Millennium Pharmaceuticals, Inc. (MLNM) Message Board

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Biotech / Medical : Millennium Pharmaceuticals, Inc. (MLNM)

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To: tnsaf who wrote (920)	2/12/2002 2:26:38 PM
From: keokalani'nui	Read Replies (1) of 3044

Latest Biotech Insight. Biotech Insight News Alert: Cephalon, Millennium, Vertex, Cor Therapeutics Finally a rally on Friday for the biotechs. As usual the midcaps came up the biggest gains with stocks like Idec up 10% while many small caps lagged behind. Investors have been hurt again, this time by accounting scandals. Accounting worries (off -balance sheet debt hidden in joint ventures) impacted Elan (a real meltdown) and Cephalon among others. Another contribution to the NASDAQ tumble was Cisco's forward-looking guidance, which threw cold water on investor's hopes of an expedited high tech recovery. Traditionally biotech stocks have tracked the NASDAQ so this also hurt the biotechs. In the future I predict a fundamental shift from high-techs to biotechs with some decoupling of the Nasdaq/biotech relationship. Certainly the beginning of '02 has been a disaster for the biotech sector and how far the BTK index drops is anyone's guess but as the end of last week it looked oversold-at least for the moment. Biotech needs some major positive news in order to ignite a rally and that news may come at ASCO (the big cancer conference in mid-May). Currently some of the larger biotechs with earnings and pipelines are carrying PEG ratios (PE/growth-probably a better comparison between companies than looking at just the P/E ratios) close to those of the more conservative pharmas-this means these stocks are probably cheap. Another sign is that some of the larger but non-profitable biotechs like Millenniun and Vertex are trading at small multiples (2-3 times) of cash. Millennium (MLMN) has recently been in the news for their purchase of Cor Therapeutics (CORR). This did not sit well with the investment community but I think that view is shortsighted considering that Cor came into the deal with lots of cash and a stealth oncology program with oral kinase inhibitors (their lead compound blocks Flt 3 and other important kinases-similar to Gleevec's spectrum). They are about to start Phase I testing in AML-acute myelocytic leukemia. The real showstopper for Millennium is MLN 341, a cancer drug with a novel target, the proteasome. This is definitely the near-term value driver for Millennium. The proteasome is a macromolecular complex in the cytoplasm of cells that chews up and degrades both improperly folded proteins and other proteins marked for destruction by ubiquitin tags. Initially it was felt that this would be a very unlikely drug target since inactivation would foul up normal cells as well as cancer cells. It turns out that a graded inhibition allows normal cells to recover while killing cancer cells. The drug is in Phase II trials in multiple myeloma (MM), a cancer of plasma cells (one of the hematological malignancies that is quite common and currently poorly treatable). Current trials are looking at patients refractory to standard therapy including some who have failed transplant and thalidomide. Initial results presented at the recent ASH meetings were quite dramatic and we should begin to see some data on durability of remissions and a clearer picture of the side-effect profile at the next ASCO meeting in May. This compound will be a big winner if it turns out to have both sustained durability of remissions and a relatively benign side-effect profile. If MLN 341 also has similar activity against solid tumors this could be a gangbuster product with enormous value. Many scientists are careful trying to extrapolate from MM data because this may be an unusual disease with unique interacting stromal factors and signaling pathways. One mechanism of action of MLN 341 in MM is thought to be inactivation of the NF-kB signaling pathway. I-kB is an inhibitor of NF-kB that is targeted for destruction by the proteasome complex and interfering with that mechanism leaves I-kB intact to inhibit NF-kB signaling. Given the special circumstances involved in the causation of MM it is encouraging that preclinical data suggests that MLN 341 also works in xenograft models of human tumors in animal models. Results of Phase I clinical trials for solid tumors are not yet available. I am using Millennium as an example of a company flush with cash, selling at a few times cash value with a rich pipeline and an exciting lead compound. If one just looked at the market cap MLNM might look rich but considering their cash position and MLN 341 it looks very reasonable to me. Of course the caveat being that 341 could show an unacceptable toxicity profile and responses may be limited to MM - but my hunch is that this is a bet worth taking.

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