Sonus: Far From The Biotech Doldrums

A Recent Uptick
Not many biotechs are favored by the Street, even though the broader market is riding high. But one that has attracted unusual attention is Sonus Pharmaceuticals (SNUS ), whose lead product, TOCOSOL Paclitaxel, is currently in Phase 3 trials for the treatment of metastatic breast cancer, with a market potential of $3.5 billion. Sonus' stock, up from 4.50 on Oct. 3 to 5.37 on Oct. 18, is rated a "buy" by Mark Monane of Needham, which has done banking for Sonus. His 12-month target is 10. In 2005, Germany's Schering acquired a 15% stake in Sonus for an exclusive license on TOCOSOL. Monane expects data from the trial by mid-2007 and a new-drug application at yearend 2007. Matthew Kaplan of Punk Ziegel, who also rates Sonus a "buy," says a second product, TOCOSOL Camptothecin for colorectal cancer, has been O.K.'d by the Food & Drug Administration for Phase 1 trials. He says this will advance Sonus' oncology franchise. Another bull, Vinny Jindal of ThinkEquity Partners, which also has done banking for Sonus, estimates royalties of $203 million for TOCOSOL Paclitaxel alone in 2013. Jindal also has a 12-month price target for the stock of 10.

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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