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Biotech / Medical : IVAX, Generic Giant

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To: Charles Holewinski who wrote (182)	4/22/1997 11:16:00 PM
From: DJ Levy	of 212

from the AOL discussion board: Subj: Re:Ignorance+.Panic:Opportunity... Date: Wed, 16 Apr 1997 00:41:06 EST From: Kurt696368 Message-ID: <19970416045600.AAA09393@ladder01.news.aol.com> Currently almost all of the analysts threw the towel on IVX for following reasons: 1) They got burned by the Co and they are upset to the Co 2) They are not doing their homework 3) Investor Relations in IVX is not very efficient. Only guy who is doing current intensive research on IVX is Dan Lewis of Gerard Klaus and he has a buy rating. Wholesalers are increasing their purchase from IVX after the merger break-off. They lowered their purchase in Q4 becuse of merger. Cardinal almost went down to nothing in Q4 because of merger. It could even offset the BBC potential shortfall ($40M) with the additionnal purchases from other wholesalers.By the way BBC gave IVX $6M order couple of weeks after the break-off. Mc Gaw, Int'l Generics, Specialy chemical, Personal Care, Diagnostics are all on the block. This could be the big news( one of them) that NCState is speculating. The reason that IVX did not announce their contingency plans and strategic alternatives is that currently they are in negations to sell noncore biz and they did not want to give the other party leverage on the price by giving a timetable to the street when non core biz will be sold. BBC broke the deal because they figured out IVX was not going to close the deal and IVX was using them as a to get a better price on the pieces. The reason that IVX was not gonna close the deal is because Frost find out he will be getting a better price. So stock should have actually gone up when they announced the break-off not plunge. But people are stupid and the fear took over the greed which I think will be reversed when they announce the first sale. Fundementals are clearly improving. They should be very close turning positive in Q1, but in Q2 comfortably so as far as EPS. Customer inventory levels ARE at the appropriate levels currently as oppose to near appropriate levels in Q4. Reorders are improving. Elmiron is on target for $25M this year. There is American Urology Association meeting this week in New Orleans. There will be some science papers that will be presented there showing that significant number of cases of prostitis for men are actually Interstitial cystitis. That's $1M patients in the US alone. Currently there re 200K I.C. patients in US. So this could be very big. Filing for KS indication on Paxene was smart. I should approved in late Q3 or Q4. Frost will be a meaninfull buyer of IVX as soon as he is allowed to buy. He can't buy right now because he is trying to sell pieces of the Co Within a month or so they should have Phase 3 clinical data on Cervene. Pricing is holding up fine. Much better than last year Q2 and Q3. Some private competition was put out of game. Royalties from GLX will be very meaningfull in time. Very little in Q1 Expect Seldane to do $5-8M for IVX this year. Frost won't be selling the CO below what he paid for it in the open market (the highest he paid was inthe low 20's) Liquidity is not a problem. They have $65M left in the revolver and 70M in cash in the bank. They are certainly not giving the discounts they did before. Also they are using pull through marketing and having the customer not just buy the product and sit in their inventory but incentivized to sell the product. Managers are more empowered than ever before. Moral is excellent right now. Robert Straus is a proven winner. I think he will turn the ship around. Frost is a good visionary and very resourcefull but he lacks focus BASF said they want to do large acquisitions this year. They said acquisition in the pharmaceutical is more likely than other industries. They also plan to invest 1Billion DM in the US in '97 which is very interesting with the context of they owned IVX in mid 20s and bought more in the mid teens and currently own 5.2%. In my opinon given all the facts I mentioned above and some others I did not IVX is a excellent buy right now. Currently people are scared, disgusted and stupid on IVX which creates great buying opportunities historically. Watch for analysts are jumping on the wagon after Q1 conference call and/or fist selling of the non core biz.

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