Feuerstein on H&Q. I understand that he will be moving over to RealMoney, so we won't get him for free in the future. I gave up my RM subscription because I found Cramer too offensive and condescending to take any more.
Biotech Execs Get Ready to Take Center Stage
By Adam Feuerstein
Senior Writer
01/02/2003 07:07 AM EST
URL: thestreet.com
If you're coming to San Francisco for the J.P. Morgan H&Q health care conference Monday, pack a raincoat and a sturdy umbrella. El Nino is wreaking havoc out here on the Left Coast!
Every year, this gathering of Wall Street's health care tribe sets the table for the next 12 months. Last January, of course, "H&Q" -- as the cognoscenti still call it -- was dominated by ImClone (IMCL:Nasdaq - news - commentary) . I'll never forget the sight of then-CEO Sam Waksal making his first public appearance (post-FDA rejection) in front of hundreds of irate fund managers. What a circus, and it certainly cast a pall on the rest of the year.
I'll try to be positive and say that because we don't have an ImClone-esque drama ready to slap us in the face at this year's H&Q, biotech and drug sectors might just emerge from the gathering with a sunnier disposition. But at the same time, there seems to be a lack of excitement about next week's confab, judging by some rather blase comments I'm hearing from fund managers (some of whom are, surprisingly, not even making the trip). The pain of a truly horrible 2002 may still be fresh in everyone's mind.
That said, I reviewed the list of presenting companies (smaller than in years past, by the way) and saw the makings for some interesting investment ideas.
Stepping Up to the Podium
Let's start with InterMune (ITMN:Nasdaq - news - commentary) . The big question is whether the company can translate what appear to be positive data on its drug Actimmune, used for patients with idiopathic pulmonary fibrosis, into actual sales. Investors will get the first hint of an answer when the company releases fourth-quarter results later in January. But at H&Q, InterMune execs will be watched closely as they provide more detailed Actimmune guidance for 2003.
Last year, Genzyme General (GENZ:Nasdaq - news - commentary) CEO Henri Termeer took the microphone at H&Q and painted a vivid picture of strong growth for 2002. Well, let's just say kindly that Termeer's forecast was a bit ... off.
Genzyme will be one of the more interesting stories at this year's H&Q. The company may make the case that its Renagel inventory problems -- and the subsequent sales shortfalls -- are behind it, and sales comps for 2003 will certainly be a lot easier to beat. (Renagel is used by kidney dialysis patients.) But Genzyme also has an intriguing pair of FDA advisory panel meetings coming up in mid-January. If the panels give positive nods to both Fabrazyme and Aldurazyme, treatments for separate rare genetic disorders, Genzyme might just be one of the better comeback stories of the year.
Celgene (CELG:Nasdaq - news - commentary) is likely to face a lot of questions about the regulatory strategy for Revimid, its experimental treatment for multiple myeloma. Now that rival Millennium Pharmaceuticals (MLNM:Nasdaq - news - commentary) plans an earlier-than-expected FDA filing for its drug Velcade, can Celgene also push Revimid to the FDA sooner rather than later?
Speaking of Millennium, CEO Mark Levin will surely talk at length about Velcade's potential, but a lot of skeptical fund managers need to hear more before they'll buy into Millennium's story. Specifically, what else will this company do -- cut costs, develop more drugs, etc. -- to finally generate some meaningful profits?
The Drug Titans
Over in the land of Big Pharma, pay attention to Bristol-Myers Squibb (BMY:NYSE - news - commentary) . Yes, the drug giant has been bruised and battered (rightly so), but its brand new schizophrenia treatment, Abilify, may at least jump-start the turnaround process. On the flip side, if Abilify shows signs of blockbuster status, it might hurt Eli Lilly (LLY:NYSE - news - commentary) and its rival schizophrenia drug, Zyprexa, which is Lilly's biggest contributor to profits.
Lastly, I want to mention one other down-on-its-luck company: Protein Design Labs (PDLI:Nasdaq - news - commentary) . Although it's not presenting at H&Q, this stock should be on your radar screen in the beginning of the year. The company is holding an analyst open house on Jan. 9, which will be Wall Street's first chance to meet new CEO Mark McDade and, more important, to hear about the steps McDade is taking to turn the company around. (A key question: What does the earlier-stage drug pipeline look like?)
With a bit more than $5 per share in cash and a steady royalty revenue stream from its monoclonal antibody technology, Protein Design Labs, trading just below $9 as the bell rings a close to 2002, looks cheap to several of my trusted sources. |
