Here's the corrected version of the May 13 story:
Reuters Company News
CORRECTED-Cash, prospects alleviate pain for tiny US biotech
In May 13 New York story headlined "FEATURE-Cash, prospects alleviate pain for tiny US biotech" ... please read in 1st para ... "its shares are near a 14-month low" ... instead of ... "an all-time low" ... (corrects historical stock performance).
In 18th para, please read ... "Cell Genesys went public in January, 1993 and shares hit a high of $61.75 in early 2000 just before stock prices" ... instead of ... "went public at $45.56 in early 2000 just as stock prices" ... (fixing year company went public and stock price).
Also in 18th para, please read ... "Shares of the company tumbled to 14-month low of $11.75" ... instead of ... "an all-time low" ... (corrects historical stock performance).
A corrected repetition follows:
By Bill Berkrot
NEW YORK, May 13 (Reuters) - Cell Genesys Inc. has yet to market a product, its shares are near a 14-month low and it is years from profitability. So why is this company's chief executive smiling?
First: Stephen Sherwin's vast experience with the peaks and valleys of the biotech industry helps buoy his confidence in his firm's ability to survive.
Second: The company has cash and stocks totaling more than $350 million that will most likely keep Cell Genesys going until it can market its innovative gene therapies for cancer.
And third, but not least: Sherwin's beloved San Francisco Giants are in first place in the National League West.
"I've been in biotech almost 20 years so I have the benefit of historical perspective on these cycles," said the avid baseball fan whose biotechnology experience includes seven years with Genentech before he left in 1990 as the company's vice president of clinical research.
Cell Genesys' fortunes have mirrored the rest of the biotechnology industry that has seen its stock prices hammered during the past 20 months. Just since January the industry has seen share values plummet more than 30 percent, and Cell Genesys has not escaped that downward trend.
Still, the company is asking investors to look at its long-term prospects if its cancer treatments clear all the hurdles needed to make it to market.
"The good news is each time we go into one of these selling periods the industry emerges even stronger from a fundamental standpoint," Sherwin said.
Until a biotech company gets a product on the market, however, its share price can be reduced almost to the value of its assets.
"As we make progress, the stock price of Cell Genesys will follow," Sherwin predicted. "We have the financial staying power because of our resources to get through this cycle."
At the end of this year's first quarter, the Foster City, California-based company had $230 million in cash and 9 million shares of former subsidiary Abgenix, which Sherwin figures is worth more than $100 million.
The company estimates it will spend about $10 million per quarter in operating expenses this year.
"I think they have one of the better business models out there," said Greg Aurand, portfolio manager for Orbitex Management Inc. "They have cash, which a lot of companies seem to not have enough of. In fact, it seems to be a fairly dear commodity."
Still Sherwin, an oncologist by profession, finds the depressed stock price frustrating, "considering the fact that the company continues to progress in all the important ways."
Cell Genesys currently has five products in mid-stage, or phase II, clinical trials, with three targeted for phase III trials -- the final stage before seeking U.S. Food and Drug Administration approval -- within the next six to 18 months.
Cell Genesys' lung cancer vaccine could begin late stage trials by the end of this year with their prostate cancer vaccine moving forward in first half of 2003, Sherwin said. The vaccines, known as GVAX, use genetically altered cells to stimulate the body's immune system to attack cancerous tumors -- a process that does not have the awful side affects of chemotherapy.
The company is also working on treatments for pancreatic cancer, leukemia, myeloma, and liver, colon and bladder cancers.
Cell Genesys went public in January, 1993, and shares hit a high of $61.75 in early 2000 just before stock prices in the biotechnology sector began their precipitous decline. Shares of the company tumbled to a 14-month low of $11.75 last week before rebounding a bit.
"It certainly is not the result of setbacks at the company in terms of programs, departures of management or urgent financial difficulties because none of those things have occurred or exist as problems today," Sherwin said.
"In truth the stock price does not impede our business day-to-day, week-to-week right now," he added. "People in biotech are patient. This is not the overnight millionaire syndrome that we were seeing with the dot-coms."
Sherwin said if all goes well, Cell Genesys would still likely not launch products before late 2004 or 2005 and possibly achieve profitability in 2006.
Still, analysts see a bright future for the company.
"I think the company is positioned for success," said Needham & Company analyst Mark Monane, who rates Cell Genesys a "strong buy."
"Biotech is a risky business but I believe they're doing everything right in terms of their drug development to help bring a novel new therapy to the market," Monane said.
"Being novel is a two-edged sword, however I think they're going to end up on the right edge because they're letting science and not the hype guide corporate strategy."
Monane said Cell Genesys is doing everything necessary to avoid a late stage failure of their products, an approach he believes will "provide the potential for real upside in the stock price."
Depending on the data Cell Genesys presents later this month, especially the advanced lung cancer vaccine could prove to be a strong candidate for fast track approval status from U.S. regulators.
"If indeed it does show the promise that we've seen to date, in the case of cancer the FDA is very cognizant that there is a lot of need out there," Aurand said, "and I think they're going to move much quicker on it if they see what we're seeing so far."
Aurand said the fact that Cell Genesys was already acquiring manufacturing facilities, "suggests they're extremely confident about their product portfolio."
And then there is that big pile of cash.
"We do have reserves that could well take us through the period of product development that's remaining at least for one of our products," Sherwin said.
"We have a much brighter outlook in that regard than a lot of other companies." |
