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What Glaxo Saw In Epix

When EPIX pharmaceuticals (EPIX) (EPIX), a small biotech, signed up on Dec. 12 with GlaxoSmithKline (GSK) for clinical trials of a drug for Alzheimer's and three other products, its stock leaped from 5.52 to 7.38 in two days. It has since eased to 6.49, but some pros think it will more than double in a year. The deal gave Glaxo 14.6% of Epix. Other funds focused on biotechs also have big positions, including OrbiMed Advisors, the No.2 investor, with 11.5%. Glaxo paid Epix an initial $35 million, with a potential of rising to $1.2 billion in milestone payments. "Its pipeline of internally developed compounds makes Epix attractive at current prices," says George Fulop of Needham, who has a 12-month target of 13. Max Jacobs of Mehta Capital, which owns shares, says Epix could hit 20 in two to three years based on the potential of its products.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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