Biotechs Offer 'Unusual Opportunity' For Patient Individual Investors:
McCamant [Procept is not mentioned, but I thought article was interesting. Same principle applies to Procept.]
SAN DIEGO, Calif.--(BW HealthWire)--Aug. 11, 1997--Investors with a long-term view should take advantage of the
``unusual opportunity'' to accumulate currently depressed biotechnology stocks, a leading industry figure told investors Aug. 9
at the 1st Annual San Diego Biotechnology Forum.
``I think biotech is the most interesting technology around,'' Jim McCamant, editor of the Medical Technology Stocks Letter,
told attendees. ``It's where electronics was 30 years ago and like electronics has, biotechnology is going to have a much
larger impact
on your lives than you can imagine over the next 20 years. In the
process, it's going to make investors who realize that a lot of
money.
"In fact, most people don't know it," McCamant added, "but Bill
Gates is a very active investor in biotech. He owns 15 percent of
ICOS Corp. (NASDAQ:ICOS) stock. Gates agrees with me that the next
great technology revolution is in biotech."
McCamant's remarks capped the morning-long Forum geared for
individual investors. It was produced by Sacramento-based Informed
Investors, Inc. and co-sponsored by Investor's Business Daily.
Preceding McCamant, attendees heard analyst-style presentations, plus Q&A, from Daniel Kisner, M.D., president of Isis
Pharmaceuticals (NASDAQ:ISIP); Steve Engle, chairman/CEO of La Jolla Pharmaceutical Co. (NASDAQ:LJPC); Arthur
Benvenuto, chairman/CEO, and Dr. Gary Gentskow, executive director of Worldwide Medical Affairs, Advanced Tissue
Sciences (NASDAQ:ATIS); and Larry Stambaugh, chairman/CEO, of Maxim Pharmaceuticals (AMEX:MMP). Audio
tapes of the presentations, including McCamant's, are available for $25. Call 800/992-4683.
McCamant said the biotech industry started with gene splicing breakthroughs in the '70s. ``The industry as an investment
started in 1980 when Genentech became public, so it's a young industry.''
Biotech stock prices have endured major cycles with the most recent peak in early 1992, McCamant said. Since then,
biotech stock prices have failed to take into account extraordinary scientific breakthroughs at many companies.
Among the numerous scientific breakthroughs discussed came from Advanced Tissue Sciences' CEO Benvenuto. ``Our
starting material for (growing) skin is newborns... circumcision from newborns, and from one, we can actually grow the
equivalent of six football fields worth of material.'' He added that skin and cartilage can be grown in two-to-three weeks.
``Investors may get excited with the latest scientific breakthrough, but it takes a long time before they become commercial
reality... typically at least 10 years,'' McCamant said. ``We're now at a stage when things are beginning to move ahead more
rapidly on a commercial side and we are also in a period where investors are less aware rather than more aware.''
``The inherent inefficiencies in biotech are also part of the opportunity,'' McCamant said. ``Students of investing understand
that you should be looking for inefficient markets, when stocks are priced different than what their value is. There are
probably a few biotechs priced more than what their value is, but there are many, many more that are priced less than what
their value is.
``Isis, for example, is still below the high made during that time period (1992) despite the fact that it has made huge technical
progress,'' McCamant said. ``People then were buying it for its potential. Isis now has a whole series of products, some of
which are nearing approval so the real value is four times, five times, maybe as much as 10 times (what it was in 1992)
because the risk is substantially reduced because they've showed this technology actually works.
``In late 1991 according to one analyst, there were 23 products out of the biotech industry that were in pivotal trials, where if
trials were successful, it could lead to a marketing application'' McCamant continued. ``Now there are between 200 and
250, almost ten times as many products in late-stage pivotal trials. Sounds to me like we are going to have more products
approved... and we are going to have more approved each year.
``We have a situation now where biotech stocks are so undervalued that the next move is going to be at least as good as the
one in 1991 and 1992... and that was a year in which the biotech stocks were the best performing group,'' McCamant said.
``We'll see the phenomenon we've seen in the last 18 months with Agouron (NASDAQ:AGPH) where the stock has moved
very substantially as they start to produce sales...first the anticipation of that, and second, the actual sales which have
exceeded analysts estimates.''
McCamant outlined the importance of corporate partnerships, the FDA, research & development, quality of management
and capital strength in evaluating biotech stocks.
``Management is key, science is key,'' McCamant said. ``Chiron has the best science among the larger companies. In earlier
years Genentech (NYSE:GNE) clearly had the best science. Amgen (NASDAQ:AMGN) made its success by focusing its
science on a relatively narrow number of products and doing a superb job of bringing those products to commercial
development.
``I believe Chiron will end up leading the next big move in the biotech stocks,'' McCamant concluded. ``It's the only one that
can easily double without worrying about evaluation. The company spends a lot money in R&D and there is a lot of
under-the-surface value that will begin to surface in the next 12 months.''
McCamant offered rules of thumb to follow when investing in biotechs. One ingredient is patience because even the best
companies falter.
``The classic example is Amgen which came public at $18. Roughly two years later it broke $4,'' McCamant said. ``You
don't have to buy stocks at the bottom to get rich in this sector. That's why I like to talking to individual investors about
biotech because you can afford to take a long-term approach with your own money. It is still a tough time for biotech but it is
a time for opportunity for those of us who believe we know what we're doing and have faith in the industry.''
The San Diego event was the second biotech Forum sponsored by Informed Investors Forum in recent weeks. On July 27,
Informed Investors hosted a Mid-Year Biotech Forum in Emeryville, Calif. David Crossen, Senior Biotech Analyst with
Montgomery Securities, was the featured speaker.
Companies presenting on July 27 were Arris Pharmaceuticals (NASDAQ:ARRS), Chiron Corp. (NASDAQ:CHIR),
Connetics Corp. (NASDAQ:CNCT - news) and Matrix Pharmaceutical (NASDAQ:MATX).
Since 1993, Informed Investors Forums have been linking investors with management of public companies. Tapes of each
Forum are available for $25. Tape sets for both Biotech Forums is $45. Call 800/992-4683. |
