Chicago, IL – April 1, 2010 – Zacks.com 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: JPMorgan Chase & Co. (JPM), Medivation, Inc. (MDVN), Pfizer, Inc. (PFE), Elan Corp (ELN) and Johnson & Johnson (JNJ).

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Here are highlights from Wednesday’s Analyst Blog:

FDIC May Impede JPM’s Tax Refund

Federal Deposit Insurance Corp. (FDIC) is trying to oppose a proposed $1.4 billion tax refund for the second largest U.S. bank JPMorgan Chase & Co. (JPM) in relation to its takeover of banking operations of Washington Mutual in 2008, according to a Wall Street Journal report.

Bankrupt lender Washington Mutual was taken over by JPM for $1.9 billion. The tax refund was expected from a clause in the economic stimulus bill. The law allows companies to apply for tax refunds against taxes paid in the previous five years, instead of the previous two years.

In order to extend the jobless benefits, the corporate-tax-refund approach was included in the economic stimulus bill in November last year. However, it was initially not a part of the bill.

Washington Mutual was seeking the $4 billion cash deposit to repay its creditors worth $7 billion, but FDIC argued that it should take temporary custody of the amount because of losses emanating from the failure of Washington Mutual’s banking operations. On the other hand, JPM argued that it should have the right to the cash as it had acquired the failed institution.

On Mar 12, FDIC, JPM and Washington Mutual came to an agreement. Accordingly, Washington Mutual will receive the cash deposit of $4 billion that was held by JPM when it acquired Washington Mutual. The three entities also agreed to share expected tax refunds worth about $5.6 billion.

Not only JPM but more than 250 companies are seeking tax refunds aggregating $12 billion.

Job Cuts at Medivation

Medivation, Inc. (MDVN) recently announced that it intends to reduce its workforce by 20% or 23 people to save costs and focus its resources towards research and development activities related to dimebon and MDV3100.

Medivation also announced the departure of its senior vice president of clinical development and the vice president of commercial development. The company said that it is no longer looking for a new Chief Financial Officer (CFO) as this post will be filled by the current Chief Business Officer (CBO).

Medivation’s workforce reduction announcement comes on the heels of disappointing phase III results reported earlier this month on its lead pipeline candidate, dimebon. Dimebon, which is being developed for Alzheimer’s disease in collaboration with Pfizer, Inc. (PFE), failed to achieve both its primary and secondary endpoints in a phase III study (CONNECTION).

Dimebon was the most advanced pipeline candidate at Medivation, which has no marketed products in its portfolio. The successful development of dimebon would have been a major boost for the company. In addition to the Alzheimer’s indication, Medivation is also studying dimebon for Huntington’s disease.

Going forward, Medivation intends to focus on the further analysis of the CONNECTION data, which will help determine future development plans for the candidate. Dimebon is currently being studied in combination with Pfizer’s Aricept for the treatment of mild-to-moderate Alzheimer’s. Positive results from this study could allow the companies to push for approval of the product as a combination therapy.

Dimebon is also in another study which is being conducted in Huntington disease patients.

We currently have a Neutral recommendation on Medivation. The high profile phase III failure was a major setback for the company. Medivation could suffer another blow if Pfizer decides to pull out from the collaboration agreement for dimebon.

We note that Pfizer already has another Alzheimer’s candidate, bapineuzumab, in its portfolio that is being developed with Elan Corp (ELN) and Johnson & Johnson (JNJ). As such, Pfizer may decide to focus its efforts towards the development of bapineuzumab.

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In order to extend the jobless benefits, the corporate-tax-refund approach was included in the economic stimulus bill in November last year. However, it was initially not a part of the bill.
 
Washington Mutual was seeking the $4 billion cash deposit to repay its creditors worth $7 billion, but FDIC argued that it should take temporary custody of the amount because of losses emanating from the failure of Washington Mutual’s banking operations. On the other hand, JPM argued that it should have the right to the cash as it had acquired the failed institution.
 
On Mar 12, FDIC, JPM and Washington Mutual came to an agreement. Accordingly, Washington Mutual will receive the cash deposit of $4 billion that was held by JPM when it acquired Washington Mutual. The three entities also agreed to share expected tax refunds worth about $5.6 billion.
 
Not only JPM but more than 250 companies are seeking tax refunds aggregating $12 billion.
 
However, recently, FDIC took back its support from Washington Mutual in the latter’s case involving itself and JPM. Also, FDIC has reversed its consent after JPM announced its share of $1.4 billion in the tax refund.
 
JPM had reported fourth quarter earnings of 74 cents per share, substantially ahead of the Zacks Consensus Estimate of 61 cents. The better-than-expected results were primarily aided by the continued strong performance of the company's Investment Bank segment.
 
All segments except Consumer Lending and Card Services delivered solid results during the quarter. However, persistently high levels of consumer credit costs and increased provisions for credit losses were the downside.
 

Last month, Washington Mutual sought permission from the federal court to question third parties − including some regulators and banks − that were connected with the Washington Mutual seizure. The company carries $8.3 billion of liabilities.

Washington Mutual, one of the largest U.S. savings and loans organizations and heavily exposed to bad mortgage investments at the heart of the financial crisis, was closed by regulators who had orchestrated a last-minute sale of its assets to JPMorgan Chase for $1.5 billion on Sep 25, 2008.
 
The tax refund will help the failed bank to gain cash, which can be utilized to resolve various legal disputes surrounding the company's collapse last year, making way for a settlement of the bankruptcy case.