ZENITH GENERIC DYAZIDE DEAL WITH GENEVA BOOSTS STOCK; INDEX GOES SOUTH

Index is published monthly on basis of weighted average from NASDAQ closing bid prices for 54 stocks: 37 Pharmaceuticals, 11 Diversifieds, 3 Drug Chains and 3 Drug & Medical Supply Wholesalers. Zenith Labs' agreement to co-market generic Dyazide with Ciba-Geigy's Geneva Generics subsidiary once the FDA approves a pending ANDA sent Zenith stock 2-1/4 higher on the last day of September trading. The issue closed the month at 8-1/2. The Sept. 28 announcement by Zenith of the agreement with Geneva and of the pending ANDA for generic Dyazide at FDA was interpreted by some Street watchers as a signal that the Zenith product may be close to an approval. If so, Zenith and Geneva would become the second generic marketer of the diuretic/antihypertensive in the re-opened generic market resulting from the market withdrawals by Bolar and Vitarine last year. Rugby, which had co-marketed the Bolar product, re-entered the generic Dyazide market on Oct. 1 following a deal with former Dyazide patent-holder SmithKline Beecham ("The Pink Sheet" Aug. 27, p. 3). A near-term generic Dyazide approval could provide enough of a boost to spur a full turnaround for Zenith, which completed Chapter 11 reorganization late last year and issued new common stock. So far this year the stock has been on a bumpy road to recovery. Zenith started 1990 trading at 7-1/2, jumped to a high of 9-1/2 in January, fell to a low of 4-1/4 in March, rebounded to 7-1/4 in July and followed the August market down to 6-1/4. Zenith hovered near 6-1/4 until Sept. 27, when it jumped back to 8-1/2. A strong recovery in sales and the benefits of substantially reduced competition in the generic market also appear to be giving Zenith a boost. Through six months of 1990, Zenith's sales were nearly 79% higher, at $26.3 mil., and the company reported earnings of $1.1 mil. compared to a $4.4 mil. loss a year ago. Zenith was the biggest point gainer of the 54 stocks tracked by the F-D-C "OTC" Index and was second in percentage increase behind Taro Vit's 40% jump on a 3/4-point gain to 2-5/8. The monthly index of drug and drug-related stocks fell 6.2% in September, mirroring the Dow Jones Industrials' 6.2% decline and underperforming the S&P 400, which slipped 5.6%. Buoyed by "buy" recommendations from Robertson Stephens and Shearson Lehman analysts, Genetics Institute finished September up 1 at 30-1/4. The recommendations were based on perceptions of the stock's relative value near $30 a share as well as the company's bullish views about the prospects for licensee Chugai/Upjohn's EPO to hit the market in early 1991. The analysts also were optimistic about 1991 marketing approvals for recombinant Factor VIII, which Baxter will market as Recombinate, and GM-CSF, which will be marketed by Schering-Plough and Sandoz. Other September gainers included drug wholesaler Durr-Fillauer (up 1 to 24-1/4), specialty drug firm Jones Medical (up 1-3/8 to 10-7/8), R&D firm Medco Research (up 3/4 to 10) and Chantal (up 1/4 to 1-3/4). Hit hardest in the September skid were Repligen (off 3-5/8 to 5), Enzon (down 1-7/8 to 4-1/8), Agouron (down 2 to 6), Marsam (down 3-7/8 to 12-1/4), and Chattem (off 4-1/2 to 22).