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Biotech / Medical : Biotech Boom?
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To: Gottfried who wrote (348)8/22/1997 7:47:00 AM
From: Henry Niman   of 368
 
GM, I think its an appropriate time to begin talking about a Biotech Boom again. I think that a sector turn-around is beginning and pharmas greater reliance on Biotechs will be a driving force. I expect the trend to accelerate with LGND leading the way.

Yesterday, AMGN said that they would pay GLFD $35 million up front and GLFD
jumped 7 1/2. Its a good example of a very large Biotech coming up with significant
cash to reinforce its dwindling pipeline (and slowing product sales). The big pharmas
are facing the same problems (blockbuster drugs going off patent and merger partners
dwindling) and as the WSJ article indicated, they are looking to the Biotechs for
products. In the past, the big boys used the Biotechs as research labs, providing a
small amount of cash for research. Big boys handled development and marketing, but
they controlled almost everything.

I expect the LGND diabetes deal to be more of a partnership. The big boy will come
up with SIGNIFICANT up front money, and the royalty rate will be in the "profit
sharing" category. The significant up front money will add pressure to develop the drug
more quickly and the "profit sharing" rate will provide significant income to the Biotech.

The deal (combined with positive Phase III data on Panretin) will set the stage for a
major sector move.
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