7. All the big pharms are getting into genomics/biotech, by buying and forming partnerships. The alliances between the big drug
company, and the little biotech, are usually very complex. When I've looked at them, it usually seems like a very unequal
partnership. The biotech ends up taking most of the risk, and the BigDrugCo. milks the biotech for their research and pipeline, and
ends up taking most of the profits. In this case, AHP still owns 41% of IMNX, which gives them effective control. The rest of the
shareholders of IMNX have to hope that AHP doesn't do anything against their interests. However, it's a given, that what
happens to AHP stock is a lot more important to AHP management, than whatever happens to IMNX stock. I've seen examples (in
other companies) where the minority owners get screwed. In this case, everyone but AHP is a minority owner. I have a feeling
that, in the long run, it's the Mercks and AHPs that are going to be the big winners in biotech.
1. Take a look at recent deals by MLNM (with Abbott, for one example) and CRGN (with Bayer), where it's 50:50.
2. Look at a company like NBIX, where control of product candidates is largely in their hands.
There are new models for business in biotech, and some of the plans have taken shape. "Partner selectively, and partner late".
Mercks and AHPs the big winners? Certainly, they're going to generate the lion's share of revenues -- from new products -- for the next decade or so. However, from a shareholder perspective, leverage comes from the biotech sector. Further, some business plans are more highly leveraged than anything we've seen in the past. I again refer you to NBIX.
At least they chose a good time to dilute their shares (good for the company, not the new shareholders).
Amen. Biotech was full of these BS deals during Q1, 2000. A few of them will turn out to be good for both the company and (new) shareholders, but..... there were others that were just as "bad" as the IMNX offering.
I think the PE and PS are (still) too high.
Psoriasis (not psoriatic arthritis) is a huge market, and data for ENBREL to date looks great. By mid-2002, most everyone is expecting IMNX to start addressing demand at about $3 billion/year. That's a chunk, given the current delta between cash and market cap. However, I feel that your point re. one product company is valid, and that downside risk is pronounced. I will not, therefore, debate your position.
3. That pile of cash is a big positive for the company (as long as you ignore where they got it from). It means that,
going into an environment where credit from debt or equity offerings is likely to be impossible to raise, they are in good
shape, compared to other biotechs.
Lots of assumptions here. Compared to some other biotechs, yes. Compared to other biotechs that have cash and late-stage projects that are not encumbered by partners, no. Moreover, as was true for Agouron in (?) 1998, some business plans may be so hot that they'll drive, even in hard times, cash out of equity offerings. There is no generalized liquidity crisis in biotech, and we'll see if the days of doom/gloom that you project are actually coming at all. But, no question, your point as it applies to IMNX is valid.
I would never let any pharm/biotech/medical equip get to more than 5% of my portfolio.
I generally set 7% as my limit, but "never"?? If you were certain that you had both leverage and downside protection, you wouldn't go above 5%? Pretty silly, no?
I'd be interested in your opinions of the MLNM and CRGN business plans. Given your analysis of IMNX, I wouldn't expect you to be enthusiastic about bumping your 5% for either of them, but.... be interested in your opinion of the business plans, nonetheless. I'd also be interested in your opinions of (1) VPHM as an investment, 01/08/2001, (2) KDUS.OB as an investment today, and (3) NBIX as an investment today.
Would you have bumped your 5% limit for VPHM, 01/08/2001?
Thread...... I was only a shareholder for about 15 minutes of one regular trading session. Sorry, but the 15-20% scalp (relative to after hours yesterday) was just too tempting, given the large number of screaming bargains out there. Good luck, all! |
