Hi Biotech Lady,
Looks like CRA and LEXG may have made a bottom and could begin to climb back up.
We'll see...
Did you see CRA's mouse story?
How do you think LEXG's knockout mice will relate to this?
I thought they already had a lot of this type of information. Perhaps LEXG doesn't have the entire genome mapped? Just the important genes?
Anyhow, it sounds like CRA is way ahead of the government consortium again...
redherring.com
Mice trap cash for Celera
By Tom Davey
Redherring.com, October 18, 2000
The study of rodents has long played a role in
understanding human diseases and searching for cures.
Now, scientists are completing their mapping of the mouse
genome, which is very similar to the human genome. In the
future, rodent research should provide shortcuts in finding
parts of the human genome that play a role in specific
diseases.
Celera Genomics (NYSE: CRA) announced last week that it
has sequenced about 95 percent of the mouse genome,
using genetic sequences from three separate strains of
mice. Perhaps Celera's timing was a coincidence, but the
company once again appeared to upstage a public-private
consortium with this announcement. Just six days earlier,
the Mouse Sequencing Consortium, backed by SmithKline
Beecham (NYSE: SBH), Affymetrix (Nasdaq: AFFX), The
Wellcome Trust, and six of the National Institutes of
Health, disclosed it was investing $58 million in sequencing
the mouse genome over the next six months. Celera staged
a similar public relations coup earlier this year when it
announced its work on the human genome well before the
completion of a similar effort by the government.
Whereas Celera plans to make money by selling its mouse
genomic databases, the government consortium will publish
its own database on the Internet as a free service to
researchers. But because the consortium is using a mouse
strain that is different from the three Celera is using,
analysts believe drug companies and universities will want
both because they'll be complementary.
So far, the bulk of Celera's revenues come from licensing its
databases and related consulting services. For its fiscal
year ending June 30, Celera lost $93 million on $43 million in
revenues.
THE BULLS
Most of the analysts who follow the stock are unconcerned
with the high growth costs and are optimistic about the
future. Winton Gibbons, an analyst for William Blair &
Company, says that when he started following Celera last
November, he predicted $65 million in revenue for the fiscal
year ending in June 2001. "The company has executed
beyond the best-case scenario," he says. "Now, we think it
should do more than $90 million in the current fiscal year."
Celera had better grow by at least that much to help
justify its $3.6 billion market value. Mr. Gibbons figures it
will. Ten years out, he predicts Celera will be raking in
somewhere between $1.4 billion and $4 billion in revenue
and will command a market value at that time of $15 billion
to $30 billion. Ironically, the stock peaked at that futuristic
value back in March and has since been in the doldrums,
now trading at about one-fifth of its 52-week high.
Mr. Gibbons says his figures might be conservative and
notes that by 2010 the company should have new revenue
streams such as percentage royalties on future drugs from
pharmaceutical companies that buy the database. But
compared with the many fast-growing companies in other
industries that are trading at relatively puny revenue
multiples, why would you want to bank on anything ten
years out unless you're buying at dirt-cheap prices?
MORE DOWNSIDE?
Some analysts and holders who like the company think
Celera may drop a bit further before it bottoms out. "A
whale of a lot of funds have lost money on Celera," says
Lissa Morgenthaler, portfolio manager for the Monterey
Murphy New World Biotechnology Fund. Because the fiscal
year for mutual funds ends November 30, she explains,
most funds will sell losing stocks by late October to offset
gains for tax purposes. Therefore, she expects Celera,
currently trading at $59, to dip to $50 or less before it
stages a rebound.
Coming up with an accurate value, however, is sheer
witchcraft. "You can't do a discounted cash-flow analysis
on Celera," says another analyst who loves the stock but
asked not to be named. "People are much more concerned
about subscriber growth right now. For a company with a
lot of hype like Celera, you can figure people will bid up the
multiple on it more than others."
Doesn't that sound exactly like what some analysts were
saying about dot-com retailers a year ago? Celera officials
were unavailable to comment for this story. |
