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Biotech / Medical : Biotech Valuation

CRSP 56.71

+0.4%

Dec 24 12:59 PM EST

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To: scaram(o)uche who wrote (1622)	9/14/2000 12:59:14 PM
From: Jim Oravetz	Read Replies (1) of 52153

Sciclone Pharmaceuticals (SCLN) 10 11/16 +13/16: The company is currently a relatively small player in the biotech industry which has come to light today following an initial buy rating from UBS Warburg which set a price target of $26. The reaction to the news has been favorable but relatively tame. The flagship drug for SCLN is Zadazin which boosts the body's immune system in the fight against multiple types of cancer and infectious diseases including both Hepatitis B and C. Currently the drug is in or expected to be in phase 2 and phase 3 development in the 3 major markets (US, Europe and Japan). No reason to become overly excited here except that Zadazin is already selling in Italy (first commercial launch in Europe) and in 21 emerging markets in Asia, Latin America and the Middle East. Assurances that the drug will successfully complete the phase 2 and 3 trials are clearly not certain but the reason for the favorable rating according to the analyst is that they are expected to be in the phase 3 US testing with Schering-Plough`s Peg-Intron-A. This cocktail is targeted at the Hepatitis C market which has thus far been underserved with 50% of the patients non-responsive to current treatments. Just 10% of this market would result in sales of several hundred mln. The drug combination with Schering-Plough is not considered the only potential association as Warburg feels that a marketing partnership is possibly in works as soon as 2001. Sales for the drug in the first half of this year were $7.7 mln, 115% better than the year ago period with 1999 topping the previous year by 151%. Projections for the entire year are at $17.8 mln with FY01 at $28 mln. These sales figures are above industry averages, it has no debt and is considered on the cheap side vs its peers. The timing of the initiation of the coverage is also interesting in that the stock has bounced off a trendline off the May/August lows, its 200 day simple ma and a longer term trendline off the March/July highs. Technically, a posture above this area sets the stage for a run at resistance at 12 and the recent trading range top at 14 over the relative short term. Ultimate success for SCLN will hinge on the success of the trials but the association with a major drug company like Schering-Plough and the developments thus far suggest keeping an eye on the company both short and long term. -- Jim Schroeder, Briefing.com – 9/13/00 Jim

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