Here's some info in support of pops' DNAP interest.
A New Biotech Boom Could Loom -- Dec 1 2000
by Dan Dorfman
NEW YORK (JAGfn.com)--If you're a gutsy investor--the kind who is willing to risk money on tomorrow's medical dreams--read on.
If not, switch to another columnist on this Website.
Why so?
Because this report is about investing in a volatile, high-risk sector--the biotech arena-- that could fall prey to an onslaught of selling, possibly in the very near future.
Here's the story.
Given their giant-sized market valuations and lofty P/E multiples in a treacherous market environment, biotech stocks--which are humming today in line with a general rise in the overall market--would seem to be rife with risk even though they've shed an average 30% since early November.
Seemingly adding to the risk is the view of a number of pros that the weakness in the technology sector may well be followed by similar pressure in the biotech industry.
A hefty addition to the supply of biotech shares is yet another flashing red light. Since Oct. 1, an estimated $8.2 billion of financing was raised in the biotech arena through the issuance of additional stock.
If it all seems somewhat frightening--I know it would frighten me--we shouldn't be scared.
Why not?
Because the biotech trackers at Prudential Securities say industry fundamentals are better than ever, with promising advancements on the near-term horizon and the possibility that biotech valuations could return to recent highs by year-end 2001.
If that were to happen, biotech stocks would boom again.
For example, at its recent high, the large-cap biotech group sold at an average multiple of 70 times projected per-share earnings, 18 times estimated revenues and 2.5 times projected long-term annual growth.
In contrast, the index, due to the biotech selloff, currently sports a multiple of 58 times earnings, 14 times revenues and 2 times long-term annual growth, based on 2001 projections.
Why so bullish?
Pru's biotech trackers point, in particular, to a slew of positive factors, namely new drug enhancements, over the next 12 months. In brief:
--A novel erythropoietin-stimulating protein (NESP) from Amgen (AMGN), 65 7/8, for red-blood-cell growth could open up a new $3 billion market opportunity.
--Xolair for asthma from Genentech (DNA), 75 1/8, would become the first-ever biologic to treat this disease and has billion-dollar potential.
--IMC-C225 is an anti-cancer antibody from ImClone Systems (IMCL), 46 3/16, that also has billion-dollar potential.
--Zevalin and Bexxar, novel radioimmunotherapies from IDEC Pharmaceuticals (IDPH), 180 31/32, and Coulter Pharmaceuticals (CLTR), 32 3/16, respectively, could bring a new treatment paradigm to patients suffering from refractory low-grade non-Hodgkins lymphoma.
--Therapeutic vaccines are expected to rise in Wall Street's esteem, as Phase III data on Provenge for prostate cancer, a product of Dendreon (DNDN), 17 7/16, and PVAC for psoriasis from Corixa (CRXA), 32 7/16, are both due out by year-end. Corixa, by the way, is buying Coulter Pharmaceuticals.
--Human Genome Sciences (HGSI), 69 1/16, is expected to file six Investigational New Drug Applications in 2001, reflecting the tremendous impact that genomic-based discovery can have on the biotech development pipeline going forward.
--Pru's single best biotech idea, Myriad Genetics (MYGN), 81 5/8----which is up on the day 11 3/4 or 16.7%----should launch its fourth genomics-based diagnostic product (Prolaris), a predispositioned test for prostate cancer and an indicator of the paradigm shift to better diagnostics and an earlier treatment inherent in genomic discovery.
In line with their bullish biotech sentiment, Pru's biotech trackers have recently upgraded four stocks to "strong buys." They are Genentech, which carries a 12-month target of $110; IDEC, whose price objective is $240; Gilead Sciences (GILD), 84 13/16, with a price target of $90 and Sepacor (SEPR), 77 1/8, with a target of $100.
Interestingly, all of the biotechs mentioned in today's column are up on the day at presstime. |
