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Pharmacyclics Falls as J&J Deal Makes Acquisition Unlikely

Pharmacyclics Inc., the cancer-drug maker that announced a deal with Johnson & Johnson yesterday, fell the most in 19 months after RBC Capital Markets said the transaction means it is unlikely to be acquired.

“The vastly reduced probability that Pharmacyclics will be acquired in 2012/2013 could likely cap performance in the near term,” said Jason Kantor, an analyst with RBC Capital Markets in San Francisco, in a note yesterday to investors. He downgraded the shares to “sector perform” from “outperform.”

Pharmacyclics, based in Sunnyvale, California, said yesterday that Johnson & Johnson agreed to pay as much as $975 million for the company’s experimental blood cancer treatment. The companies said they will split profits and share costs of developing the drug, now being evaluated in first- and second-stage trials. Three stages of clinical trials generally are required for U.S. marketing approval.

Pharmacyclics shares were downgraded today to “neutral” from “buy” by Global Hunter Securities analyst Brian Lian, based in New York.

The shares declined 15 percent to $12.39 at the close in New York, the biggest drop since January 2009. The shares have more than doubled this year.

“They delivered the partnership so people are thinking, ‘Well, you did it, so what else is there?’” said Joseph Pantginis, an analyst with Roth Capital Partners in New York with a “buy” rating on the stock. “The stock literally before yesterday had been trading at multiyear highs so it was an easy profit-taking signal.”

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