MGI Pharma Has Just What Patients Need

By Gene G. Marcial

Set For A Rapid Recovery?
Tiny MGI Pharma which focuses on cancer, is catching the Street's eye. Its first major drug, Aloxi, an injection to prevent chemotherapy-induced nausea and vomiting, is on fire in a $1.5 billion market -- turning MGI into a moneymaker. O.K.'d by the Food & Drug Administration in early 2003, Aloxi posted better-than-expected sales of $37 million in the second quarter alone, prompting analysts to ramp up their estimates on MGI.

"We are encouraged by Aloxi's performance," says Christopher Raymond of securities firm Robert W. Baird, who rates MGI "outperform." Because of Aloxi, he lifted his 2004 earnings estimates from 26 cents to 48 cents a share, on projected sales of $187 million. Aloxi alone will account for $153 million, he figures, higher than MGI's own forecast for Aloxi of $140 million to $150 million. For 2005, Raymond sees earnings of 84 cents on $280 million.

Another MGI drug, Salagen Tablets, for radiation-induced dry mouth in patients with head or neck cancer, accounted for 67% of 2003's sales of $49 million, which included licensing fees. MGI has inked a pact with Alpharma (ALO ) to market its pain drug, Kadian. In MGI's pipeline is Irofulven for prostate cancer. David Maris of Banc of America Securities rates the stock, now at 26, a buy, with an upside of 37 in a year. He notes the Alpharma deal will bring "rewards with little risk."

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.

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