PathoGenesis Rises on Hiring of Goldman Sachs

The company is looking to Goldman Sachs to help it seek out 'strategic options' to raise its stock price.
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Shares of

PathoGenesis

(PGNS)

climbed Monday after the biotechnology company said it had hired

Goldman Sachs

to seek out "strategic options" to raise its stock price.

The Seattle-based company also said it was on track to meet Wall Street's expectations for its financial results this year. Analysts' estimates range from a gain of 2 cents per share to a loss of 6 cents per share.

PathoGensis was lately up 1 3/4, or 10%, to 19 7/8. (PathoGenesis finished up 1 13/16, or 10%, at 19 15/16.)

The company develops drugs to treat infectious diseases -- particularly lung infections -- including those common in cystic fibrosis.

Maryellen Thielen, a spokeswoman for the company, said no timetable has been set. She would not comment on whether PathoGenesis is seeking a merger partner or an outright sale of the company.

Shares in PathoGenesis traded as high as 59 3/8 before beginning a steep descent May 1999, following the release of a disappointing set of first-quarter earnings, said Ajay Bansal, an analyst at

Mehta Partners

.

Bansal has a hold rating for the stock and his company has not performed any underwriting. Mehta, a research and asset management firm, had owned shares of PathoGenesis on behalf of its clients, but sold its position last fall, Bansal said.

He said that PathoGenesis is "a one-product company," referring to its cystic fibrosis drug, and it achieved rapid market penetration following its release in January 1999.

"Investors are saying, 'where is the upside now?'" he said. "We had liked the company, but what we found out was that the volume is not good. If I were an individual investor and could get a few shares here and there, I would. But if I were an institutional investor looking to establish a position, it would be very difficult to in this company."

Based on his figures, Bansal said PathoGenesis shares are fairly valued at around $20 a share.