Technology valuation estimate of $400 million
moneycentral.msn.com
Value play: Naqvi says Cell Genesys (CEGE, news, msgs) is a value play, based on its
total current assets of $734 million, which includes a large amount of cash and a 12%
ownership stake in Abgenix. This is nearly equal to Cell Genesys' market cap of $785.7
million as of March 21. Naqvi calculates the value of Cell Genesys' own technology at $400
million, meaning the stock is trading more than 40% below its current value.
bull-market.com
That said, let's focus on two stocks I feel are worth watching in the near
term because of their relatively low valuations, cutting-edge technology,
and deep pipelines. The companies below may not be secrets, but they are
anything but household names either.
Cell Genesys (CEGE, $46)
Cell Genesys is an interesting outfit. A few short weeks ago, their
market cap was only half of their asset value. Yes, their share price was
50% less than the combined total of their cash on hand and investments. A
large portion of their assets was in the form of Abgenix (ABGX) stock, as
Cell Genesys owned 19% of the hot young company. Well, if the Street had
any doubts as to the legitimacy of those holdings, they must have been
erased when Abgenix -- who just recently announced a 2 for 1 stock split -
soared m ore than 70 points in the days following their secondary
offering. Their strong showing after a potential negative event sent Cell
Genesys soaring to new highs, but they still remain a bargain on paper.
Cell Genesys contributed to Abgenix's stock offering with a portion of
their shares, but they still retain over 12% ownership.
Cell Genesys currently owns 220 patents, plus they have well over 300
patents pending. Their pre-clinical programs include potential gene
therapies for cancer, cardiovascular disorders, hemophilia and Parkinson's
disease. At this time, they have a GVAX cancer vaccine in Phase II
testing and another in Phase I/II. While most biotechs would love to have
two years cash on hand, Cell Genesys has close to ten. Their strong
financial position will allow them to be more aggressive with their
research, and it also provides ammunition should they choose to license
late stage technology.
There are 32 million shares outstanding and 23 million in their float. As
it stands today, their equity in Abgenix and cash position adds up to $1.1
billion, leaving about $13 per share for their technology contribution.
On paper, Cell Genesys continues to be a bargain when compared to its
competitors. The Street continues to discount their patent property,
assets, and certainly not least, their technology. It is possible that
analysts are still wondering how Cell Genesys could have agreed to sellout
for $10 per share last year before backing out. Management paid a $15
million fee for their troubles, and possibly lost some credibility. At
this time, only one analyst covers Cell Genesys, and they recently
reiterated their Buy recommendation. Cell Genesys is optionable. |
