From the "Inside Wall Street" column in Business Week:
Orchid: A Soldier in the Biotech War?
By Gene Marcial
Not only are investors flocking back to biotechs, but new spice has been added: their potential role in fighting bio-terrorism. Shares of biotech companies that make products to detect bio-weapons have soared: On Oct. 9, Cepheld jumped 86% in just one day, and Luminex climbed 18%. Dr. Anna Kazanchyan-Markarian of First Union Securities confirms that interest in such technologies has increased.
One biotech whose stock has yet to capture much attention is Orchid BioSciences (ORCH ), which has a proprietary detection technology known as single nucleotide polymorphism (SNP). SNP helps identify and characterize genetic variations that are vital to drug discovery. Orchid's stock rose 1.25, to 3.55, on Oct. 9. It has since fallen to 3. The company has a pact with Luminex that allows Orchid's SNP gene assays to run on the Luminex LabMAP platform, which performs up to 100 assays simultaneously on a single lab specimen. Luminex technology, used mainly for drug research, could also be used to detect organisms that could be used by terrorists. Orchid, which has joined forces with AstraZeneca and Eli Lilly on SNP genotyping, may soon sign a European marketing pact with a large drugmaker.
Kazanchyan-Markarian, who rates Orchid a strong buy--and thinks the price will rise to 9 in 12 months--isn't recommending the stock as a bio-terrorism play. "Orchid is well on its way to becoming a fully integrated genetics-based diagnostics company, with a large, growing base of recurring revenues," she says. Kazanchyan-Markarian expects 2002 revenues to nearly double, to $50 million, helped by its recent acquisition of Lifecodes, a leading provider of identity and forensic testing products. She sees Orchid making money in early 2004. |
