Immunex Message Board - Msg: 15558240

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Biotech / Medical : Immunex

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To: Jacob Snyder who wrote (501)	3/24/2001 10:19:14 AM
From: Logain Ablar	Read Replies (1) of 656

Jacob: A good post which I'd like to expand / comment on: 1) Valuation. Earnings will be flat to down due to limits on Enbrel sales and increases in R&D spending. 2) Earnings will start to accelerate in 2nd or 3rd quarter of next year depending on RI production facility ability to manufacture Enbrel. 3) Cash as a positive. Company has some hefty spending plans over the next two years (not sure of trial impacts) so this will decrease but it should put a bottom on the stock above the horizontal level you mentioned. 4) One product company doesn't hurt when the sales go from 0 to 650m so quickly (product approved 4th qtr of 98) and the market is over $1.5B (and can increase if further uses materialize). 5) On management competence to not meet demand. Jacob this IMO is an unwaranted conclusion. Let me explain. To set up a drug production facility takes a lot of capital and time. To invest funds in this area prior to drug approval would be risky (Centocor made this mistake with its sepsis drug & its part of the reason they are now part of JNJ) since if the drug isn't approved you've wasted precious capital / resources. Unfortunately no one forsaw the rapid acceptance of Enbrel once the drug was approved (this is the good problem to have versus having excess capacity due to lack of demand). Management is trying its best to resolve this but it takes time to build / convert a facility (its not just having an empty space and bringing in equipment), start production (I'm not sure how long it takes to "grow" enbrel (could be 4 months, nor am I sure of its shelf life) have it tested and then submit to FDA for approval (FDA has to inspect production facility and assure product quality). The german facility is being used to currently produce $750M of enbrel. When you say there are no acceptable excuses and your knowledge of the drug industry and FDA I have a disconnect. Its easy to critize in hindsight and we can differ here but I feel this is unwaranted. 6) Agree on the injectable drug but it works pretty good. Competition can always happen. 7) TA - well breaking $14 I see support @ $6.5 but with the balance sheet don't see the stock hitting this level. With the power spike yesterday I see more downside too (maybe $9 but still like the company for a long term buy @ this point (although I sold yesterday and will probably wait till market bottoms). I don't see a bounce past resistance @ $14 but it could go to $16 area (doubtful). 8) Long term - 2 years from now when the stock is making 60cents + per share with over 50% growth rate I wonder how the market will price the shares. $20 to $40 range seems reasonable (not mania valuations and we know the market will swing to the other side @ some point but). An 80% return in two years is not shabby (risk of course if competion to Enbrel comes out and so far Centocor's product is not as effective value). 9) On 1 product. Nature of the beast. You can't spread yourself out too thin but once you have 1 block buster you can either make or acquire more. Of course amgn has had problems after its 2 products. Of course I thought $16.5 was a good value so take my comments with a grain of salt. Tim

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