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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: Peter Church who wrote (1024)7/23/1997 8:11:00 PM
From: JOHN W.   of 6136
 
The last three posts regarding projected earnings per share clearly demonstrates the variety of errors that occur when projecting earnings.
A few points that I would like to make regarding EPS:
1) PE Range: To consider a PE for a company like Agouron of 10
when Coke has hit the 40s is ridiculous. The argument of a short lifespan of Nelf affecting the PE is absurd. One only has to consider the recent events RE: AMGN to see that this is not a likely event.

2) R&D: "you may have overestimated the EPS by not including R&D expenses". What is really being done is a gross underestimation of the commitement of Roche for co-development of THYMITAQ and AG3340. AGPH will receive approx 80 million over the next 4 yrs (R&D). Review; 80% of development costs are being picked up by BIG-PHARMA. Still worried about R&D expenses? Look at the blockbuster drugs that this money is being used to develop and the potential in price appreciation that they bring to AGPH. Viracept in itself is not AGPH. Yet still there are people saying 20 million shares outstanding from 14.6 million in 1-2 yrs?

3) Revenues are only considering sales here in the U.S. This drug will be sold globally.

4) THYMITAQ will bring approx 50 million in revenues for FY99.

5) Dr. Lind's $5.60 estimate is based on very conservative (ridiculously?) growth estimates by his own admission.

6) There will be a small % of those that will discontinue Nelf, but the growth of new patients will more than compensate. The PI mkt will be
at least 2.5 bil in 5 yrs.
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