile has you out in Cali, I'll say UCLA.

That's the right answer!

As soon as A+Bert passes out from "bogarting" the bong water pipe, it's all yours!

[StriperSniper]

That kind of logic works sometimes.
Each stock has it's own quirks, once you learn them all, they change. ;-)

[meadsjn]

I'd say the investors correctly judged the mindset and sanity of the American consumer -- half of them voted for Bill Clinton twice, and then for Al Gore after him.

[Lurker]

Good plan.

(I love my Enfield...) L

[dread78645]

I'm on drugs. The voices told me to stay home, take drugs, and clean my guns.

Nicotine, caffeine, and alcohol.
Cleaned & exercised the pistol Saturday past.

No voices yet --But I'll listen.

[Lurker]

Which model do you have?

I have an Ishapore (7.62 rather than .303)

It's a joy to shoot, although I did replace the metal buttplate with a synthetic one. I plan on buying a few more of that model because I am so pleased with the first one I bought.

Navy Arms has a nice selection of Enfields, and I can tell you that I am satisfied in my business dealings with them.

Regards,

L

[Lurker]

Sorry, it's here. My fault.

L