Jim McCamant's Picks and Comments from GeneAcres Conference on Life Sciences Facilities, April 28th, Oakland, CA. He talks quickly and I write slowly, abbreviated and paraphrased, so these are not direct quotes in every case. Buyer Beware! Jim, if you're out there, please feel free to correct me. For those who don't know him, Jim McCamant publishes the Medical Technology Stock Letter. I was going to put down info on subscribing, but I can't seem to find the copy of it I had. Hey Vector 1, did you end up with both copies after dinner last night? If so, toss one in the mail to me if you would (regular mail will do, save the Fed Ex, they wake me up from my naps #;-)
This was a rather short talk, which was made worse because Jim got a late start, and "abbreviated it even more". He used no overheads or slides.
Jim said it is an unusual opportunity to BUY Biotech stocks as the prices are so depressed at the moment. There has been tremendous fundamental progress in the industry and the prices don't reflect it. The product pipeline is full and each year more approvals, more profitability, all of which yields long term opportunities. Short term he says there is a great opportunity due to the extremely inefficient stock market at present. It is a volatile group, partly because inherent to the nature of the field, there are long product cycles, some will work, and some will fail. Wall Street exacerbates the problem. (definite paraphrasing above, the guy talks fast!)
In 91 Biotech was best performing of all stock groups. Highs hit in 92, then declined 60% to lows in July 94. May 95 to May 96 doubled, then declined to Nov 96 and then up to Feb 97 when it has declined substantially again to the present time, much of it due to "nervousness" in the markets. Jim said that a couple of weeks ago, he would have said that it was hard to see how it could go lower, but then it went down some more. (crowd laughed) But, he made the point that for long term investors who are buying in constantly and holding long, that they should be OK, but that it is hard on "traders".
Jim said when evaluating biotechs that PE ratios don't really matter. He said you have to look at the total market capitalization of the companies. He made the point that the place to make real money in biotech is by buying companies with market caps in the $100 million, uhh but now more like $50 million range and watch them go into the billions. "We will see people get excited about Biotechs again in the next few years."
Much of the volatility is due to the Sell Side Analysts doing a poor job, concentrating on the few big ones, and that their revenues are from clients, ie.) money comes from underwriters. (basically that they ignore much of the field is what he was getting at)
He said that Biotech is good for individuals who have exposure to the industry which gives you a basis to select and understand the stocks. He also pointed out that "some of the bad ones are pretty obvious."
OK, the good part, JIM's PICKS:
His only Large Stock Recommendation:
Chiron: Best on R&D, best pipeline, and sells for less than the component pieces of the company would sell for if broken up and sold off. Have 5 products awaiting FDA approval. They only spend 15% less than Amgen on R&D, yet have a $3 billion market cap versus Amgen's $15 Billion Market Cap. He guesses that in 5 years that Chiron will be worth more than Amgen.
XOMA: per the recent bad news, said that Pfizer wouldn't give up on E5. He made the point that all efforts are on BPI.
Shaman: the #2 infectious disease killer in the world in diarrhea. They have a P3 which should start in 3Q 97 for Travellers diarrhea. They also have Type 2 diabetes clinical (I think clinical, might be pre-clinical, not sure if he said what phase???)
Agouron: $100 prior to FDA approval of protease inhibitor which is better than current protease inhibitors. Trades at $62 today. Initial sales of the drug are exceeding estimates. They also have a Rhinovirus inhibitor going into clinicals (soon??)
ISIS: Leader in Antisense. For Crohn's disease, they got statistical significance in a 20 person P2 trial.
Jim then took questions from the crowd, which basically amounted to shout up your stock and he would make a quick comment. The guy was pretty amazing at how quick and knowledgable he was.
Immunex: Above his buy limit
Anergen: Not recommending it, but intrigued by it
Gilead: Negative on it. Shifts focus of what they do, but great Wall Street support (implying overvalued), lots of $$$, good long term prospects.
Cytel: was negative on it, but is now extremely cheap
Affymetrix: Seemed to like it, but "not particularly cheap"
Biogen: Poor pipeline - in spite of spending lots on R&D, made too high of estimates on product revenues (Vector 1 definitely doesn't agree with him on this one!)
Favorite Gene Therapy Recommendation: Gene Medicine, but it is just above his buy point though. Also said that Chiron has a great gene therapy pipeline.
Genome companies: generally overvalued
Guilford: Still too fully valued. Wall Street is in love with it.
SuperGen: "Skeptical", then some mummbling on about generics that I couldn't make out.
I got in the last one at the public forum:
Cytogen: Used to recommend it but gave up 2-3 years ago, when had poor marketing of first product. Have an interesting pipeline, but "they need to prove themselves before he would recommend it".
That was it for the public portion. But, I hounded the poor guy, among many others afterwards for a bit in the hallways, and at a reception afterwards and caught a few more tidbits.
Incyte: not cheap, but the best of the genomics
He seemed to also really like Connectus (formerly Connective Therapeutics).
Sorry Andy, but I didn't think to ask him about Ligand, and didn't get your request to do so until the night after the conference. C'est la vie.
Dadadadadada...dats all folks.......
Rman |
