Drug Firms Gain on Wall Street : ICN Pharmaceuticals, 2 Subsidiaries Shoot Up Over 10%
Three local winners on Wall Street last week were ICN Pharmaceuticals Inc. and its two subsidiaries, SPI Pharmaceuticals Inc. and Viratek Inc.--all of which gained more than 10% of their market value by the market’s close Friday.
Although none of the three companies are part of the biotechnology group, they got a share of the spoils last week by being among several drug companies which shot up on news of federal approval of the genetically engineered drug alpha-interferon for treating a rare form of cancer.
Viratek, which is traded over the counter, gained 14% in price to close Friday at $45.50 a share, up $5.75 for the week. SPI, also traded over the counter, increased 13.7% to finish the week at $16.50 a share, up $2.25. And ICN, which is traded on the New York Stock Exchange, gained $1.25 to close Friday at $12.875 a share, up 10.7% for the week.
Before slipping to its close Friday, Viratek on Wednesday hit a new 12-month high of $49.75 a share, while SPI hit a new high on Thursday of $17.75 a share.
HealthCare USA, which shot up sharply two weeks ago after Maxicare Health Plans Inc. disclosed it had amassed an 11.9% stake in the company and announced plans to acquire the rest, began to slip last week as prospects of a merger appear to dim.
Although Maxicare officials say they are eager to enter into a friendly takeover of the Orange-based health maintainence organization, HealthCare USA officials appear uninterested, insisting that they have not received a serious offer from the Los Angeles-based HMO giant.
On weekly Big Board volume of only 161,100 shares, HealthCare USA lost $1.375 a share to close Friday at $10.50 a share. The issue, which in February hit a new 12-month low of $5 a share, peaked at $12.50 on May 27, following Maxicare’s announcement.
Although the impact of the sweeping tax-reform plan being considered by the Senate is far from clear, passage of the tax bill in its present form could lead to a bonanza for engineering and construction concerns, including Irvine-based Fluor Corp.
In a recent research letter to investors, Richard Rossi, of Merrill Lynch, Pierce, Fenner & Smith Inc., said the new tax code would help engineering and construction firms by stimulating the economy and reducing the cost of capital through lower interest rates.
Perhaps most important of all, Rossi said, is that the proposed new tax code would boost municipal bonds, which are used to finance many so-called “infrastructure” projects, including water treatment plants and the like.
Fluor made its name on glitzy, multimillion-dollar oil refineries, but has successfully redirected much of its focus to the less glamorous but profitable business of building and upgrading the facilities upon which civilization depends.
“As more funds pour into the muni market, more new projects should soon follow,” Rossi writes. “In addition, state tax revenues will benefit from the elimination of certain federal deductions--more state taxes means more funds for badly needed infrastructure work.”
On Friday, Fluor reported a net loss of $5 million during the first half of its fiscal 1986, which ended April 30, down from a net loss of $72 million a year earlier. Six-month revenues were $2.6 billion, compared with $2 billion last year.
