Columbia Laboratories Inc. has engaged Banc of America Securities to explore strategic alternatives, including a possible sale. And though the company's stock has lagged, sources believe brighter days are ahead. The company's stock has been floundering since June 12, when it dropped nearly 56% to close at $5.75, after Columbia announced that the phase III trial of Advantage-S, a spermicide, failed to show that the product could prevent the transmission of the HIV virus.

The Street had a ho-hum reaction to the June 28 announcement, with the stock losing about 7 cents to end at $5.06. But at press time, the stock had traded up to close at $6.

Sharon di Stefano, an equity analyst with Ryan, Beck & Co., said the Street had a "knee-jerk reaction to an over-the-counter product that is a sidebar to the company's core competencies, which is hormone replacement therapy."

Columbia, headquartered in Adventura, Fla., is a $136 million market cap pharmaceutical company that specializes in the research and development of female-specific diseases, including infertility, hormone replacement therapy for men and women, and the prevention of sexually-transmitted diseases.

Though Columbia also faces a class action lawsuit, filed in the U.S. District court for the Southern District of Florida, Di Stefano was not too concerned. Class-action lawsuits tend to go away with time, she said. "Very rarely do they kill a company."

Di Stefano believed that a sale of Columbia is a more remote possibility, and noted that she would sooner expect a strategic alliance with a major pharmaceutical company regarding one of Columbia's products that are on the market now, or in clinical trials.

Still, she believed that if the company were to get taken out, the most likely candidate to do so would be current partner, Ares-Serono, an international pharmaceutical company that specializes in fertility products.

She added that, based on a multiple of future revenues, the company could get taken out for anywhere between $14 and $16 a share, or in a range of $413 million to $472 million.

She added that Columbia is expecting positive results from its Phase-2 clinical trials for a testosterone supplement for men.

Columbia Vice Chairman Paul Apostolakis said the company should know what direction it will be headed in by the end of the year. He did not elaborate.

Banc of America banker Paul Donofrio declined to comment.

For the first quarter, the company posted a loss of $1.4 million on revenue of $3 million compared with a year-earlier gain of $100,000 on revenue of $5.5 million.