The Zacks Analyst Blog Highlights: Alcon, Novartis AG, Lazard, Celgene and Elan

CHICAGO, April 11, 2011 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alcon Inc. (NYSE: ACL), Novartis AG (NYSE: NVS), Lazard Ltd. (NYSE: LAZ), Celgene Corporation (Nasdaq: CELG) and Elan Corporation (NYSE: ELN).


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Here are highlights from Friday's Analyst Blog:

Alcon Shareholders Approve Merger

Alcon Inc. (NYSE: ACL) recently announced that its shareholders have approved of the company's merger with Novartis AG (NYSE: NVS). Per the terms of the merger agreement, Alcon shareholders will receive 2.9228 Novartis shares or American Depositary Shares (ADS) along with a cash payment of $8.20 for each share that they hold.

We note that the completion of the merger is subject to approval by the Novartis shareholders.

The Alcon board had approved the merger in December last year, following a favorable recommendation from the Independent Director Committee and a fairness opinion issued by Lazard Ltd. (NYSE: LAZ), among other things.

Following the completion of the merger, Alcon will become the second largest division within Novartis. Moreover, Novartis' CIBA Vision, select eye care medicines and an Alcon business wing will be integrated into Alcon, forming an organization, which will contribute more than $8.7 billion in sales (over 70%) to the eye care segment.

This acquisition will help Novartis diversify and make up for revenues lost to generic competition. Moreover, it will help the company bolster its position in the eye care market, which presents significant growth potential due to the unmet needs of an aging population.

Novartis had first announced its intention to gain full ownership of Alcon in early January 2010. At that time, the former had a 25% stake in the latter. In April 2010, Novartis acquired 156 million shares of Alcon from Swiss corporation Nestlé S.A. for $28.3 billion, raising its stake in the company to 77%. Novartis' outlay for acquiring the entire 77% stake in Alcon was about $38.7 billion.

Currently, we have Neutral recommendations on both the companies, supported by Zacks #3 Ranks (short-term Hold rating).

Celgene Settles with Elan

Recently, Celgene Corporation (Nasdaq: CELG) has settled a legal dispute with Elan Corporation (NYSE: ELN) regarding cancer injection Abraxane. Abraxane became a part of Celgene's portfolio in October 2010 with Celgene's acquisition of Abraxis BioScience Inc. Legal action against Abraxis BioScience was initiated by Elan in 2006.

In June 2008, Elan got a favorable judgment that Abraxis BioScience had infringed a patent owned by it pertaining to the application of Elan's nanocrystal technology to Abraxane. Consequently, Elan was awarded $55 million -- a royalty of 6% on Abraxane sales from January 2005 through June 13, 2008 (the date of the judgment).

The settlement of the patent dispute allows Elan to receive a one-time payment of $78 million from Celgene. Celgene will make no further payments to Elan regarding the drug. Moreover, through this settlement Celgene will acquire from Elan a fully paid-up, exclusive, global license to certain US and foreign patents for Abraxane.

We note that Abraxane is already available in the US and European markets as a second-line therapy for metastatic breast cancer. Celgene intends to launch Abraxane in other countries for treating metastatic breast cancer throughout the second half of 2011 and 2012.

The drug is being developed for other indications such as skin, lung and pancreatic cancer. US approval of the drug for lung cancer is expected to be sought in the second half of 2011. Abraxane contributed $71 million to Celgene's revenues in the final quarter of 2010.

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