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Biotech / Medical : GZSP, Genzyme Surgical Products
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To: Micawber who wrote (2)7/5/1999 12:19:00 PM
From: jeffbas  Read Replies (1) of 55
 
Perhaps.

This post of Rick's would concern me more:
Message 10367706

I listened to the roadshow presentation last night genzyme.com

I was not impressed. They have a slow growing, respected surgical device business which they appear to have grossly overpaid $250 million for years ago. There is the Seprafilm business which IS interesting and appears to be making progress -- but I don't like the apparently large potential for adverse developments because of competition -- see above reference. (They may be pioneering a field for someone else's benefit.) They also have a startup biotherapeutic R&D effort.

I could see the surgical device business selling at a modest P/E of modest earnings in a competitive business -- if you did not have the huge goodwill to amortize. Because of that it will be hard for them to ever report earnings from that line. The adhesion prevention (Seprafilm) business is quite interesting, but not if their product position is suspect longer term. The biotherapeutic business is just a money pit for the foreseeable future.

In my opinion, the current valuation is not a surprise. They do not have the latitude to take actions that would really increase shareholder value, because this is not an independent company. However, if they today sold the Seprafilm business for what they could get, closed down the biotherapeutic business, laid off a bunch of employees, and wrote down the good will by a ton, they would be left
with a decent, profitable surgical device business, a ton of cash and a stock value over $10.

As I said before the value will be constantly eroding here and if the
thesis in the prior paragraph is near the mark I would not want to be a Director responsible for enhancing tracking stock value.

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