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Pharmacyclics Drops Before J&J Earnings: San Francisco Mover

Pharmacyclics Inc., the developer of blood cancer treatments with Johnson & Johnson, fell the most since April 10 ahead of Johnson & Johnson earnings scheduled for release tomorrow.

The shares, which earlier declined as much as 6 percent, were down 73 cents, or 2.8 percent, to close at $25.33 in New York trading. The stock more than doubled last year.

“Johnson & Johnson’s earnings report is tomorrow, people will be watching for news in that,” Michael King, a New York-based analyst at Rodman & Renshaw LLC, said in a telephone interview.

“We continue to view Pharmacyclics as a core holding in the mid-cap biotech space,” King wrote in an April 9 note to investors. He has a market outperform rating on Pharamacyclics, meaning he expects the stock’s return to exceed the market average, with a target price of $22 a share.

The Sunnyvale, California-based company announced on Dec. 8 that Johnson & Johnson agreed to pay as much as $975 million for Pharmacyclics’ experimental compound, known as PCI-32765 or ibrutinib.

The two companies 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 said last month the Phase III program is on schedule “for initiation” by mid-2012.

“The next value driver for Pharmacyclics on the horizon is the ASCO meeting in June,” King said. Companies usually provide updates at the American Society of Clinical Oncology Annual meeting, he said.

There is “no change to the fundamental story,” Jason Kantor, an analyst with RBC Capital Markets in San Francisco, wrote in an e-mail. He has an outperform rating on the stock, with a target of $34 a share.

‘Could be Volatile’

“The stock could be volatile around ASCO, which is when we expect the next clinical update,” Kantor wrote. “Pharmacyclics is likely to provide more details on clinical plans for the drug as well as update the available clinical data.”

Pharmacyclics and Johnson & Johnson’s partnership focuses on an oral treatment for non-Hodgkin’s lymphoma, chronic lymphocytic leukemia and multiple myeloma, all of which are considered hematological malignancies, Pharmacyclics said in a regulatory filing. The two companies will also collaborate and develop other therapies and treatments for cancer.

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