BOSTON (Thomson Financial) - Shares of Cell Genesys Inc. climbed in
premarket trading Tuesday after the South San Francisco-based biotechnology
company said it formed a global alliance with Takeda Pharmaceutical Company Ltd.
to develop and commercialize GVAX immunotherapy for prostate cancer.
The stock jumped 30% to $3.06 on volume of 24,000 prior to Tuesday's opening
bell.
Under the agreement, Takeda will pay Cell Genesys an upfront payment of $50
million and additional milestone payments of up to $270 million relating to
regulatory approval and commercialization of GVAX in the U.S., European Union
and Japan.
GVAX immunotherapy is Cell Genesys's lead product candidate currently in
Phase III clinical development.
As a result of the partnership, JPMorgan reiterated its neutral rating on
Cell Genesys shares and raised its 2008 earnings-per-share estimate to a loss of
$1.43 from a loss of $1.46.
Analysts polled by Thomson Financial, on average, estimate a full-year loss
at Cell Genesys of $1.54 a share.
"We believe (Monday's) announcement comes as a welcome surprise. The deal
brings a degree of validation to the overall GVAX-prostate program and
strengthens the company's balance sheet," JPMorgan said. "In the meantime, we
believe news flow and data releases are likely to be incrementally positive and
insufficient to support the stock in a volatile market."
Greg Saulnier
gs/gs/pc
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