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Biotech / Medical : GZSP, Genzyme Surgical Products
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To: David Howe who wrote (5)7/6/1999 11:07:00 AM
From: jeffbas  Read Replies (1) of 55
 
Actually last night I reconsidered the valuation but not my general view -- and bought an initial amount this morning.

I think the surgical device business surely could be sold for at least $100 million, which is $6.25 per share. On the roadshow tape, Collier said they paid $250 million and that "it is worth more now" (which would be $15.625 per share). There is no debt.

The $150 million cash in addition should last 5 years even if there is no success with Seprafilm or biotherapeutic products. Therefore, it does make sense that with a core business worth between 6 and 15 and a (mediocre) biotech business where you get 5 years of future staying power for nothing, that this price is too cheap.

Lastly, this must be a HUGE embarrassment for GENZ -- to assign a nominal value of $25 to the tracking stock, do roadshows all over, and have it selling here. I actually think this is almost the most important investment factor -- that they may try to do something to improve the price. Therefore, I will probably double my initial position if it drops to $3, and double it again at $2.

On the technical side, in my opinion, the break of $4 today without dropping to say 3 1/2 is not too bad. There are buyers. If we can close at $4 or better, that will be promising. If it can close up on the day I would become quite positive. We shall see.
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