Making Eyes at Ivax

If there is anything that inspires investors' confidence in Ivax (IVX ), it's CEO Phil Frost's "nose for products and deals," according to Nissim Aboodi, president of money manager Questrion Corp. Ivax, a developer and maker of generic and branded pharmaceuticals, has 34 applications before the Food & Drug Administration, thanks to Frost's constant search for new products. As for deals, Frost's latest acquisition, LabChile, a major drug outfit in Latin America, should boost earnings in 2002.

But the deal investors are really anticipating: an Ivax merger--with the likes of GlaxoSmithKline or AstraZeneca, two companies said to be eyeing Ivax. Frost, who owns 12% of Ivax, "is shareholder-oriented and receptive to good ideas--including the sale of Ivax," says Harvey Eisen, a former investment adviser to Citigroup's Sandy Weill and now president of Bedford Oak Advisors. Frost is 64, so it isn't unthinkable that he'll do a deal, he argues.

When this column featured Ivax on July 15, 1999, the stock was at split-adjusted 7. It is now trading at 37, and Aboodi thinks it could double in 18 to 24 months. "Ivax has blockbuster drugs in its pipeline," he says, including TP38, a novel immunotoxin drug for brain cancer, and paclitaxel, a generic version of Bristol-Myers Squibb's anticancer drug Taxol. Ivax has also developed a system to deliver paclitaxel orally. Early tests on TP38 indicate "encouraging results," says Aboodi. Phase I and II clinical trials are under way, and because of the drug's importance, it could get a fast-track process at the FDA, says Aboodi.

Ivax is becoming more focused on branded products, notes Merrill Lynch's Gregory Gilbert. That should bring higher margins and more sustainable growth, says Gilbert, who sees Ivax earning $1.15 a share in 2001 and $1.35 in 2002.

By Gene G. Marcial

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