Wednesday’s Top Health Care Stories: Valeant, Allergan, GlaxoSmithKline, and CytRx

Let's take a closer look at four stocks -- Valeant Pharmaceuticals (NYSE: VRX  ) , Allergan (NYSE: AGN  ) , GlaxoSmithKline (NYSE: GSK  ) , and CytRx (NASDAQ: CYTR  ) -- which could all loom large in Wednesday's health care headlines.

Valeant raises its bid for Allergan, sells skin care products to Nestlé
Valeant just made two major announcements -- that it was raising its bid for Allergan, and that it was selling the rights to several skin products to Nestlé (NASDAQOTH: NSRGY  ) .

Valeant raised its bid for Botox-maker Allergan to $58.30 in cash per share, along with 0.83 of a share of Valeant (currently worth $130), the contingent value right (CVR) related to Allergan's potential Darpin eye drug sales worth $25 per share (based on $20 billion in cumulative shares over the next ten years), and a commitment to invest up to $400 million in DARPin development at Allergan. That places the total value of the new offer at around $166 per share plus the CVR.

Valeant's previously rejected offer for Allergan valued the company at $153 per share. According to Reuters, investors reportedly desired an offer between $180 to $200 per share. Investors should note that Allergan is reportedly trying to remain independent by either acquiring or merging with Shire.

Valeant has made some major acquisitions over the past few years, including eye care giant Bausch & Lomb for $8.7 billion, skin care company Medicis Pharmaceutical for $2.6 billion, and Precision Dermatology for $475 million.

Meanwhile, Valeant sold the commercial rights to several skin care products to Nestlé's newly formed Skin Health division for $1.4 billion in cash -- a somewhat unusual move considering that Valeant had spent so much money building up its dermatology portfolio over the past few years. Nestlé will notably gain the rights to Dysport, a Botox competitor Valeant acquired through the Medicis acquisition.

Nestlé has recently expanded into the health and medical industries to offset competitive pressures in its core food business.

GSK faces fresh fraud charges in the U.K.
Meanwhile, GlaxoSmithKline just announced that it was the target of a criminal probe led by the U.K. Serious Fraud Office, which specializes in complex fraud and corruption cases. Shares of GSK are down more than 1% in pre-market trading.

GSK has recently struggled with a streak of problems in China, Poland, Jordan, and Lebanon. In China, GSK was accused of using travel agencies as fronts to bribe doctors with $500 million in kickbacks. In Poland, GSK is being probed by the government over corruption charges, and the company is investigating itself regarding allegations of employee misconduct in Jordan and Lebanon.

The U.K. Serious Fraud Office has not made an official announcement regarding the investigation yet. However, this recent development, along with past unresolved issues, will likely keep GSK's stock -- which has advanced less than 4% over the past 12 months -- under pressure.

CytRx climbs on positive mid-stage trial results for aldoxorubicin
Last but not least, CytRx is up more than 10% in pre-market trading this morning, after it reported that aldoxorubicin, its lead drug candidate for soft tissue sarcoma (STS), significantly increased progression-free survival (PFS) at six months, overall response rate (ORR), and tumor shrinkage when compared to doxorubicin during a mid-stage trial:

Those positive results bode well for aldoxorubicin, which also appears to lack the cardiotoxicity qualities of doxorubicin. The drug is currently in phase 3 trials as a second-line treatment for STS and phase 2 trials as a first-line treatment for the same indication. It is also being tested as a potential treatment for brain cancer, lung cancer, and other indications.

Analysts at Edison Equity Research believe that the drug could be approved in 2016 and eventually generate peak sales of $340 million. CytRx has no marketed products.

But can they keep up with this top stock?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2973588, ~/Articles/ArticleHandler.aspx, 9/19/2014 5:54:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement