Cerus: A Biotech Suffers Growing Pains

Running Up And Back Down
Breaking up can be painful, as Cerus (CERS ) (CERS) found out when it revised its ties with Baxter International (BAX ) in February. Since then, Cerus shares have swooned from 15 to 6.37. Cerus got back worldwide marketing rights to its Intercept Blood System, which treats platelets, plasma, and red blood cells from donated blood, making them safer using technology that inactivates pathogens. It will pay royalties to Baxter. Cerus won approval to sell Intercept platelets in Europe, but they are still in U.S. clinical trials. Taymour Tamaddon of T. Rowe Price (TROW ), which owns 4.4% of Cerus, says its stock is way undervalued because Intercept's huge potential in various applications is not reflected in the price. "We aren't in the stock for just a 30% gain," says Tamaddon. Christopher Raymond of Robert W. Baird, which did banking for Cerus, says Intercept platelets, already sold in small European countries, are likely to reach France and Germany in the next 24 months. He doesn't expect Cerus to make money until 2009, when he sees it earning 3 cents a share on sales of $96 million, vs. $27 million in 2006. His 12-month target: 16.

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

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