I think that several of us have had long-standing respect for VRTX. I really like them, and have liked them for a long time. Two different creatures, AGPH and VRTX. However, from what I can see, Viracept will gain and *hold* market share. The relative market valuations thus make AGPH a screaming buy, IMO.
We could also look at BCHXF. They just came out with earnings for last quarter of $15 million. This supports, given their interesting pipeline (not outstanding, apart from 3TC for HBV), a market cap of $2.7 billion at the close today. Merck has just recently, I believe, indicated that crixivan is currently selling at $400 million/year. So, let's add in ritonavir and saquinavir and estimate the current sales of PIs at $600 million (and heading much higher, I think everyone will agree). My worst case scenario is 20% penetration and 50% margin for Viracept. At $600 million/year, that equals the $15 million/quarter that BCHXF just reported.
By any measure relative to VRTX and BCHXF, IMO, AGPH is way undervalued. Agouron expects margins to ramp up toward 70%, and you hear estimates of the PI market which are 3X current sales or better. If you use 1.8 billion as the market size, 40% penetration and 70% margin, you get $500 million. My own personal view is that we'll see closer to 100 than 500, but you can see why some people consider $200/share a reasonable target.
I expect to see 3340 (the MMP inhibitor) in U.S. trials and initiation of phase II testing by June.
Cheers! Rick |
