Hi, I'm back and you can't see my tan line. Well, in the short term, I see AGPH going to $105. Lehman had a conference call today and I'm somewhat surprised that you didn't mention it on the thread. I disagree that consensus for the June quarter is a loss of $.15 - although some people are in print for a huge range of numbers (from +3 cents to big losses), I think that most analysts aren't going to revise estimates so close to reporting time. Lehman is now expecting positive eps for the June qtr. - although it has been suggested to me that in June, no payments were made from AGPH to their partner, which in the future will occur. I listened to the recorded call - if I can find the playback number, I'll post it for you all, but after being out for a bit, my desk is messier than the set of the movie "Twister". Highlights from the call -
1. they're selling a lot of pills. (no shit, Sherlock!)
2. Statement was made by guest MD that Viracept was equal potency to Crix, but when questioned could not back it up - I find that important.
3. Crix has more side effects than originally thought - not new news.
4. Claim that if you become resistant to non-Viracept triple therapy, you'll be able to switch to Viracept and be a happy camper just isn't backed up by the data and John, I am certain you & Robertson Stephens & a couple of other analysts knew that yet wrote that patients "responded". Responded is actually a viral load drop of .5logs, and that drop isn't much (we can agree on that)and that certainly isn't "below the level of detection".
5. Flipping around the mutation scenario to claim that if you become resistant to Viracept, you'll be able to switch to Crix...IMO, this claim at this point in our knowledge of the disease is quite irresponsible (I know that's a strong term) - I know you disagree but don't argue with me, argue with Douglas Richman, MD - member of the Advisory Board, International AIDS Society, and Professor of Pathology and Medicine at UC San Diego. Richman was part of panel in San Francisco who reviewed the St. Petersberg conference papers. Besides the review meeting in NY, there was one in San Francisco 2 days earlier.
6. And this is real interesting - Butler (lehman analyst) was asked the following after the call - Could Vertex be a short because by the time their drug comes out in late '98, much of patient base will be long along the road to viral resistance to the entire class of pi's? He said it was an issue that concerned him. Of course, that would also affect AGPH, but AGPH at least would have a big chunk of the market, but this again points out the big risk in the story - how long will this drug be around? - and therein lies the valuation issue. I don't know the answer, but given that risk, I couldn't buy AGPH on fundamentals. Yes, I'm aware of the dual PI approach that you suggest, but that may have some serious problems too.
7. AGPH's ad in the June issue of Individual Investor came up and the peanut gallery (former Lehman analyst) said not to worry. It was suggested that the ad couldn't be pulled in time because magazines are put together far in advance of distribution. If AGPH is truly trying to be more than a drug company out to make $, then a public explanation of the ad and an apology would be a wonderful gesture. (IMO)
8. An important component of the buy recommendation was the short interest in the stock, which IMO is not the role of of a sell side analyst to take into consideration. The role of a sell side analyst is to fundamentally evaluate companies and industries that he/she is assigned to. (just my 2cents worth) the portfolio mgr can overlay his or her opinion of chart reading and/or sentiment and come up with a decision.
9. Financing needs - a squirrely issue. One of components of a short thesis is that they need money. AGPH is suggesting they may not need to do a deal. is that message meant to scare shorts and make them cover, making the stock go higher, and then they can do a deal at $140 instead of $80? Nobody knows except the source at AGPH.
10. Lehman is much less bullish than you regarding Thymetaq (however you spell it). he said that the data "wasn't as bad as people made it out to be", but to me that doesn't sound very exciting.
11. Even though you probably like this posting, if you want I am sure that I can find something to piss you off if you'd like, but I've got a lot of other stuff to do, so you'll have to wait.
Love,
David S. |
