COPLEY BREEZES THROUGH MARCH WITH 25% GAIN; NO SPRING THAW FOR BIOTECHS
Copley Pharmaceutical's 177% fourth-quarter earnings growth and steady flow of new products resulted in a 25% gain in the firm's market valuation in the month of March. The updraft in Copley's share price, a rise of nine points to 45, was in sharp contrast to the performance of most of the issues on the 65-stock "F-D-C" Index of O-T-C pharmaceutical stocks. The biotech-heavy group remained in hibernation with a net gain of only .9% for the month. The drug component of the index is down nearly 35% for the year. Copley's run-up began after March 25, when the generic drug manufacturer/marketer reported net earnings for the fourth quarter (ended Jan. 31) of nearly $4 mil. compared to $1.4 mil. in the comparable quarter a year ago. Net income for the year was $12.3 mil. compared to $4.8 mil. the previous year, an increase of more than 156%. After its stock blossomed in late March, Copley declared a three-for-two split, effective June 8, and filed March 31 for a secondary offering of 2 mil. shares. In a prospectus for its proposed secondary offering, Copley ascribed the earnings growth to "new product introductions at greater than average profit margins," including albuterol for inhalation (equivalent to Schering's Proventil), clemastine syrup (Sandoz' Tavist), and diltiazem tabs (Marion Merrell Dow's Cardizem). Other products that Copley has begun shipping recently include: fluphenazine concentrate (Squibb's Prolixin); Co-Lav, a branded generic of Reed & Carnrick's Colyte and OTC miconazole vaginal cream 2% (Ortho's Monistat-7). Copley is the only company with approved ANDAs for miconazole vaginal cream and fluphenazine. The prospectus lists diltiazem, clemastine syrup, extended-release potassium, and versions of two OTC decongestants, Robins' Dimetapp Extentabs and Schering's Drixoral, as Copley's best-selling products. In February, Copley received tentative approval for naproxen tablets, equivalent to Syntex' Naprosyn, placing Copley in a position to be one of the first to market with a copy of the NSAID when the patent expires in December 1993. The naproxen approval eventually could allow Copley to add to its line of OTC products if Syntex and Procter & Gamble successfully switch Naprosyn over- the-counter. Danbury Pharmacal has a tentatively approved naproxen sodium (Anaprox) ANDA. Overall, Copley's product line includes 86 dosage forms and strengths of 49 prescription and 14 OTC drugs. The firm has 27 ANDAs pending at FDA. The Street was bullish on several generics makers in March, following a mild decline in the stocks in February. Zenith Labs was up 6-1/8 points to close the month at 28-1/8, a nearly 28% gain. Teva, owner of Lemmon, rose 2-5/8 points, or 6.2%, to close at 45-1/4.
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