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APPX: Cancer Fighter

Biotechs have been pulverized lately, and the market has ground down even companies with strong results. Take American Pharmaceutical Partners (APPX), whose stock has tumbled from 22 on Dec. 31 to 14. It earned $12.6 million, or 30 cents a share, in 2001, on revenues of $192 million. In 2002's first quarter, sales jumped 38%, to $54 million, and earnings leaped from 1 cents to 10 cents. Moreover, the No. 1 APPX product, ABI-007, shows promise as a treatment for metastatic breast, lung, and ovarian cancer. A reformulation of paclitaxel--better known commercially as Bristol-Myers Squibb's big-selling Taxol--ABI-007 is in Phase III clinical trials. On May 19, APPX will report early results at the American Society of Clinical Oncology meeting in Orlando.

"We expect APPX to disclose favorable Phase II results in metastatic breast cancer patients," says Martin Sass, CEO of M.D. Sass Investors Services, which has been buying shares. This "potential blockbuster achieves a higher response rate than Taxol, with less toxicity," says Sass, "and can be used at higher dosages." Sass knows the drug through a nonprofit cancer research group he funds. He says ABI-007 targets a $1 billion market. Sass and other analysts expect APPX to file for Food & Drug Administration approval in the first quarter of 2003--and get an O.K. in 2004. The company didn't respond to a call for comment.

Current APPX sales stem from other generic oncology, anti-infection, and critical-care products. Sass figures the company will earn 50 cents a share in 2002 and 65 cents in 2003. Between 2004 and 2005, ABI-007 could yield huge sales, says Sass. He sees the stock doubling in two years. Analyst Elliott Wilbur of CIBC World Markets, which took APPX public, estimates peak ABI-007 sales of $500 million by 2007. He rates the stock a strong buy. By Gene G. Marcial

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