info on GENE Therapy...written up on Cutting Edge...someone sent it to me. I have HGSI. AFFX has great technology,,,but expensive...
gene therapy WILL be HUGE...i don't know who will win the race,,but i think there will be many winners. HGSI, MLNM, INCY, AFFX and CRA are solid.
_ Human Genome Sciences (HGSI-NASDAQ)
_ Affymetrix (AFFX-NASDAQ)
_ Genome Therapeutics (GENE-NASDAQ)
_ GeneLabs (GNLB-NASDAQ)
MAPPING THE HUMAN GENOME COULD BE THE GREATEST DISCOVERY EVER
Human Genome Sciences may have all of the answers in the biotech
sector. HGSI is the company mapping the human genome. Nothing else can be said about this, except it is earth-shattering. Their leadership is in the fact that not only are they well-funded to map the human genome (they currently have $288.6 million in cash), but they also have a monster portfolio of patents. Currently, HGSI has or has applied for over 5,500 patents covering potential medical uses of 6% of all human genes. This is considerably more than all the rest of the world combined. The closest competitor to HGSI is Incyte Pharmaceutical, which has about 107 patents.
Although Human Genome Sciences is years away from having gene-based drugs on the market, HGSI has substantial intellectual capital. Any big pharma would love to get its hands on HGSI's genomics database. Currently, Human Genome Sciences trades at a market cap of roughly $2 billion - putting it solidly in the first-tier biotech camp. But let's be honest. If the Human Genome Project delivers on just 10% of its expected potential, Human Genome Sciences is easily a $40 billion company in the coming years (remember: Amgen trades at a market cap in excess of $40 billion). As the purest play on the human genome
project, Human Genome Sciences is a strong buy between $95 and $85 a share.
GENE CHIPS ANYONE?
I love Affymetrix (AFFX-NAS-DAQ). Let me state that up front. But as a microcap investor, I've been play-ing this blockbuster technology
through Gene Logic, which is a small-er version of Affymetrix. Before I get into AFFX's amazing technology, let me give you some numbers which demonstrate that AFFX's technology isn't some pie-in-the- sky idea. Top line growth for AFFX has been stellar. In 1995, AFFX posted revenues of $4.6 million. In 1997, it posted revenues of $19.8 million. For the trailing 12 months, AFFX has swelled its top line to $81.9 million. What do these numbers mean?
It means the market is eating up Affymetrix's technology. And here's what they do. Affymetrix is the developer of the GeneChip, the leading computer technology for the acqui-sition, analysis and management of complex genetic information for use in biomedical research, genomics and clinical diagnostics. Affymetrix's GeneChip technology can be used for a broad spectrum of nucleic acid analy-sis applications including sequence analysis, genotyping and gene expression monitoring.
The previous two paragraphs are a bit eso-teric. But here it is in a nutshell. Using AFFX's GeneChip, biotech and big pharma companies can quickly test drugs against computer-gener-ated gene expressions. The companies can then, through various analyses, determine if there's a possible drug target. So what previously took months, even years, to determine a possible tar-get, now takes minutes. Affymetrix's clientele is a who's who in the drug market:
American Home Products, Astra, Bristol-Myers Squibb, Eli Lilly,
Hoffman-LaRoche, Gene Logic, Glaxo Wellcome, Hoechst, Merck,
Millennium, Novartis, Pfizer and Warner-Lambert/Parke Davis.
You really don't need any more validation than that. AFFX's top line growth coupled with these customers is proof enough that the GeneChip is huge. In fact, the current estimate market for microarray space is at least $7 to $8 billion. As a pure play on the high tech and
genomics market, Affymetrix is a strong buy at current levels.
TWO MICROCAP STOCKS TO ROUND-OUT OUR GENOMICS PLAYS
I rate Genome Therapeutics (GENE - NASDAQ) a strong buy based on its
novel genomics technology and swelling top line. Let me throw this at you: Genome Therapeutics has posted trailing-twelve-month revenues of $23.7 million. Yet the company trades at a svelte market cap of just $64 million. So the stock is trading at a price-to-revenues ratio of 2.7. Not bad for the biotech sector. At current levels of $3.75 a share, you can't go wrong picking up GENE. This is the kind of company that gets picked off before its valuation gets too expensive. So downside at these levels is minimal. But the upside could be enormous. Genome Therapeutics is a strong buy at current levels with a 12-month price target of $10 a share.
Buy Gene Labs (GNLB-NASDAQ) under $4 a share. I love this stock, too. Maybe it's because they could have a drug to treat lupus (clinic name: GL701) on the market within 24 months. Not a huge market, but it would be the first lupus drug on the market in 40 years. If GNLB's drug is approved, current estimates say the company will generate in excess of $250 million in its first year.
Earlier this year the FDA gave the drug fast-track review status, a
priority to address serious or life-threatening conditions for which
there is no existing, adequate therapy currently. This is one of the things I look for when evaluating a biotech for a possible recommen-dation. This is a considerable plus. And at only $3.50 a share, the downside is minimal and the upside enormous.
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