Just a few weeks into the new decade, shares of

Medarex

(MEDX)

nearly hit $100. Since then, they've nearly hit bottom -- often.

After reaching an all-time high in March 2000, the biotech company's stock at one point dropped below the price of a small cup of cappuccino, at least by New York City prices. For the last three years, the stock hasn't broken $12. On Thursday, it closed at $8.13. (All prices reflect a 2-for-1 stock split in 2000.)

But there are stirrings on Wall Street that maybe Medarex is about to revive, although not to those soaring prices of yesteryear and not to near-term profitability. Then again, analysts have been wrong about Medarex before.

"The company's stock has been anything but stable over the past five years, as investor sentiment regarding the biotech sector as a whole has created significant fluctuations in Medarex's market value," says Brian D. Rye, of Janney Montgomery Scott, in a recent report to clients.

Working With Giants

Still, Medarex is getting attention from Rye, who has a buy rating, and other analysts not only for experimental products but also for its strategy of collaborating with such big players as

Bristol-Myers Squibb

(BMY) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

.

"Medarex offers investors what we believe to be one of the more intriguing investment opportunities within the small-cap biopharmaceutical sectors," Rye says in his May 10 research report. He praises Medarex for a "risk-mitigating business strategy" that includes having collaborators for most of its experimental products in clinical trials or preclinical development. (He doesn't own shares, but his firm is a market maker.)

"We view the pipeline for Medarex and its collaborators as deep across all phases of the clinical trial process," says Winton Gibbons, of William Blair & Co., in a recent report to clients. Thanks to "the depth and maturing of the company pipeline," Gibbons is keeping his outperform rating. (His research report notes that Gibbons or members of his family own shares, and his firm is a market maker).

Five analysts have buy ratings and two have hold recommendations, according to Thomson First Call, even though they expect Medarex to continue losing money at least through 2007.

In addition to Bristol-Myers Squibb and J&J, Medarex has signed deals with

Amgen

(AMGN) - Get Report

,

Novartis

(NVS) - Get Report

,

Medimmune

TheStreet Recommends

(MEDI)

and

Pfizer

(PFE) - Get Report

.

The Pfizer deal, signed in September, was notable because Pfizer paid $80 million upfront, bought $30 million in Medarex stock, promised to pay as much as an extra $400 million assuming all goals of the pact are met, and agreed to pay royalties on products that reach the market. The agreement, which runs for 10 years, calls for Medarex to provide up to 50 antibodies.

The Big Attraction

What Big Pharma sees in Medarex is the possibility that its technology can create drugs that have a more targeted effect than older drugs. Medarex is trying to achieve its goals through monoclonal antibodies, which are laboratory-produced versions of a key element of the body's defense system.

Naturally occurring antibodies are produced by the immune system as a weapon against diseases, but the natural antibodies can be overwhelmed by invaders. If an antibody can be cloned in the lab, scientists can make large amounts of this protein, thus creating a drug that strengthens the body's defenses.

Companies have been selling monoclonal antibody-based medications since 1986, treating such diseases as rheumatoid arthritis, breast cancer, colorectal cancer and asthma. Some of the best known drugs include Avastin and Herceptin from

Genentech

(DNA)

; Erbitux from

ImClone Systems

(IMCL)

and Bristol-Myers Squibb; Remicade from J&J; and Rituxan from Genentech and

Biogen Idec

(BIIB) - Get Report

.

Medarex compounds are being tested in several types of cancer -- skin, prostate, lymphoid system -- as well as for inflammatory diseases such as rheumatoid arthritis and ulcerative colitis.

During the next six to 12 months, a clearer picture should emerge on how many Medarex compounds have real promise. Furthest along the R&D process is MDX-010, a treatment for the most dangerous skin cancer, malignant melanoma. Medarex is working with Bristol-Myers Squibb on this drug, which is in the final stage of clinical testing, but analysts say results won't be available until early 2006.

Awaiting Results

Medarex expects to make two presentations at the upcoming American Society of Clinical Oncology meeting in Orlando, Fla. On Sunday, company representatives will discuss a phase II test of MDX-010 alone, or with another cancer drug, in prolonging the survival of patients whose malignant melanoma had spread to other organs.

On Monday, they will discuss early stage research on how well MDX-010 shrinks tumors in patients whose kidney cancer has spread to other organs. MDX-010 also is being tested for prostate cancer, breast cancer and HIV/AIDS.

Analyst Gibbons says investors should keep an eye on the May 26 presentation of midstage clinical trial results of CNTO-148, an anti-inflammatory compound. Medarex is working with J&J, which is expected to announce results at a meeting with analysts.

Gibbons says CNTO-148 is being targeted as a successor for J&J's multipurpose medication Remicade, which is prescribed for rheumatoid arthritis, Crohn's disease and ankylosing spondylitis, a chronic inflammation of the spine and certain joints. Remicade produced $2.1 billion in sales last year. Late-stage clinical trial results will be available in the first half of 2006. Midstage trial results of other Medarex compounds due in 2005 involve drugs for Hodgkin's disease and prostate cancer.

Despite the flurry of research activity, analysts caution that investing in Medarex isn't for the squeamish. It will still be "several years before Medarex begins to realize the returns on its comprehensive, expensive and ongoing ... investment in a significant way," says Rye of Janney Montgomery Scott. Even though the monoclonal antibody drug field is growing rapidly, "competition is fierce within this industry," he says.