Institutional investors weren't privy to what tiny biotech Sonus Pharmaceuticals (SNUS ) was up to, but Schering AG (SHR ) knew -- and acted. In October the German giant acquired a 15% stake in Sonus and gained a global, exclusive license for Sonus' breast-cancer treatment TOCOSOL paclitaxel -- valued at $220 million in licensing fees, royalties, and milestone payments from Schering. That's a big vote of confidence in Sonus, which has no sales yet, says Mark Lappe of Efficacy Capital. He figures TOCOSOL, seen as a replacement for Taxol, will have a potential $1 billion in sales in six or seven years. It is now in Phase 3 trials. He sees the stock at 12 in a year. Also bullish is Mark Monane of investment bank Needham, which has done banking for Sonus. He says TOCOSOL has advantages over Taxol, offering superior safety while allowing delivery of a greater dose density and greater efficacy. He sees Sonus in the black by 2009 -- earning 36 cents a share, and 77 cents in 2010. It trades at 4.56.
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.
By Gene G. Marcial