The Bull Market Drug & Biotech Investor - bull-market.com
THE BULL MARKET BIOTECH INVESTOR for Sunday, June 25, 2000
Volume 7, #6
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The Bull Market Biotech Investor is a periodic series of discussions of
the changing Biotech and Pharmaceutical world we live in and the companies
that are going to profit from these changes.
The Bull Market Report web site has links to The Bull Market Biotech
Investor (http://www.Bull-Market.com). The site includes The Bull Market
Biotech Portfolio (with 12-month price targets for its 21 stocks), and all
issues of The Bull Market Biotech Investor, including today's.
Descriptions of the companies and links to their web sites accompany the
Portfolio.
We try to cover some of the most relevant news relating to investment
potential in the healthcare industry, and particularly to the companies in
our Portfolio. Just because we haven't mentioned an event or a company
doesn't mean we don't think it's important!
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DISCUSSION
In last weekend's edition of The Bull Market Biotech Investor, we noted
the peculiar strength demonstrated by Biotech stocks on three consecutive
Fridays in June. Well, as soon as we mentioned it, the streak came to an
end. When it seems that all we need is a fistful of darts and a few press
releases, the sector begins to experience a pullback.
On days that the Nasdaq exhibits great strength, investors like to see
stocks of the big high technology companies leading the charge: stocks
such as Intel, Cisco, Microsoft and Dell. On a similar note, when Biotech
stocks begin moving higher, we like to see the larger companies (the
familiar names) leading the sector. This pattern did occur at the
beginning of last week, but by the middle of the week the sector began to
lose its strength as investors took profits in stocks of the larger
Biotechs.
In an effort to provide more technical information to our readers, we are
providing in our weekend edition a list of the best performing
Biotechnology stocks. Our aim is to provide a recap of some of the week's
highlights in the Biotechnology sector as well as some technical
information regarding Biotech stocks.
The following is a list of last week's best performing Biotech and
Pharmaceutical stocks according to percentage change in price.
Company Symbol Close Change %Chg.
Lexicon Genet LEXG $24 10 76
OSI Pharma OSIP 24 8 49
Cytoclonal Ph CYPH 11 4 45
Sequenom SQNM 48 13 37
Alexion Ph ALXN 58 14 31
Arqule ARQL 14 3 31
Pharmacopeia PCOP 34 7 25
Immunogen IMGN 12 2 22
Magainin Ph MAGN 5 1 21
Cytogen CYTO 10 2 21
Abgenix ABGX 138 24 21
Agilent Tech A 75 13 20
Geron GERN 33 6 20
Genzyme Trans GZTC 28 5 20
Celera CRA 127 21 20
Orchid BioSci ORCH 26 4 19
Immune Resp IMNR 9 1 18
Progenics PGNX 15 2 18
Tularik TLRK 30 4 16
Immunomedics IMMU 22 3 15
Valentis VLTS 10 1 14
Genome Thera GENE 30 4 14
Genelabs GNLB 5 1 14
Genentech DNA 150 18 13
Repligen RGEN 6 1 13
Texas Biotec TXB 16 2 13
ALZA AZA 56 6 13
Enzo Biochem ENZ 68 8 13
Immunex IMNX 50 6 13
Curagen CRGN 40 5 13
Targeted Gen TGEN 12 1 12
Cubist Pharm CBST 44 5 12
LEXICON GENETICS
The big winner of the week was Lexicon Genetics (LEXG) advancing 76%. The
company put out a press release on Tuesday morning stating that they had
genetically altered over one-third of the genes in the mouse genome. The
value of having thousands of genetically altered clones (each mouse genome
containing a mutation is referred to as a clone) is that it can speed up
the process of determining the function of specific genes. Since there is
a high degree of homology between the mouse and human genomes, the
information that is garnered from studying the function of genes in murine
models may be applicable to human models. Also on Tuesday, CIBC World
Markets reiterated a "Strong Buy" recommendation on Lexicon Genetics with
a 12-month price target of $30 (not a huge upside target). We discussed
Lexicon Genetics in the June 22nd edition of The Bull Market Biotech
Investor and that can be read at our website.
OSI PHARMACEUTICALS
OSI Pharmaceuticals (OSIP) advanced 49% on the week with the entire gain
being acquired on Monday. Due to the merger of Pfizer and Warner-Lambert,
the Federal Trade Commission is requiring Pfizer to grant a potential
cancer therapeutic to OSI Pharmaceuticals. The anti-cancer agent is a
growth factor inhibitor; a member of a class of compounds that show much
promise. On Tuesday, both Robertson Stephens and Prudential put out
"Strong Buy" ratings on the company. However, Robertson Stephens lowered
FY00 and FY01 earnings estimates for OSIP because of the expected
increased research costs associated with further development of the growth
inhibitor.
We would guess that if the market is weak this week, you may get to buy
OSI at a lower level.
CYTOCLONAL PHARMACEUTICALS
The stock of Cytoclonal Pharmaceuticals (CYTO) was silent all week until
Friday when the company issued a press release stating the development of
an inhibitor of the BCL cancer gene. The stock price added 3.5 points to
$11. Cytoclonal Pharmaceuticals has a proprietary technology termed OASIS
(optimum anti-sense reagents) that is used to generate Anti-sense
molecules. Anti-sense molecules are synthetic pieces of genetic material
that are complementary to normal gene sequences. The Anti-sense molecule
can thus bind to the normal gene sequence and render it ineffective for
making protein. A possibility for the company is to use its OASIS
technology to create a library of Anti-sense molecules to all human genes.
