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Biotech Sell Side Tosses Billion-Dollar Valuation Bumps Like Mardi Gras Beads

BOSTON (TheStreet) -- What's $1 billion among friends? Not much if you're a biotech sell-side analyst under pressure to stay in the good graces of his firm's investment banking clients.

On Monday, Howard Liang of Leerink Swann raised his price target on Celldex Therapeutics (CLDX) from $29 to $45 per share, which implies a bump in the company's market value of just over $1 billion.

Why does Liang believe Celldex is worth $1 billion more today than on Friday? Because of CDX-1127, an experimental cancer immunotherapy which hasn't yet reported any clinical data in patients. The first human data from a phase I study are expected in early November. Naturally, Liang set his expectations very low:

As a combination partner for immune checkpoint inhibitors such as anti-PD-1 agents, we believe the efficacy bar [for CDX-1127] is not high based on our analysis of early clinical data on other IO agents, and we believe any demonstration of single-agent activity coupled with a clean safety profile could position CDX-1127 as one of the leading candidates for PD-1 combination.

Celldex last sold stock in February, raising $90 million. Leerink co-managed the offering. One can only imagine Celldex is getting ready to raise money again, which helps explain Liang's enthusiasm.

Not to be outdone, BMO Capital Markets analyst Jim Birchenough increased his price target on Isis Pharmaceuticals (ISIS) from $31 to $45 per share. Why is Isis suddenly worth $1.6 billion more on Monday, in Birchenough's eyes?

Because Isis reported data on three patients from a mid-stage study of the triglyceride-lowering drug ISIS-APOC3-Rx. Birchenough called the Isis data "striking" but fails to mention ISIS-APOC3-Rx is well behind a competing drug from Novartis (NVS) already in phase III studies for the same orphan disease indication.

The Novartis drug, known as LCQ908, is a once-daily pill while Isis' drug requires an injection.

This should sound familiar. Isis' injectable triglyceride-lowering therapy Kynamro is losing badly to Aegerion Pharmaceuticals' (AEGR) more convenient, better tolerated and effective Juxtapid pill.

Isis learned nothing from the Kynamro experience -- and neither has Birchenough, whose employer counts Isis as an investment banking client.

I remember when companies actually had to do something to deserve a $1 billion valuation bump from the sell side. No longer.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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