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]rallied. The stock started picking up steam after the news broke late this morning that its late-stage experimental migraine headache drug essentially works just as well as an existing drug, but with fewer side effects. And that's significant, says Dr. Dara Jamieson, a neurologist at the Weill Cornell Medical College/New York Presbyterian-Hospital (Okay, that is just the world's longest facility name, but the PR folks there get testy if you don't use the whole darn thing. I think the hospital/medical school needs to find a much shorter way to brand itself. It would take way too much time to say all that on TV and would have to be squeezed so much on screen that it wouldn't be legible.) Anyway, I digress.
Dr. Jamieson, who has done consulting work for Merck and other migraine drugmakers, says currently marketed pills cause some patients to be nauseous, vomit, get dizzy, feel lethargic and chest pain. People who have high blood pressure or heart disease also shouldn't take the drugs. And so, even though the Merck drug's efficacy is comparable, Dr. Jamieson says it could have a competitive advantage with a better side-effect profile. Merck says it plans to file next year for FDA approval of the drug that had been known as MK-0974, but is now called telcagepant (tell-caj-uh-pant). That's its scientific name, not what it might be called commercially.
It closed off of its intra-day high, but MRK was the biggest dollar gainer in the sector. And it duked it out with Bristol-Myers Squibb[BMY
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] to be the top percentage gainer on the day. BMY won that contest. Dr. Tim Anderson at Sanford C. Bernstein upgraded BMY to "Outperform" (Buy) calling the company a "Best-in-class grower, at least over the next four years." He sees BMY posting an 18 percent compound annual growth rate between 2008 and 2011.
The next closest CAGR, Dr. Anderson tells clients, is Schering-Plough at 12.4 percent. But his call isn't just based on growth. Dr. Anderson says, "BMY has a high dividend yield of over six percent that could resonate with investors increasingly disillusioned with another high yielding stock, Pfizer." Speaking of Pfizer, there's one more angle to his upgrade. Dr. Anderson writes that "BMY is one way to play major pharma M & A." And even though he points out that Pfizer, a leading acquirer suspect, has recently said it's not interested in doing a big deal, Dr. Anderson believes, "If PFE's pipeline does not deliver over the next 24 months the company may find itself changing course."
A part of Bernstein owns at least one percent of BMY. And one of the people on Dr. Anderson's team owns PFE shares.
Part of Bernstein's bullish thesis on BMY is based on the company's bloodthinner Plavix having dodged a near-term competitive bullet. Lowly Lilly announced an FDA delay earlier this week on its new bloodthinner. Since then, the company's stock has continued to fall to new multi-year lows. LLY[LLY
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] finished the week at $45.61, which is the "cheapest" it's been in more than 11 years. Not to make light of a debilitating problem, but big pharma investors could use that Merck migraine drug.
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