UPDATE 2-Drug maker QLT mulls sale of all, part of assets

(Adds details, analyst comments, updates share price; in U.S. dollars unless noted)

By Scott Anderson

TORONTO, Nov 28 (Reuters) - QLT Inc (QLT.TO) (QLTI.O) said on Wednesday that it planned to stop investing in new products and technology and would instead review all strategic alternatives, including the sale of some or all of the company, sending its shares up more than 15 percent.

The Canadian pharmaceutical company, known for its Visudyne anti-blindness treatment and its Eligard prostate cancer treatment, said the board is examining proposals from several investment bankers and it expects to name a financial adviser shortly to help the special committee in its evaluation.

Options could include "the sale of all or part of the assets of the company," QLT said.

But some analysts questioned which companies would be potential buyers.

"The question is who would want to purchase the assets? That is the question. It is great for them to say they are doing a strategic review and that they are putting the company up for sale," said John Maletic, an analyst at Scotia Capital.

"Some of the assets like Eligard could be sold at a reasonable price ... and the rest of the assets is anybody's guess. I suspect that they would not get the kind of valuations they are looking for."

By noon, the shares were up 68 Canadian cents, or 17.5 percent, at C$4.56 on the Toronto Stock Exchange. The shares were up 72 cents, or 18.5 percent, at $4.61 on Nasdaq.

"This is a bit of a white flag. Clearly the company has been fighting the tape for a while and trying to get its house in order," said Brian Bapty, an analyst at Raymond James Ltd, in Vancouver, British Columbia.

"They have been doing a reasonable job, but they have a lot of shareholders that I suspect have run out of patience, so there's some pretty decent incentive to make something happen."

Bapty, who values the company at $7 a share, expects QLT to be sold in one or two pieces, at most, for around the $7 a share mark. The company has a market capitalization of $260.1 million according to Reuters Estimates.

Although QLT is known for its Visudyne anti-blindness treatment, analysts see its Aczone acne formula attracting some interest among potential buyers.

The company recently filed an application for the treatment with the U.S. Food and Drug Administration and expects a decision by March 2008, a development that Bapty said could be "a sweetener" in any deal.

Analysts do not see its flagship Visudyne attracting much interest, however, even from marketing partner Novartis AG (NOVN.VX).

"Novartis is the primary candidate for buying that (Visudyne) and they haven't expressed that interest over the years, so why would they now, unless they got it at a discount," said Maletic.

The decision to put up the for sale sign follows a number of fits and starts to boost QLT's flagging stock price, which had been lingering near its 52-week low of C$3.44 prior to Wednesday's news, and well off its February high of C$11.67.

Last month, QLT said it planned to "significantly" reduce research and development costs in 2008 and shift its focus to its new punctal plug technology -- tiny plugs inserted into the tear ducts to prevent tear drainage.

This came after it reported another disappointing quarter, highlighted by a 43.3 percent drop in quarterly sales for Visudyne.

"There are a lot of what ifs in this company right now. The trick is, how much do you want to spend or how much does a buyer want to spend for these what ifs," said Bapty.

($1=$0.99 Canadian) (Reporting by Scott Anderson; Editing by Rob Wilson)