This would be a large task; however, it should be possible to generate
effective Anti-sense molecules to many genes related to human disease.
HUMAN GENOME SCIENCES
Although Human Genome Sciences (HGSI, +9%) was not one of the top
percentage gainers in our list above, the company issued a significant
press release concerning the initiation of human clinical trials for its
BlyS protein. To give you an idea of the pace at which science travels
from the laboratory bench to an approved drug, it was last July that Human
Genome Sciences published a paper in SCIENCE magazine describing the
discovery BlyS: a human protein that induces the growth of B cells and
the secretion of antibodies from those cells. We can assume that the
company had spent at least the previous year performing the science that
led the publication. So, after at least two years of work, the company is
ready to begin a clinical trial -- actually a fast pace for science. It
could take another four years before BlyS, if efficacious, finishes a
phase III clinical test.
Human clinical trials will commence with individuals with Common Variable
Immunodeficiency. This disease is characterized by the inability of
patients to produce enough antibodies to ward off infections. The
objective is to discern whether treatment of these immunodeficient
individuals with BlyS will restore or enhance their production of
antibodies. In addition, there is the hope that BlyS will be applicable
to other human diseases or immunodeficiencies characterized by B cell
disorders such as autoimmunity (when individuals make antibodies against
their own "self" proteins) and cancer.
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Don't forget that on Monday there is expected an announcement that the
Human Genome Project has finished a rough draft of the human genetic
sequence. Celera Genomics has been in a race with the
government-sponsored Genome Project and it is expected but unknown whether
Celera will be involved with the announcement. Either way, if an
announcement is made, it should make for an interesting day for stocks of
companies involved with genomics.
Robert Mendoza, Ph.D.
Contributing Editor
The Bull Market Biotech Investor
Mendoza@Bull-Market.com
Biography. Robert Mendoza has monitored and made investments in the
Biotech sector since 1985. Dr. Mendoza is currently a research scientist
at the University of California San Diego and is developing models for the
gene therapy of cancer. Robert earned a doctoral degree in Molecular
Biology at the University of California Berkeley and also holds a Master's
degree in Chemistry from the California State University at Fullerton. At
the current time, Dr. Mendoza does not hold a position in the companies
discussed in this article..
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2. PORTFOLIO TRACKER
The Bull Market Biotech Investor Portfolio:
The columns indicate the closing price for stocks on June 16th and June
23rd, the change in price and the percentage change. The %YTD represents
the percentage year-to-date change for each security.
Name Symbol 6/16 6/23 Chg. %Chg. %YTD
Affymetrix AFFX 175 176 1 1 4
*ALZA AZA 50 56 6 13 15
Amgen AMGN 68 67 1 -2 11
Biotech HLDR BBH 164 172 8 5 20
Biomira BIOM 10 10 0 0 140
B-M Squibb BMY 53 54 1 2 -16
Celera Genomics CRA 106 127 21 20 -15
*Chiron CHIR 43 44 1 2 19
*EntreMed ENMD 26 28 2 10 -15
*Gene Logic GLGC 36 39 3 8 11
Genentech DNA 132 150 18 13 12
Gilead Sciences GILD 66 69 3 6 28
Human Genome Sci HGSI 134 145 12 9 90
Imclone Systems IMCL 82 81 -1 -1 104
*Maxygen MAXY 56 62 6 11 -23
MedImmune MEDI 70 70 0 0 27
Millennium MLNM 120 120 0 0 96
Merck MRK 71 73 2 2 9
Pfizer PFE 48 46 -2 -4 42
*Phrmceutcl HLDR PPH 99 98 -1 -1 8
ViroPharma VPHM 15 14 -1 -4 -60
The portfolio has achieved a year-to-date gain of 15.4%.
*These securities were added to the portfolio after the beginning of the
year. The %YTD reflects the percent return since being added to the
portfolio.
Good Biotech investing!
Todd Shaver
Editor in Chief
The Bull Market Report
Washington, DC USA
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Disclaimer: Todd Shaver and other contributors to this newsletter may
hold positions in securities mentioned in The Bull Market Biotech Investor
for purposes of investment or trading.
All information contained in the newsletter is obtained from public
sources. The sources used are believed to be reliable but the accuracy of
this information is not guaranteed.
The Bull Market Report, LLC is not a registered Investment Adviser or a
Broker/Dealer. Readers are advised that the report is issued solely for
informational purposes and is not to be construed as an offer to sell or
the solicitation of an offer to buy. The opinions and analyses included
herein are based from sources believed to be reliable and written in good
faith, but no representation or warranty, expressed or implied is made as
to their accuracy, completeness or correctness. Readers are urged to
consult with their own independent financial advisors with respect to any
investment. All information contained in this report should be
independently verified with the companies mentioned. In addition, The
Bull Market Report is taking no compensation of any kind from any
companies that we mention in this
report.
(C) Copyright 2000 The Bull Market Biotech Investor and The Bull Market
Report, LLC.
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