[Biotech Mailbag: Adam Feuerstein gives his opinion on Millennium and the company's near-term prospects]
URL: thestreet.com
Joe N. writes to ask about Millennium Pharmaceuticals (MLNM) . He met recently with management, and they seemed very bullish. This leads him to wonder if there are new reasons for investors to get excited about the company's prospects.
It's fun (sometimes) to go back and read old columns to see if what you wrote back then is still true today.
In December 2004, I wrote a column titled "Millennium's Future Remains Cloudy," which basically argued that the biotech firm was relying too heavily on its multiple myeloma drug Velcade. Millennium's growth rate was slowing, the research-and-development pipeline wasn't advancing fast enough, and as a result, the stock price was languishing around $12 per share.
If I wrote the same column today, I don't think I'd have to change much, unfortunately. Velcade is still an important drug in multiple myeloma, but its growth has been stunted by Revlimid, a competing drug from Celgene (CELG) .
Millennium has followed through on its promise to cut costs and achieve profitability, but just barely. Revenue growth remains basically flat to down.
As for its drug pipeline, let's just say that Millennium has a lot to prove before investors get excited. The new R&D focus is on drugs to treat oncology and inflammation, but historically, Millennium has not done a good job advancing internally developed drug candidates into the latter stages of clinical trials. To be perfectly blunt, the company's track record is wretched, especially given its size and resources.
This is not meant to write off Millennium altogether, just to say that it's a biotech company -- and a high-profile one at that -- which has not lived up to its potential. Maybe there is something in the R&D pipeline that will change Wall Street's perception of the company. At this point, however, Millennium has to deliver before investors start to believe.
That's clear by looking at Millennium's current stock price of around $10 per share, lower than it was when I wrote that old column two-and-a-half years ago. |
