This Blockbuster Drug Has Room to Run

William Patalon III

Shares of blood cancer drugmaker Pharmacyclics Inc. (Nasdaq: PCYC) rocketed as much as 22% last Tuesday after the company exhilarated investors by forecasting that sales of its key drug would double this year.

We weren't surprised by this, of course.

But even more important was that Private Briefing readers weren't, either.

In a Private Briefing report back in early December, we said the Pharmacyclics blood cancer drug Imbruvica (ibrutinib) was well on its way to becoming the blockbuster we predicted when we first recommended shares of the Sunnyvale, Calif.-based biotech back in April 2012.

That "call" was right on target.

Late last Monday, after the close of trading, Pharmacyclics said net-product revenue for Imbruvica for full-year 2014 would come in at $492 million. That would include sales of about $185 million in the fourth quarter alone – a hefty "sequential" (quarter-to-quarter) jump of 31%.

But here's the real stunner: For 2015, the company is looking at sales to more than double and reach $1 billion.

For those who want the actual numbers, that's a gain of 103%.

Imbruvica, you see, is shaping up to be the very blockbuster we told you it would be.

And that bodes well for Pharmacyclics shares.

Let's take a look …

A Leap… a Jump… and More to Come

Pharmacyclics shares have gained as much as 444% since we recommended them in the April 2012 special research report "The Biotech Buyout Binge."

From our initial recommendation price of $28.47 a share, the stock has soared as high as $154.89.

We re-recommended it back on Dec. 3 – and it closed that day at $139.33.

On Tuesday, Pharmacyclics zoomed as much as $27.28 a share, or 22%, to peak at $150.99.

Although it gave back some of those gains, the stock was still up $20.37 a share, or 16.2%, to $144.08 in late-afternoon trading. That's 3% above our Dec. 3 re-recommendation close – or about 27% on an annualized basis.

Sell-siders right now have a $156 target price on Pharmacyclics. But the estimates go as high as $225 – a potential 68% gain from current levels and 690% above our $28.47-a-share"Buy" price.

And with the company's bullish, just-released projection for Imbruvica, you can bet we'll see a strong "upgrade cycle" – where analysts boost their ratings and target prices for Pharmacyclics. And a concentrated upgrade cycle could be just the catalyst required for the stock to embark on its next rally.

For instance, RBC Analyst Michael Yee boosted his target price from $118 to $130 – only to have the stock blow right through his estimate.

Pharmacyclics is far from our only big win in the biotech sector…

William Patalon III

About the Author

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Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.

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