A Sweet Pill At Cima Labs

It was a "cold" summer for health-care stocks when CIMA Labs went public on July 28, recalls one New York money manager who bought in at 19. The stock, alas, is still at 19, even though CIMA's patented drug-delivery technology, named OraSolv, has attracted some big-time licensing partners, including Glaxo, Merck, Pfizer, and Sterling Winthrop.

So some pros believe that investors will warm up before long to CIMA because of the growing appeal of OraSolv--a quick-dissolve tablet that contains microencapsulated drug ingredients. Some of the major institutions that bought in at the initial offering--including Neuberger & Berman, Invesco Group, and Scudder Stevens & Clark--agree and are holding fast to the stock.

Apart from OraSolv, which analysts say will attract wide usage by the biggies in the drug-making industry, "CIMA is a very attractive takeover target," says one Boston fund manager. Here's why: It is targeting OraSolv to nonprescription medicines. Many types of drugs can use OraSolv, which triggers a mild effervescent reaction in the mouth. The tablet disintegrates quickly, releasing tiny flavor-coated particles of whatever drug the pill carries into the saliva.

OraSolv "will be a big hit with the major drugmakers," says the fund manager. Glaxo, for instance, has a licensing pact for the prescription-to-over-the-counter switch of an OraSolv formulation for at least one of its products, Zantac, whose patent expires next year. Zantac is Glaxo's largest-selling drug.

As more drug makers make use of OraSolv for their products, "CIMA's stock will rocket," says the investment pro, who thinks earnings will start to jell in two years. He sees 15 cents a share on sales of $20 million in 1996, when he predicts the stock will double--or even triple. By 1987, he expects earnings of $1.15 on sales of $45 million. "It's a long-term play but a sure shot," he says.

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