From AG Edwards, via Quote.com:
Summary:
Biotech: . We wanted to provide an update on the biotech/genomics sector. There are four
things that we would like to cover: 1) everyone seems to hate genomics right now, but we see
value, 2) HGSI is undervalued. We`d buy it just for the albumin drug technology, 3) AMGN is
vulnerable as its drug Enbrel most likely will see stiff competition in `03+ and the merger
with IMNX hinges on good Enbrel performance. We would watch positions in AMGN carefully, and
4) We visited Biogen recently and we are comfortable with the strong buy. May 23 is the FDA
panel review meeting on their psoriasis treatment Amevive. The media has been writing negative
stories about genomics recently. The sector has been under pressure but the concerns posed in
the articles are not new. If the stocks were too high in 2000, then it is not difficult to
posit that the market has taken them too low now. The American Society of Clinical Oncology
meeting (i.e., the big cancer meeting) will start the flow of clinical data that comes in the
second half and we think that this is a decent time to be looking for performance from the
group. We have the awkward position of liking the prices here. On Human Genome Sciences
(HGSI), they held an analyst meeting that was upbeat. We think the company is well-positioned
and very product and precisely where we expect them to be at this point in their life cycle.
Valuation is attractive here. Amgen has two risks in their shares going forward: one is that
Embrel can fail to perform in `04+ and the second is valuation (both overall and related to the
previous point). On BGNE, if you have clients that cannot stomach Biogen (BGEN) being closed
for trading on May 22-23 as we await the panel news, you may want to contact those clients
today. If the news is positive or negative, the stock we react quickly, so investors that own
BGEN need to understand this potential volatility. |
