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Kos Takes Two Shots In The Arm

BusinessWeek Investor -- Inside Wall Street

Kos Takes Two Shots in the Arm

Kos Pharmaceuticals (KOSP) had been a sleeper, languishing last year between 4 and 5. But it shot up in the first five trading days of the year, to 8 on Jan. 3 from 5. It jumped to 12 3/8 on Jan. 24, before easing to 10 1/2 on Feb. 1. What's behind the leap?

Two things: The Veterans Affairs Dept. on Jan. 6 added Kos's chief product, Niaspan, to its national formulary for cholesterol therapy. That means the V.A. system, providing coverage to 3.5 million veterans and including 170 hospitals, is using Niaspan, which lowers harmful cholesterol through controlled-release formulations containing niacin.

And the company, with little publicity, said recently that Niaspan had been added to the list of drugs approved for reimbursement by health services departments in California and Tennessee.

"With the acceptance by the two states' stringent Medicaid programs, Niaspan is now reimbursable by Medicaid programs in all 50," says Peggy Farley, president of Ascent/Meredith Asset Management. So prescriptions for Niaspan should jump, says Farley. She expects Kos to be in the black in 2001, on revenues that she thinks will at least double, to $26 million. Despite its recent surge, the stock is still undervalued, she says. Farley's two-month target: 20.By Gene G. MarcialReturn to top

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